Canada and Australia are rivals in the “new frontier” of liquified natural gas export sales to Asia, a panel of energy marketing executives told the National Energy Board Tuesday at hearings into the KM LNG in Kitimat.
The “marketing panel” testifying before the board included Kenny Patterson, Vice President LNG Marketing and Shipping for Apache Energy, Sean Bolks, Apache Director of Corporate Risk Management, Jamie Bowman, Vice President of Marketing for EOG and David Thorn,Vice President, Canadian marketing for Encana and two consultants.
Patterson told the NEB at more than one point during his testimony that Canada was the “new frontier” for liquified natural gas, and so was attracting a good deal of interest from countries across East Asia who need more natural gas supplies.
Patterson and the other executives on the panel refused to be specific on who the customers actually are, despite cross-examination from NEB counsel Parvez Khan and additional questions from the NEB presiding member Lynn Mercier.
Patterson said Apache couldn’t go into individual buyers, so Khan asked: “How many different buyers n a general sense?” to which Patterson replied that in Asia, the KM LNG partners, which include Apache, EOG and Encana, were general discussions with seven to eight major Asian LNG companies as well as other smaller players.
That answer came despite the fact that earlier in the day in Kuala Lumpur at the Asia Oil and Gas Conference, Mate’ Parentich, general manager of LNG marketing at Apache, said the company would soon conclude talks on the sale of 85 percent of liquefied natural gas from the Kitimat terminal.
Asked for specifics by Bloomberg News, a Houston based Apache spokesman Bill Mintz then said that no binding contracts had yet been signed for the Kitimat project.
Khan asked about one Memorandum of Understanding signed with KM LNG. Again the panel refused to be specific. Bowman said the MOU had been signed with the previous partnership in KM LNG and while the MOU had not yet expired, it was subject to further negotiations.
Khan and Mercier were both aware that any agreements with potential buyers were “subject to regulatory approval,” which, of course, is the National Energy Board’s role, but again they were unable to drag any specifics out of the executives on the marketing panel.
The panel members told the NEB members that Korea and Taiwan are already well established LNG markets and China was beginning to be more aggressive as an LNG buyer. Japan, which was devastated by the earthquake in March and lost of a lot nuclear powered electrical generation capacity is now scrambling to catch up with its Asian neighbors. The executives told the NEB panel that both Indonesia and Malaysia will also become more important buyers for LNG in the Canadian market as their domestic demand grows.
Noting that Patterson is based in Perth, Australia, Mercier asked the executives about the recent announcement by Shell that it would build a floating LNG platform off Australia.
Panel members replied that the Asian markets want long term, secure sources of supply, with multi-billion dollar contracts for between 10 and 20 years. As stable, market-driven countries with ample supplies of natural gas, both Canada and Australia could fulfill those needs, panel members said. Companies operating in both countries would require those multi-billion, multi-year contracts to justify the investment in natural gas extraction and transportation.
Jamie Bowman, Vice President of Marketing for EOG listens as fellow panel members testify before the NEB. (Robin Rowland/Northwest Coast Energy News)
The Kitimat Rod and Gun Club Tuesday asked the National Energy Board to place special conditions on the Kitimat LNG project so as, in the words of Rod and Gun representative Mike Langegger, to preserve “the fish and wildlife values of the northwest,” from the “cumulative effects” of industry encroaching on the wilderness.
As the National Energy Board hearings on the Kitimat LNG project opened, a principal owner of the project, Apache Corp is reported to be in final talks to sell up to 85 % of the capacity that could flow through the proposed port.
Bloomberg quoted Perth-based Mate’ Parentich, general manager of LNG marketing at Apache, said at the Asia Oil and Gas Conference in Kuala Lumpur Tuesday “We will offer stakes in upstream, midstream and downstream to buyers,” Parentich said. Shipments may start in 2015.” Note: Bloomberg later moved a corrected and updated version of the story, noting no contracts have yet been signed.
Reuters quoted Parentich as saying, Asian utilities were also interested in buying equity stakes
in the Kitimat project.”We are speaking with the major utilities in the Asian Pacific region,” he said. The LNG will be sold on Japan Crude Cocktail (JCC) prices, he added.
National Energy Board hearings on the Kitimat LNG project opened Tuesday morning at the Riverlodge Community Centre with the usual legal introductions.
Lawyers for KM LNG asked the panel to postpone some more controversial issues until Friday, as one of the lawyers said, “parties were still in discussion” about certain matters.
The panel ruled that they would hear the contentious issues beginning Thursday morning.
Kitimat residents are complaining that the formal panel is “mystifying,” compared to the more open and public friendly joint review panel on the Enbridge Northern Gateway proposal last fall.
The current hearings are much more limited than the Enbridge Northern Gateway joint review. That’s because these hearings are for an export licence only. The Enbridge hearings are a facility hearing covering the whole project, because the oil sands are in Alberta and that pipeline would cross provincial boundaries. At the moment, the KM LNG project is entirely within the province of BC and so the only matter under consideration is the export of natural gas.
Lawyers representing one of the KM LNG rivals tried to widen issues in the morning session, but the NEB panel ruled while there would be some flexibility in questions about the project’s ownership and facilities, those questions had to be specific and narrow and relevant to the export licence.
Like theatregoers fleeing a bad play at the first interval, many of the Kitimat residents who had shown up left at the first break, leaving the room to the lawyers and executives.
A Canadian energy company, Progress Energy Resources, based in Calgary, has agreed to sell 50 per cent its stake in a BC shale gas development called North Montney to Malaysia’s state oil firm Petronas for $1.07 billion Canadian ($1.09 billion US). The two plan to build an LNG export terminal somewhere on the BC West Coast for the export of liguified natural gas to Malaysia and possibly other parts of Asia.
The Progress news release says:
Petronas and Progress will establish an LNG export joint venture (the “LNG Export Joint Venture”) to be 80 per cent [by Petronas] and 20 per cent owned [by Progress], respectively. The LNG Export Joint Venture will launch a feasibility study to evaluate building and operating a new LNG export facility on the West Coast of British Columbia. Petronas would be the operator of this facility, and Petronas and Progress would jointly market the LNG utilizing Petronas’ well-established and extensive network of customers in the largest LNG markets globally.
No location was mentioned for the proposed LNG terminal.
“We look forward to working with West Coast British Columbia communities as we pursue this opportunity to build a new facility that will add value to British Columbia’s natural resourceswhile creating considerable long-term local economic benefits.”
Culbert also said in the news release:
“This is a breakthrough transaction for Progress: the partnership we are launching will enable us to accelerate our growth strategy…. ”We are very pleased to form this long-term partnership with PETRONAS. They share our belief that our North Montney shale assets are a world-class resource that deserves significant investment. We look forward to benefitting from PETRONAS’ significant global expertise including their leadership in developing infrastructure and accessing LNG markets. As well as enhancing Progress shareholder value, this partnership will also generate substantial economic benefits for local communities and the province of British Columbia, while leveraging the environmental benefits of Canada’s abundant and clean-burning natural gas resources globally.
This is the first time that Petronas has entered the Canadian energy market, an indication of the growing scramble in Asia for BC oil shale and likely Alberta oil sands.
Petronas, the national oil and gas company of Malaysia is one of the Fortune Global 500, with oil, gas and petrochemical interests in more than 30 countries. The company calls itself one of the world’s leading LNG companies and is involved in all parts of the LNG business, from liquefaction and shipping to re-gasification and trading. As well as Malaysia, it has assets in Australia, Egypt and the United Kingdom.
In a story broken early Thursday, June 2, by the Vancouver website Tyee and confirmed by Northwest Coast Energy news, another major energy player, Kinder Morgan is proposing a second pipeline to carry bitumen from the Alberta oil sands to the port of Kitimat.
The proposal was part of a presentation to industry analysts during a conference on March 24, 2011, with a PDF of the Power Point presentation posted on the Kinder Morgan Website.
The likely controversial proposal was not picked up by the media until Tyee broke the story.
The presentation says the proposed pipeline is one of several alternatives proposed for the expansion of the existing Kinder Morgan Transmountain Pipeline. In this scenario the pipeline to Kitimat would branch off from the Transmountain Pipeline go through Prince George and then apparently follow existing pipeline routes to Kitimat and not follow the proposed Enbridge Northern Gateway route.
The Kinder Morgan presentation says the Transmountain pipeline branch to Kitimat would cost $4 billion, compared to the $5,5 billion that Enbridge has budgeted for the Northern Gateway project. The Transmountain pipeline would have a capacity of 450 million barrels a day compared to the Northern Gateway capacity of 550 million barrels a day.
A power point presentation
for investors by Ian Anderson, president of Kinder Morgan Canada Group,
provides a wealth of information that has not been widely shared with
the general public or local governments:
Tyee says Kinder Morgan is also asking the National Energy Board for a immediate jump in the bitumen going through the port of Vancouver
They are also requesting to divert more Alberta crude and bitumen capacity to the Westbridge tanker terminal in Burrard Inlet and away from existing land-based refineries in B.C. and Washington. If approved, this would immediately expand crude capacity through Vancouver from 52,000 bpd to 79,000 bpd — an increase of more than 50 per cent
According to the documents seen by Tyee, the Vancouver end of the project would require the dredging of Second Narrows to allow large supertankers to visit the port. Tanker traffic in Vancouver would increase, Tyee says
Tanker transits through Vancouver will increase to 216 per year in 2016, up from 71 in 2010 and 22 in 2005.
All this is being propelled by increasing energy demand from China. It also appears that Kinder Morgan wants to increase the Vancouver capacity because of the delays in the Enbridge Northern Gateway project, which means that Alberta oil patch is seeking new ways to get the raw bitumen to China.
Apache Corporation, of Houston, Texas, the main backer of the Kitimat LNG development announced a management shakeup Tuesday, May 31, including a new boss for the Kitimat project.
According to a news release issued by Apache, “Graham Lawton was named vice president –
liquefied natural gas (LNG) projects, leading the Kitimat project team
for the LNG facility and Pacific Trail Pipelines.”
Lawton is a new comer to Apache but has 30 years experience in the natural gas industry.
The news release describes Lawton this way:
Lawton joined Apache in March 2011. He brings 30 years of experience in the gas industry – with 15 years in LNG projects – and has worked in the United Kingdom, United States, Tunisia, Singapore, Trinidad, India and Peru. Prior to joining Apache, Lawton was vice president of LNG at Hunt Oil Co. since 2005 and served as general manager of COLP, the operating company of Peru LNG. Previously, he was operations director at Marathon Oil Co. where he worked for Equatorial Guinea (EG) LNG. Prior to that, he spent more than 20 years with BG Group. Lawton is a fellow of the Institution of Gas Engineers and Managers, a fellow of the Institution of Mechanical Engineers, and a chartered engineer. Lawton received a bachelor’s degree in mechanical engineering from the University of Sheffield in England.
PR Newswire release Apache Announces Changes in Operational Leadership
The National Energy Board Joint Review Panel on the Enbridge Northern Gateway pipeline project has set the dates for information sessions regarding future hearings in communities across northwestern British Columbia and Alberta.
These are short information sessions about the joint review process and not full hearings. The NEB says, “These sessions will provide information and guidance on the joint review process and participation options.”
The NEB says specific dates and venues for the information sessions in Bella Bella, Hartley Bay, Kitkatla and Klemtu will be announced on the panel’s website as soon as the details are available.
More information on the Joint Review Panel website
NEB news release on Canada News Wire
Enbridge Pipe Dreams?
CNBC Mad Money host Jim Cramer interviews Enbridge’s Pat Daniels
Cramer: Enbridge is a Canadian company with a juicy 3.3% yield and a consistent track record of raising that payout. average of 11% over the last decade. They’ve given us a 15% boost this year. Enbridge is the kind ofconsistent dividend-raiser you can count on in good times and bad. they are so money!… Why are you highlightinga pipeline company when oil has been getting slammed? the important thing is a company like enbridge is not hostage to oil. they’re related by long-term assets or regulated contracts.Enbridge has never once had to cut the dividend, not once. they’re more regular than metamucil…”
Daniels: “The gateway pipeline project to the west coast would employ another 1,200 people on apermanent basis. and there would be about 63,000 man years of labor that would go into the construction of the pipeline. We call on crews from all across North America, capped, the U.S.and also from pipe suppliers right across North America. It has a huge positive impact on the economy and huge employment opportunities associated with both the construction and theoperation in our business.“