Australia, Canada rivals in “new frontier” of liquified natural gas

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.  

Bloomberg later moved a corrected and updated version of the story, including the statement that no contracts have yet been signed.

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.
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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)

Kitimat fishers, hunters ask NEB for special conditions on KM LNG export licence

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. 

The board panel,which is considering the project’s application for a natural gas export licence,  allowed Langegger to testify early in the proceedings, now expected to run at least until Thursday, because he has other commitments.
In response to a specific question from Lynn Mercier, presiding member of the board panel, Langegger asked that the NEB require the KM LNG partners, energy giants Apache, Encana and EOG,  establish a joint committee with Kitimat residents, both First Nations and non-First Nations, to preserve the values of the wilderness around the liguified natural gas terminal.
He also asked that the energy companies create special funding “dedicated to fish, wildlife, and the environment…to maintain the fishing, hunting [and] recreational activities used by residents not just for now but for generations to come.” 
The liquified natural gas terminal is proposed for Bish Cove, down Douglas Channel from Kitimat, an area that is currently still largely wilderness. 
Langegger noted that crucial salmon breeding rivers flow into Bish Cove from the surrounding mountains. Bish Cove is also known as a habitat for deer and bears, both black bears and grizzlies.
He also asked that Kitimat residents continue to have access, as they do now, to the bush surrounding the proposed terminal “with no gates, no lockoffs.” Langegger complained to the board that Rio Tinto Alcan has, in recent years, restricted access to the Kitimat River estuary, near the aluminum plant, while once Kitimat residents had easy entry to the estuary.

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Langegger said that Rod and Gun members and other Kitimat residents fear the cumulative effects of the destruction of the wilderness, and specifically that some of the past practices of the forest industry, which he said had a “huge detrimental effect,” could be compounded by the Kitimat LNG plant and other projects.
 While not referring directly to the proposal, Langegger was bringing in the Enbridge Northern Gateway project, which is being considered in a separate National Energy Board proceeding. 
Lanegger told the NEB panel that he hoped that “the new generation of industries coming [would] accept those values” of fishing, hunting and recreation.
Mike Langegger of the Kitimat Rod and Gun
 club checks his notes while testifying before the NEB. (Robin Rowland/Northwest Coast Energy News)

Apache secures 85% of Kitimat LNG sales (Corrected version)

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.

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National Energy Board hearings on Kitimat LNG begin, expected to go rest of the week

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.

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Malaysia buys stake in BC shale, eyes West Coast LNG export terminal

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.

In the news release Michael Culbert, President and Chief Executive Officer of Progress was quoted as saying:

“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.

For the public, Petronas is best known as the owner of the giant twin towers that dominate the skyline of Kuala Lumpur.

 Links

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Kinder Morgan proposes second Kitimat bitumen pipeline

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.

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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.

Tyee says:

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.

Links
Kinder Morgan Canada presentation on the Kitimat pipeline and the Vancouver port expansion (PDF)

Kinder Morgan application to the National Energy Board (PDF))

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Apache names new boss for Kitimat LNG project

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

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NEB Northern Gateway Joint Review info sessions set for NW BC

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.”

Dates are

  • Kitimat, BC, 16 June,   5 p.m. to 9 p.m. Riverlodge Community Centre
  • Prince Rupert, BC, 15 June, 7 p.m. to 9 p.m. North Coast Convention Centre
  • Queen Charlotte City, BC, 14 June, 7 p.m. to 9 p.m. Community Hall
  • Smithers, BC, 22 June 5 p.m. to 9 p.m. Hudson Bay Lodge and Convention Centre
  • Burns Lake, BC,  June 8,  7 p.m. to 9 p.m. Burns Lake District Chamber of Commerce
  • Vanderhoof, BC,   June 7, 7 p.m. to 9 p.m Nechako Senior Friendship Centre
  • Prince George, BC, June 22,  5 p.m. to 9 p.m  Ramada Hotel Downtown
  • Tumbler Ridge, BC,  June 9, 7 p.m. to 9 p.m. Community Center
  •  Bruderheim, AB,  June 6,  7 p.m. to 9 p.m.  Bruderheim Community Hall The Lions’ Den   
  • Whitecourt, AB,   June  7, 7 p.m. to 9 p.m. Royal Canadian Legion
  • Grande Prairie, AB,  June 8, 7 p.m. to 9 p.m  Grande Prairie Curling Club

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

CNBC interview with Pat Daniels: Enbridge Pipe Dreams?

CNBC VIdeo
 
Enbridge Pipe Dreams?

CNBC  Mad Money host  Jim Cramer377-cnbc2.jpg  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.

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Energy sector needs to diversify its market

Calgary Herald


Energy sector needs to diversify its market

More on Enbridge Liquid Pipelines president Steve Wuori’s speech in Calgary:

Enbridge has proposed its Northern Gateway project between Edmonton and Kitimat — a $5.5 billion, two parallel pipeline project of 1,900 kilometres — which would diversify the market to include Asia and the Pacific Rim markets.

Wuori said the project would be a “game-changer” for Canada because of the unlocking of various new markets — leading to a $2-3 barrel increase in oil, a $270-billion increase in national GDP over 30 years, 63,000 person years of employment during construction, $4.3 billion in labour-related costs and income for people, and about 1,150 long-term jobs once Northern Gateway is in operation.

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