Apache | Northwest Coast Energy News

Eurocan site at Kitimat — Apache will build the work camp for the Kitimat LNG project at the old Eurocan site. (Robin Rowland/Northwest Coast Energy News)

As the financial and energy markets speculated Monday, Feb. 6, 2012 that Apache Corporation would make an official announcement during its quarterly webcast next week that the Kitimat LNG project will go ahead, a company report to the District of Kitimat Council, released this evening, is a strong indication that the project is a go.

Mayor Joanne Monaghan told the council that Apache has reported to the district that work at the site for the LNG terminal at Bish Cove has been “progressing well” through the winter and was now “progressing toward the construction phase.” Work so far at Bish Cove includes site preparation, building an access road and a temporary dock for the crew boat.

Monaghan said that Apache will begin work on a work camp for the Kitimat LNG project at the old Eurocan site “shortly.”

Monaghan also that the province of British Columbia told her that it estimates that there will be 800 permanent, long term jobs in British Columbia over the life of the projects 9,000 construction jobs over the 10 to 15 year multi-train (phase) plans from the KM LNG, BC LNG and Shell projects. Premier Christy Clark estimated that LNG projects will bring the province $1 billion in revenue. (For Premier Christy Clark’s statement see Vancouver Province Liberals shift strategy to LNG)

The mayor said that Apache plans to work closely with local contractors in general contracting, supplies, concrete supply, logging and land clearing and other supporting jobs.

Apache will be in competition with Rio Tinto Alcan for the local workforce and contractors. Last Thursday, RTA, which is working on a $3 billion modernization project at the Kitimat aluminum smelter, stole a march on Apache, by holding a day long conference for contractors and suppliers across British Columbia, including a tour of the plant, so they could bid on work during that project.

At the same meeting, district council was told that Shell has begun the official transition in its takeover the old Methanex site, which it recently purchased from Cenovus by applying for a licence of occupation at the site, which included asking for permission under district of bylaws to put a Shell Canada sign at the entrance to the site, replacing the current Methanex sign. The old Methanex site will be the base for Shell’s plans for its LNG project.

(This story has been updated and corrected after checking Christy Clark’s statement on LNG which at the council meeting was attributed, in part, to Apache)

There is increasing speculation in the financial and energy markets that Apache Corporation, the lead investor in KM LNG partners, who propose to build the Kitimat LNG project will announce the investment decision next week. If the decision is positive, and it is expected to be positive, that means the work underway at the Bish Cove site will ramp up to full construction.

The speculation is heightened by the fact that the two other partners in KM LNG, Encana and EOG, report the following morning. Rumours on the Kitimat announcement began after Encana delayed its announcement by a week from its normal time in early February. (At that time one energy market analyst who follows NWCEN on Twitter contacted this site to ask if there were rumours here. At that time, there were none)

Apache has scheduled a fourth quarter report conference call and webcast from its headquarters in Houston, Texas, Feb. 16, 2012, at 1 pm Central Time.

Apache has always said that the go/no-go decision on the Kitimat project would come in the first quarter of 2012.

The market speculation, however, may not be entirely good news. That’s because this morning, Andrew Potter, of CIBC World Markets, told a conference call that the rush to export liquified natural gas from northeastern BC and Alberta to Kitimat would mean building one or two large natural gas pipelines, instead of several small ones, to reach the terminal projects.

Reuters quoted Potter as saying: “There is no logic at all to seeing three to five facilities built with three to five independent pipelines,” he said.

At the moment, the just approved BC LNG project, a cooperative of 13 energy companies, plans to utilize the existing Pacific Northern Gas facilities which already serve northwestern British Columbia. The PNG pipeline roughly follows the communities it serves along Highway 16. KM LNG is in partnership with the Pacific Trails Pipeline project, which would take that pipeline across country.

The third LNG project, by Shell, is still in the planning stages, but it, too, would need pipeline capacity.

Although there is general support for the LNG projects in northwestern BC, and less controversy over natural gas pipelines, last fall, members of one Wet’suwet’en First Nation house blocked a survey crew for Apache and Pacific Trail Pipelines who were working near Smithers on that house’s traditional territory. The survey project was then stood down for the winter.

The fear among some First Nations leaders and environmentalists is that the Pacific Trails Pipeline could, intentionally or unintentionally, open the door to much more controversial Enbridge Northern Gateway bitumen pipeline, since the PTP and Northern Gateway could follow the same cross country route.

Whether or not Potter intended to stir up a hornet’s nest, he likely has. What appears to be logical and economic for a CIBC analyst in a glass and steel tower, one or two giant natural gas pipelines, is now likely going to be fed in to, so to speak, and amplify the controversy over the Northern Gateway pipeline.

Potter also told the conference call that together the natural gas projects do not have enough gas in the ground to support the export plans. That means, Potter said, more acquisitions and joint venture deals in the natural gas export sector. Bob Brackett of Bernstein Research, quoted by Alberta Oil magazine, also says there will likely be consolidation of Kitimat LNG projects, since there was similar consolidation in Australia.

Apache Corp. Fourth quarter reporter webcast page.

PNG System map — The existing Pacific Northern Gas Pipeline follows Highway 16 (PNG)

The Pacific Trails Pipeline (yellow and black) would go cross country to Kitimat. The existing PNG pipeline, seen in the above map, is marked in red on this map. (PTP)

The Northern Gateway Pipeline also goes cross country, on a similar route to the proposed Pacific Trails Pipeline. (Enbridge)

Category: Apache

Apache, Shell mark LNG progress at District of Kitimat council

CIBC analyst speculates on one big natural gas pipeline to Kitimat as rumours persist that Apache decision on KM LNG will come next week