Another LNG shake up: Shell reported to be in talks to acquire BG Group

Shell logoNumerous media sources are saying that Royal Dutch Shell is in talks to acquire the BG Group.

Shell is developing the LNG Canada project in Kitimat,  while BG had been developing an LNG proposal for Prince Rupert.  BG announced last fall it was delaying further development of the Prince Rupert project due to uncertainty in the liquified natural gas market.

An initial report came from Bloomberg, which said:

Buying BG would be Shell’s largest acquisition since the $60.3-billion (U.S.) merger of its Dutch and U.K. parent companies in 2005, according to data compiled by Bloomberg. It would unite the U.K.’s first- and third-largest natural gas producers….BG posted a record $5-billion loss in the fourth quarter, mainly due to writing down the value of its Australian assets as commodity prices fell.

BBC News quotes the Wall Street Journal as matching the report.

A Shell spokesman told the BBC: “We’re not making any comment.”
No-one from BG Group was immediately available to confirm or deny the WSJ’s report.

Last fall, when BG put the Prince Rupert project on hold, with a financial investment decision postponed until 2019, the Financial Post, quoted BG executive chairman Andrew Gould as saying, “We’re not abandoning Prince Rupert, we’re pausing on Prince Rupert to see how the market evolves particularly in function of total supply that will come out of the U.S.”

At the time, analysts noted that unlike Shell, Chevron and Petronas, BG had no gas extraction assets in Canada. BG is a privatized spinoff of the once nationalized British Gas company in the UK.







Spectra Energy, BG Group propose natural gas pipeline to Prince Rupert, creating fourth NW BC LNG project

Spectra Energy Corp of Houston, Texas, today announced that the company has signed a Project Development Agreement with BG Group PLC, based in the United Kingdom, to jointly develop plans for a natural gas transportation system from northeast B.C. to serve BG Group’s potential liquefied natural gas (LNG) export facility in Prince Rupert.

The BG group signed an agreement last February with the Prince Rupert Port Authority  for a feasibility study to develop an LNG terminal at the port.

Spectra Energy BC project map
A map released by Spectra Energy shows the proposed pipeline project from the shale gas fields of northeastern BC to Prince Rupert (Spectra Energy)



A release from Spectra Energy and BG Groupsays each company will initially own a 50 per cent interest in the proposed transportation project. Spectra Energy will be responsible for construction and operation and BG Group has agreed to contract for all of the proposed capacity.

The approximately 850-kilometre, large diameter natural gas transportation system will begin in northeast B.C. and end at BG Group’s potential LNG export facility in Prince Rupert.

A fact sheet released by Spectra says the project would provide 50 to 60 permanent jobs on completion and about 4,000 jobs during construction.

BC Group logoThe Spectra BG project will be the fourth using BC’s strategic position on the Great Circle Route to Asia to export liquified natural gas. TransCanada has signed a deal with Shell for a pipeline, Coastal GasLink, that would initially carry up to 1.7-billion cubic feet a day of gas to the Shell Canada project at Kitimat The Pacific Trails pipeline, could carry more than 1-billion cubic feet a day to the KM LNG partners ship where Apache, EOG and Encana are building a terminal at Bish Cove, south of Kitimat. The fourth project, BC LNG, would use either existing pipelines or share one of the proposed Kitimat pipelines to produce LNG for customers at a barge-based floating terminal at what is sometimes called North Cove, between the KM LNG project at Bish Cove and the proposed Enbridge Northern Gateway project which would be close to the Rio Tinto Alcan smelter.

Spectra Energy LogoThe Spectra release says the new transportation system will be capable of transporting up to 4.2 billion cubic feet per day of natural gas. The project will connect with the Spectra Energy facility at Fort St. John, the centre of the still growing shale gas production and exploration in the northeastern BC.

Greg Ebel, president and chief executive officer, Spectra Energy says in the release:

We are excited to be partnering with BG Group, a recognized world leader in natural gas and more specifically, LNG. This project offers B.C. a unique opportunity to access new markets, strengthen its energy infrastructure, engage stakeholders in economic growth and job creation, and ultimately secure the province’s position as a competitive energy leader.

Furthermore, today’s announcement initiates our next wave of investment opportunity in B.C.  We are ideally positioned to create further value for our investors by leveraging surplus B.C. natural gas supplies and facilitating its export to high-demand markets in Asia. This, in turn, will provide multiple opportunities for further investment in our gathering and processing facilities in the province.

Doug Bloom president of Spectra Energy Transmission West adds in the release:

For more than half a century, Spectra Energy has been a part of communities in B.C. This project will build on our expertise and track record of delivering natural gas responsibly, listening to the needs of Aboriginal and local communities, and protecting the environment, as we help deliver on B.C.’s energy potential.
Working together with affected stakeholders and based on preliminary assessments of environmental, historical, cultural and constructability factors, early conceptual routes have been developed. Spectra Energy and BG Group will continue engaging with interested and affected stakeholders, including Aboriginal and local communities, environmental organizations and regulatory agencies, to further refine the project route.

Spectra Energy Fact Box
Fact box from Spectra Energy on the proposed pipeline to Prince Rupert (Spectra)

As is now common with proposed energy projects for northwestern British Colulmbia, Spectra  has set up a website for consultations Energy for BC.

Spectra says: “The new outreach initiative is designed to engage with stakeholders on the jobs, revenues and environmental benefits that natural gas can create in British Columbia.”
Spectra also makes the usual commitment to “spend the next several years closely conferring with stakeholders and working through the permitting process for the proposed transportation system.”

Spectra Energy Project Fact Sheet