LNG Canada has postponed the Final Investment Decision on the Kitimat project citing the “impact of global industry challenges.” The latest estimates said that the project would cost $40 billion.
The news release says that despite strong community support and regulatory approval, what LNG Canada called “the context of global industry challenges, including capital constraints” led to the decision. In other words, the continued low price of oil is constraining projects across the energy industry.
LNG Canada’s Joint Venture Participants Delay Timing of Final Investment Decision
Impact of global industry challenges, despite strong project fundamentals
Vancouver, British Columbia — Today, LNG Canada announces that its joint venture participants – Shell, PetroChina, Mitsubishi Corporation and Kogas – have decided to delay a final investment decision on LNG Canada that was planned for end 2016.
LNG Canada remains a promising opportunity – it has strong stakeholder and First Nations’ support, has achieved critical regulatory approvals, has important commercial and engineering contracts in place to design and build the project, and through its pipeline partner Coastal Gas Link, has received necessary environmental approvals and First Nations support along the pipeline right-of-way.
“Our project has benefitted from the overwhelming support of the BC Government, First Nations – in particular the Haisla, and the Kitimat community. We could not have advanced the project thus far without it. I can’t say enough about how valuable this support has been and how important it will be as we look at
a range of options to move the project forward towards a positive FID by the Joint Venture participants,” said Andy Calitz, CEO LNG Canada.
Through their efforts to build a strong LNG sector for Canada, and a critical, cleaner energy alternative for the world, the governments of British Columbia and Canada have developed sound fiscal and regulatory frameworks for success.
However, in the context of global industry challenges, including capital constraints, the LNG Canada Joint Venture participants have determined they need more time prior to taking a final investment decision. At this time, we cannot confirm when this decision will be made.
In the coming weeks, LNG Canada will continue key site preparation activities and work with its joint venture participants, partners, stakeholders and First Nations to define a revised path forward to FID.
LNG Canada Joint Venture Participants are Shell (50%), PetroChina (20%), Mitsubishi Corporation (15%)
and Kogas (15%).
Haisla Nation chief councillor Ellis Ross issued a statement that said:
Haisla Nation Council very firmly believes in the future of liquefied natural gas for the Kitimat Valley and Haisla territory. It is an industry which has the capacity to grow jobs, provide new training opportunities and provide a sustained quality of life for Haisla members. It’s worth remembering that LNG Canada is a relatively new project to the area, and decisions on major projects such as these can take a long time to reach.
Today’s decision was the second time the FID was postponed. Andy Caloz LNG Canada’s CEO was quoted by Bloomberg News as saying that the project hasn’t been canceled. It has all the necessary approvals from regulators in Canada and doesn’t require any more work in the country.
“The whole global LNG industry is in turmoil,” Calitz told a conference call, Bloomberg reported, adding that Western Canada still has advantages including its proximity to customers in Asia. “I’m confident that the Japanese market remains available to LNG Canada.”
The Shell-led LNG Canada project in Kitimat has received a facility permit from the B.C. Oil and Gas Commission (OGC), the company said Tuesday.
A news release from LNG Canada says the permit is one of the key permits required for the construction and operation of the proposed LNG Canada project.
LNG Canada is the first LNG project in British Columbia to receive this permit, which focuses on public and environmental safety, and specifies the requirements the project must comply with when designing, constructing and operating the proposed LNG export facility in Kitimat.
The news release warns “that while today’s announcement is an important step forward for LNG Canada, the project must ensure it is economically viable and meets several other significant milestones including finalizing engineering and cost estimates, supply of labour, and achieving other critical regulatory approvals before making a final investment decision.”
That means that Shell and its partners are still keeping a close eye on factors such as the continuing collapse of the price of oil on world markets, the volatile natural gas market in Asia and the slowdown in the economy in China.
The news release goes on to say:
“We have made excellent progress in the past two years, achieving a number of critical milestones,” said Andy Calitz, CEO of LNG Canada. “Receiving our LNG Facility Permit could not have been achieved without the important input we received from the Haisla Nation and the local community of Kitimat. We continue to progress our project and appreciate the ongoing support from First Nations, the local community and other stakeholders.”
“The OGC identified several conditions that must be met by LNG Canada to design, construct and operate the project,” says Calitz. “We have reviewed these conditions and are confident that we will meet these conditions as they are aligned with LNG Canada’s core safety values and commitment to protect the environment, the community and our workers.”
LNG Canada continues to develop a number of important plans to address public safety and minimize the effects on the environment and local community. For example, LNG Canada is working closely with local emergency response organizations, as well as leading safety experts, in the development of an emergency response framework for the proposed project.
“Safety is our first priority. Safety as it relates to people and the environment is embedded into the design and planning of our proposed facility, and will carry into the construction and operation phases of our project should the project go ahead,” said Andy Calitz.
Social and economic benefits from the LNG Canada project include local employment and procurement opportunities, federal, provincial and municipal government revenue and community investments. Since 2012, LNG Canada has distributed more than $1 million to community initiatives, such as emergency services, trades scholarships and community services. LNG Canada has also contributed more than $1.5 million in programs to build awareness and help provide training for trades careers in all industries, and particularly the emerging LNG industry.
LNG Canada is a joint venture company comprised of Shell Canada Energy (50%), an affiliate of Royal Dutch Shell plc, and affiliates of PetroChina (20%), Korea Gas Corporation (15%) and Mitsubishi Corporation (15%). The joint venture is proposing to build an LNG export facility in Kitimat that initially consists of two LNG processing units referred to as “trains,” each with the capacity to produce 6.5 million tonnes per annum of LNG annually, with an option to expand the project in the future to four trains.
LNG Canada has called a news conference in Vancouver early Wednesday morning to “announce a project milestone.”
BC Premier Christy Clark, BC LNG Minister Rich Coleman, LNG Canada executives and delegations from the joint venture partners, Shell Canada Energy, Diamond LNG Canada, an (“affiliate” of Mitsubishi), Korea Gas Corporation and Phoenix Energy (an “affiliate” of PetroChina) will be present at a downtown hotel.
LNG Canada says it will now continue to gather information and complete studies in support of developing our Environmental Assessment Application.
The company intends submit to the Environmental Assessment Application to the the B.C. EAO later this year.
LNG Canada will hold its next public meeting, an “LNG Demonstration and Presentation” on March 6, 2014 at the Mount Elizabeth Theatre starting at 6 p.m. The company says the event is to “to share information and answer questions about liquefied natural gas (LNG).” Starting at 7 pm there will be a a live demonstration using LNG to explain the science behind liquefaction and the properties of LNG.
For more information about the project’s EA process, www.eao.gov.bc.ca and look for our project under the “Proposed EAs” sections.
The other partners in the LNG Canada project are Diamond LNG Canada, an (“affiliate” of Mitsubishi), Korea Gas Corporation and Phoenix Energy (an “affiliate” of PetroChina).
LNG Canada says it wants to be “first out of the gate” in the competitive race to send BC’s liquified natural gas to Asian markets.
The company held a well attended open house at the Kitimat Rod and Gun on November 27, with the usual array of posters and experts, to mark the beginning of the environmental assessment process for what is formally called the “LNG Canada Export Terminal Project.:
The LNG Canada Export Project is a partnership of Shell,Canada Energy, Diamond LNG Canada, an (“affiliate” of Mitsubishi), Korea Gas Corporation and Phoenix Energy (an “affiliate” of PetroChina) filed a draft application for an Environmental Assessment Certificate with the BC Environmental Assessment Office and Canadian Environmental Assessment Agency on November 8. The 30-day public comment period on the draft Application Information Requirements started on November 13, 2013 and end on December 13, 2013.
The extensive documentation can be downloaded in PDF format from the BCEAO site. The documents can also be viewed at the Kitimat and Terrace Public Libraries and the LNG Canada office in Kitimat at the old Methanex site.
“What we want to be able to do is actually to provide information in a way that we can provide a lot of conversation with the community, so we can really have a dialogue, to give them a place where they know than go to get answers. We do believe that we can be the best project in British Columbia, the only way we can do that is if we have the support of the community,” LNG Canada’s Susannah Pierce told reporters.
“We would like to be first out of the gate. This is a competitive industry and we’re not just competing in terms of providing Canadian gas to the Asian markets, we’re competing with everyone else for the opportunity to deliver product to market.”
The application says that the all-important Financial Investment Decision will likely be “made mid-decade followed by 4-5 years of construction with commissioning of the first phase to follow.”
The first phase would have a first phase of about 12 million tonnes a year of LNG, with another MTPA (million tonnes per anum) in “one or two subsequent phases.”
Federal, provincial and municipal governments or agencies, First Nations and the general public have the ability to comment on the proposal.
An aerial photo map included in the application shows the footprint of the proposed LNG Canada operation. Although the LNG Canada project is based at the old Methanex plant, the map shows that the LNG plant will take up a much larger area than the original. The old Methanex access road would be widened parallel to the Rio Tinto Alcan smelter and a Cyrogenic Pipeline would cross the Kitimat River estuary to the marine terminal.
The scope of the project includes one possibly controversial item: “Onsite power generation,” where natural gas would be used to power the cooling equipment to turn the gas into LNG.
The assessment will also look the natural gas receiving and production facility; “a marine terminal able to accomodate two LNG carriers each with capacity up to 265,000 cubic metres (approximately 122,000 DWT) and a materials offloading area; supporting infrastructure and the construction facilities.
The environmental assessment will examine air quality, green house gas management, the acoustic environment (the noise created by the project), soil, vegetation, wildlife, freshwater, esturine fish and habitat, marine resources including fish and fish habitat and marine mammals, water and ground water quality.
The economic and social assessment includes infrastructure, land use, “visual quality,” odour, marine transportation and use, community health and well being, archaeological heritage and human health.
The assessment process will also “assess potential cumulative economic, health, social and heritage effects from the Project…interacting cumulatively with similar effects of past, present and future projects activities. The current table of projects to be considered for cumulative effects include the Rio Tinto Alcan Aluminum Smelter and Modernization Project, the Kitimat LNG and Douglas LNG terminals, the possible Enbridge Northern Gateway porject, the new use for the old Methanex and Cenovus operations, the operations at the Sand Hill, the former Moon Bay and current MK Bay Marinas.
Projects further away include LNG and other projects and associated pipelines at Prince Rupert, including expansion of the current ports and the redevelopment of Watson Island. Cruise ship and BC ferry operations will be only considered where they impact the shipping routes. Any forestry operations will also only be considered where they impact the project.
Updated to fix typos, including spelling of Feldhoff
The Shell LNG Canada project officially opened its Information Centre at the old Methanex site offices in Kitimat on Tuesday, June 25, 2013. About 180 people attended the event, which included a barbeque, kids activities with face painting, a tour of the office/information centre and a chance to community to meet the LNG Canada project team. Shell’s partners in LNG Canada are Mitsubishi, PetroChina and Korea’s Kogas.
Samuel “Sammy” Robinson, Chief Jassee of the Haisla Nation, offered an opening prayer and welcoming remarks on behalf of the Haisla for the project in Haisla traditional territory (Robin Rowland)
LNG Canada project Director Rob Seeley makes opening remarks. “We are confident that the Shell-led LNG Canada Project Team has the combined expertise to safely and successfully design and operate this project. We thank you for welcoming us to your community and look forward to working together to develop a project that we can all benefit from and be proud of.” (Robin Rowland)
LNG Canada’s Craig Jackson explains shipping issues to Kitimat residents touring the LNG Canada open house. (Robin Rowland)
LNG Canada’s Seiichi Tsurumi speaks to Kitimat residents touring the information centre. (Robin Rowland)
Kitimat residents touring the information centre watch a video on LNG tankers. (Robin Rowland)
The LNG Canada information centre and office building during the open house. (Robin Rowland)
PetroChina went on a multi-billion dollar natural gas buying spree Thursday, Dec. 13, 2012, picking up shares in operations in both Canada and Australia.
In Canada, Encana, one of the partners in the Kitimat LNG project, signed a joint venture arrangement with Phoenix Duvernay Gas, a wholly owned subsidiary of PetroChina, to explore and develop Encana’s extensive undeveloped Duvernay naturgal gas holdings in west-central Alberta. According to an Encana news release, Phoenix will gain a non-controlling 49.9 per cent interest in Encana’s approximately 445,000 acres in the Duvernay play for total consideration of C$2.18 billion.
Hours earlier, PetroChina agreed to pay $1.63 billion for BHP Billiton’s 10 per cent share for an Australian LNG development, known as Browse, that like the KM LNG project in Kitimat had been delayed by the uncertainty in the LNG market. The other partners in the Browse are Woodside Petroleum, Chevron Corporation, Royal Dutch Shell and BP.
Encana says the PetroChina/Phoenix investment is significant for the Duvernay, which Encana describes as a “liquids rich play” with potential for natural gas, butane and oi development.
THE Encana release quotes Randy Eresman, Encana President & CEO. “A transaction of this magnitude keeps us on track to create a more diversified commodity portfolio and maintain our balance sheet strength. It is a strong endorsement of Encana’s position as a reliable long term partner.”
The release also quotes Zhiming Li, Phoenix’s President & Chief Executive Officer, as saying The Duvernay project will combine Phoenix’s integrated upstream and downstream capabilities and financial resources with Encana’s proven resource play hub expertise. This joint venture will build a foundation for the successful development of the Duvernay play and help to diversify our business portfolio. Encana is our ideal long term partner for the development of our future natural gas business.”
The company goes on to say:
Having entered into several joint venture transactions in 2012, these types of arrangements have become an important part of Encana’s business model. Joint ventures help the Company to achieve a highly efficient deployment of capital throughout its vast exploration and development asset base as Encana transitions to a more diversified portfolio of commodities.
Significantly, the Encana release, while talking about LNG development and export, it makes no mention of the Kitimat KM LNG project, instead looking south to Louisiana.
These relationships have the potential to increase natural gas demand as a number of Encana’s partners are actively exploring opportunities to export liquefied natural gas (LNG), while some are industrial consumers looking to transition to natural gas as fuel for their operations. An example is a recent agreement with Nucor Energy Holdings (Nucor) which is designed to support Nucor’s increased use of natural gas for its facilities, such as its direct reduced iron facility currently under construction in Convent, Louisiana.
Reports say PetroChina paid a premium price for the Australian Browse natural gas project, anticipating that if it comes on stream, as planned in 2018, the current glut in the natural gas market will have eased and once again LNG will be a seller’s market.
The Browse project at James Price Point on the north-western coast of Australia is facing similar opposition to projects in British Columbia, including some of the site’s aboriginal landowners and from some environmental groups.
The opposition to the Australian Browse project, according to reports, reflects a split in the local aboriginal community. While Wikipedia says that 60 per cent of the local aboriginal people voted in favour of the project, there is also fierce opposition, according to the Australian Mining Journal, which reported in 2009:
[A] number of Traditional Owners, as part of the Save The Kimberley organisation, issued a statement which said there is not unanimous support for this site.
In a signed declaration, Traditional Owners have affirmed that they do not support the imposition of an industrial site on their country and will legally challenge the authenticity of any agreements entered into by the Kimberley Land Council supporting the proposal.
The statement said that “…many local Indigenous people are disgusted by the apparent abandonment of the established process put in place by the previous State government. Concerns include the threats made earlier in the year by the Premier regarding compulsory acquisition of land and the pre-empting of the Joint State and Commonwealth environmental and cultural assessment process via announcements by Woodside and the Premier.”
A company called Woodside Petroleum, which leads the LNG venture wants to build the “greenfield” onshore terminal but is facing competition from Shell’s proposed offshore floating LNG “given the land access challenges and soaring development costs in Australia,” even though Shell also has a stake in the Browse project.
Shell Canada and its Asian partners have chosen TransCanada Corporation to design, build, own and operate the proposed natural gas pipline to Kitimat, now called the Coastal GasLink project.
The estimated $4-billion pipeline will transport natural gas from the Montney gas-producing region near Dawson Creek, in northeastern British Columbia to the proposed natural gas export facility at Kitimat, BC.
The LNG Canada project is a joint venture led by Shell, with partners Korea Gas Corporation, Mitsubishi Corporation and PetroChina Company Limited.
In the release, Russ Girling, TransCanada president and CEO says:
Our team has the expertise to design, build and safely operate pipeline systems. We look forward to having open and meaningful discussions with Aboriginal communities and key stakeholder groups, including local residents, elected officials and the Government of British Columbia, where we will listen to feedback, build on the positive and seek to address any potential concerns. Coastal GasLink will add value to British Columbians, particularly Aboriginals and communities along the conceptual route, by creating real jobs, making direct investments in communities during construction and providing economic value for years to come.
TransCanada says the company has approximately 24,000 kilometres of pipelines in operation in western Canada including 240 kilometres of pipelines in service in northeast BC. Another 125 kilometres of proposed additions either already having received regulatory approval or currently undergoing regulatory review. These pipelines form an integral and growing part of TransCanada’s NOVA Gas Transmission Ltd. (NGTL) System, which brings natural gas from Alberta to British Columbia to a hub near Vanderhoof.
Girling said in the release:
TransCanada is a leading energy infrastructure company in North America, with a 60-year history of safe, efficient and reliable operation of our assets and a respect for the communities and environments where we operate. We appreciate the confidence that Shell and its partners have placed in us to build, own and operate this natural gas pipeline in British Columbia. We will work collaboratively with them, Aboriginals and other stakeholders as we launch into the initial phases of consultation and regulatory review.
In it’s release TransCanada describes the potential Coastal GasLink pipeline project this way:
Receipt point: Near Dawson Creek, BC
Delivery point: Proposed LNG Canada facility near Kitimat, BC
Product: Natural gas from BC’s abundant Montney, Horn River and Cordova basins and elsewhere from the Western Canada Sedimentary Basin
Length of route: Approximately 700 kilometres of large diameter pipe
Initial pipeline capacity: In excess of 1.7 billion cubic feet of gas per day
Anticipated jobs: Estimated 2000-2500 direct construction jobs over a 2- during construction 3 year construction period
Estimated cost: Detailed cost information will be developed following completion of project scoping and planning. The current estimate is approximately $4 billion
Regulatory process: Applications for required regulatory approvals are expected to be made through applicable BC provincial and Canadian federal processes
Estimated in-service date: Toward the end of the decade, subject to regulatory and corporate approvals
TransCanada says: “The final pipeline route will take into consideration Aboriginal and stakeholder input, the environment, archaeological and cultural values, land use compatibility, safety, constructability and economics.:
At this point there are two possible routes for the pipeline west of Vanderhoof. One route would be to follow the existing Pacific Northern Gas route that roughly parallels Highway 16. The second possibility is a cross-country route, which may lead to controversy. The Pacific Trails Pipeline, which would feed the KM LNG partners (Apache, Encana and EOG) goes across the mountains from Smithers. While the PTP project has the approval of most First Nations in the regions, Apache and PTP are still in negotiations with some Wet’suwet’en houses over portions where the pipeline would cross the traditional territory of the houses. The much more controversial Enbridge Northern Gateway pipeline follows a similar cross-country route and faces much stiffer opposition than the Pacific Trails Pipeline, due to the content of that pipeline, mainly diluted bitumen and because, critics say, Pacific Trails managed to secure the most geologically stable cross country route earlier in this decade when the pipeline was originally planned to import, not export, natural gas.
TransCanada says the Coast Gaslink pipeline will also have an interconnection with the existing Nova Gas (NGTL System and the liquid NIT) trading hub operated by TransCanada. The company says:
A proposed contractual extension of TransCanada’s NGTL System using capacity on the Coastal GasLink pipeline, to a point near the community of Vanderhoof, BC, will allow NGTL to offer delivery service to its shippers interested in gas transmission service to interconnecting natural gas pipelines serving the West Coast. NGTL expects to elicit interest in and commitments for such service through an open season process in late 2012.
That means that the Asian customers will not be just dependent on natural gas from northeast British Columbia. Instead the “molecules” of natural gas from Alberta will join the stream heading to Kitimat. “Open season” in the energy industry is an auction where potential customers or transporters bid for use the pipeline.
In the release Girling says:
The potential Coastal GasLink pipeline project will allow British Columbians, and all Canadians, to benefit from the responsible development of valuable natural gas resources and will provide access to new markets for that gas. The project will also create substantial employment opportunities for local, skilled labourers and businesses as part of our construction team,” concluded Girling. “We know the value and benefits that strong relationships in British Columbia can bring to this project and we look forward to deepening those ties as our extensive pipeline network grows to meet market and customer needs.
TransCanada Corp. is no stranger to controversy, the company is the main proponent of the Keystone XL pipeline from Alberta to the US Gulf Coast. Portions of that pipeline were put on hold by President Barack Obama pending further review and Keystone has become a hot issue in the current American presidential election.
Shell Canada has confirmed that, with three partners, it is developing a giant proposed liquified natural gas export facility at Kitimat.
The project could see up to 12 million tonnes of LNG exported from Kitimat each year. What the companies are now calling LNG Canada would be built in two “trains” or stages, with each producing six million tonnes. A news release from Shell says there is an option to expand the project beyond the 12 million tonne capacity.
The announcement made international news. The Chicago Tribune said Tuesday. “Kitimat… looks set to become a major supply hub for the Pacific Rim.”
Shell’s partners, Korea Gas Corporation, Mitsubishi Corporation, and PetroChina Company Limited will work to export natural gas, mostly from northeastern British Columbia, combining the “four companies’ extensive development experience, technical depth, financial strength and access to markets required to be the leading LNG developer in Canada.”
The four companies did not say how much money is involved in the project. Reports in the Japanese media said the project could cost as much as $12 billion US.
Shell holds a 40 per cent working interest. The partners KOGAS, Mitsubishi and PetroChina each hold a 20 per cent working interest.
“Our combined expertise, and our focus on technological innovation in delivering safe and environmentally sound LNG projects around the globe, ensures that our LNG Canada project would be well-suited to deliver long-term value for British Columbia and increase access to new export markets for Canada,” says Jose-Alberto Lima, Vice President LNG Americas, Shell Energy Resources Company in a news release.
The proposed LNG Canada project includes the design, construction and operation of a gas liquefaction plant and facilities for the storage and export of liquefied natural gas (LNG), including marine off-loading facilities and shipping. LNG Canada can create significant economic benefit for the province, First Nations, local communities and the region. Such a project can create thousands of jobs during construction and hundreds of full-time, permanent jobs during operations. Such a significant energy project can also bring indirect economic development opportunities to the region.
Shell and PetroChina say:
A decision to move this project into development would be taken after conducting necessary engineering, environmental and stakeholder engagement work with start up around the end of the decade, pending regulatory approvals and investment decisions.
The approval process will begin with a formal consultation process with First Nations and local community residents.
“This project will contribute to a further strengthening of trade relationships between China and Canada and will help China use clean burning natural gas to fuel its economic growth,” Bo Qiliang, Vice President, PetroChina, said in the release.
“We are sitting on the doorstep of a very fast-growing market that actually wants to come to Canada because they see it as long-term stability and a secure source of supply,” Shell Canada president Lorraine Mitchelmore said. “We are now, for the first time in the natural gas industry, very competitive with other countries like Australia.”
Kitimat Mayor Joanne Monaghan said her and the District Council have been working on the project for sometime. “Council have been aware of it and have rolled up their sleeves for almost a year and half to two years,” the mayor said.
One aspect was making sure Kitimat is ready for the project, Monaghan said: “We had to make sure there were hospital facilities, rental facilities, that we had housing available. We were getting all our inventories together. Now we know and now we can go full blast ahead.”
Monaghan hopes that eventually Kitimat will return its population peak of between 10,000 and 15,000 residents. (Since the closure of the Eurocan craft paper mill in 2010, Kitimat’s population dropped to around 8,000 but that number has been growing with the LNG projects and the Rio Tinto Alcan Kitimat Modernization Project, even though the KMP project will eventually mean fewer jobs at the aluminum smelter).
“If they have the five to seven thousand construction workers they’re looking for, they will bring in workers from all over BC, probably all over Canada,” Monaghan said.
Most of the natural gas supply will come from the booming Horn River and Montney shale gas formations in northeastern British Columbia.
Reports say that LNG Canada will work with a third party that would build and probably own a pipeline from the northeast to the coat.
The profit picture comes from the fact that LNG prices in Asia, based on a proportion of the world price of oil, are much higher than the price of natural gas in North America, where the shale gas boom has driven gas prices to a record low.
The price boom in Asia could be a windfall for British Columbia, which could receive up to $600 billion in natural gas royalties over the next 25 years.
There is also fierce international competition to send LNG to Asia. The major energy companies are investing heavily in projects in Australia, while traditional suppliers like Qatar and Russia are ramping up their marketing efforts to Asia.
As of this week, Japan began closing down the last of its nuclear electrical generation capacity. After the March 11, 2011 earthquake, that country became a major customer for current and future liquified natural gas projects.
Since the earthquake last year, two other projects in Kitimat have proceeded. The Kitimat LNG project, a partnership called KM LNG led by Apache Corporation, Encana Corp, and EOG Resources plan to start up a Kitimat LNG plant in 2015, at Bish Cove with an initial capacity of five million tonnes a year. That project has been approved by the National Energy Board but is still waiting for a final go ahead from the boards of the three corporations, expected now in the fourth quarter of 2012.
A second project, called BC LNG, owned by the Haisla Nation in partnership with Houston-based LNG Partners, will act as broker and exporter for other LNG companies, facilitating exports to Asia from a barge based facility at North Cove, with the first shipment expected in 2014 or 2015.
There are also reports that Malaysia’s Petronas in partnership with Calgary-based Progress Energy Resources Corp., which have major stakes in B.C. shale are also looking for a possible LNG terminal on the west coast. As well, Talisman Energy, Nexen and Imperial Oil are also looking at west coast projects.
Chinese investment in Canada’s energy sector could move to a new level if PetroChina wins a bid to build the controversial Northern Gateway oil sands pipeline.
The largest of China’s three state-controlled oil companies has expressed an interest in building the $5.5-billion project across the northern Canadian Rockies and is considering purchasing an equity stake, said Pat Daniel, president and CEO of proponent Enbridge Inc.
“They have made the point to us that they are very qualified in building pipelines, and we will take that into consideration when we are looking for contractors,” Mr. Daniel said in an interview. “It’s an open bid process. They are a very big organization, they build a lot of pipelines, and they would love to be involved from what they have told me.”
To speculate at this time about who might be contracted to build a project that has yet to receive regulatory approval is premature in the extreme.
Construction of Northern Gateway would be through an open bid process, and to be successful any bid would have to meet Enbridge’s stringent requirements and meet all federal and provincial employment standards. Enbridge is firmly committed to hiring as many local people as possible to build and operate Northern Gateway and is not anticipating bringing in overseas workers to construct or operate the project.
“British Columbians and Albertans deserve to know that providing local employment is a top priority for Enbridge Northern Gateway,” said Janet Holder, Executive Vice-President of Western Access and the senior executive in charge of the pipeline project. “Ensuring a local workforce is skilled and work-ready in order to fully participate in, and benefit from, the economic benefits associated with the project is a priority for Northern Gateway.”
The Financial Post report says the Chinese company stands a good chance of presenting a competitive bid, but it is likely that Chinese construction of a major Canadian energy project would increase anxiety among Canadians already worried about China’s expanding ownership of Canadian resources.
While there is a labour shortage in the energy sector at the moment, the Financial Post says Canada could use could use a hand from an experienced Chinese oil company, but turning over construction to PetroChina could mean fewer construction jobs in B.C., “where Northern Gateway is a hard sell because of perceptions the province would bear all the risk of a spill, while the rewards would go primarily to Alberta’s oil sands sector.”
The Enbridge statement also says:
Northern Gateway will shape its hiring and procurement policies so that contractors and sub-contractors working on the pipeline and the proposed marine terminal maximize local hiring and training opportunities, particularly for Aboriginal people – who are expected to comprise approximately 15% of regional construction employment.
An education and training fund of $1.5 million has recently been developed by Northern Gateway. The fund will support flexible community based training associated with the pipeline construction.