Some further comments, this time from CFO Mike Mott on this week's BH land acquisition from The Financial Post ...
Why Canadian LNG projects are inching forward despite low prices, sagging interest
Canada’s nascent LNG export industry continues to inch forward, despite low commodity prices and speculation of sagging interest in the country’s natural gas resources.
Two projects — on the West Coast,
the other on the East Coast —
provided some good news this week for a Canadian liquefied natural gas industry that has been weakened over the past year as major companies slashed capex budgets and liquefied natural gas prices fell in tandem with crude oil prices over the past year.
On Monday, Exxon Mobil Corp. submitted an application to extend the permit of its project in British Columbia to 40 years from 25 years and strengthen its global competitiveness. Exxon and its affiliate Calgary-based Imperial Oil Ltd. plan to export up to 30 million tonnes per annum of LNG from either the Kitimat or Prince Rupert site in B.C.
Ottawa approved Exxon’s original application for the WCC LNG project in March 2014, but the company is seeking an extension to take advantage of government incentives to improve the project’s economics.
The group has also “entered into confidentiality agreements with several pipeline companies relating to services for delivery of gas to the LNG terminal,” Exxon said in a letter to the National Energy Board.
Exxon’s project is one of 20 proposed on the West Coast, but none has secured a final investment decision (FID) from backers.
A group led by Royal Shell Plc., received its 40-year permit in January, but deferred an FID decision till the end of the year, while a Petronas-backed consortium has a conditional FID in place but faces strident opposition on environmental grounds.
A group of 130 scientists sent a letter earlier this month to federal environment minister Catherine McKenna to reject the “flawed” Canadian Environmental Assessment Agency report on the Malaysian company’s $36-billion project.
The delays and setbacks are giving smaller projects such as Woodfibre LNG, part of Singapore-based RGE Pte., an opportunity to secure better deals with its contractors as new projects dry up in Western Canada.
Woodfibre secured key permits this month for its project near Squamish, B.C., including an environmental permit from Ottawa. The company will also seek a 40-year permit and hopes to lower its original cost of $1.8 billion, according to Byng Giraud, country manager at Woodfibre LNG Ltd.
“We need to lower capex,” Giraud said in an interview. “There are a lot of sharper pencils and lots more interested contractors and suppliers. Our team is feeling confident we can get the ($1.8 billion) number down.”
The company awarded engineering company KBR Inc. a multi-phased a front-end engineering and design contract this month, but has yet to seal long-term contracts with buyers.
“We will complete the optimization and we should have a better sense of offtakes by then, and that still gives us a chance of an FID this year. That’s still our target,” Giraud said.
While the West Coast gets much of the attention, smaller East Coast LNG projects are also moving forward.
Australia’s Liquefied Natural Gas Ltd. said Tuesday it’s purchasing additional land and opening an office in Halifax as it proceeds with its Bear Head LNG project in the Strait of Canso in Nova Scotia, after securing a key U.S. Department of Energy authorization for exports to countries that do not have a free trade agreement with the country.
“The acquisition of additional land is very important for our project. It enables us to increase the capacity of the LNG facility from a nominal eight million tonnes per annum (mtpa) up to 12 mtpa in 2024, as per our approval from the National Energy Board,’’ Maurice Brand, president of Bear Head LNG said in a statement.
Bear Head will acquire 72 acres of land near its existing 255-acre site, and will boost its plans enables to increase its LNG capacity from eight million tonnes per annum (mtpa) to 12 mtpa by 2024.
Michael Mott, chief financial officer of LNG Ltd. would not disclose an FID timeline, but said the company was looking to source supplies from either offshore East Coast, or from the Utica shale basins and may also tap TransCanada Corp.’s Mainline pipeline, connecting Western Canadian natural gas to the East Coast.
“We are working hard all of them hard – each of them have challenges but none of them are insurmountable,” said Mott.
Spot LNG prices in northeast Asia averaged US$4.460 per million British thermal units (MMBtu) for April, according to Platts, a provider of energy data, from US$18.11 two years ago.
While the LNG industry remains oversupplied, Mott says many Western Canadian producers are seeking markets for their stranded assets.
"At a macro level markets are oversupplied, but a micro level there are niche players who want to monetize now,” Mott said.
http://business.financialpost.com/n...ng-forward-despite-low-prices?__lsa=caad-b8a9
Go BH!
