Further insights from GV challenging the view that BH has a "slightly better chance than a snowball in hell" ...
Greg Vesey says he’s been trying to connect the dots to figure out how someone would consider an oil pipeline an essential part of a liquefied natural gas project, specifically the one his company is proposing to build at the Strait of Canso.
A recent article about the demise of the Energy East pipeline, which would have delivered Alberta oil across the country to the Irving Oil refinery in Saint John, N.B., quoted an energy expert who suggested the loss of the pipeline would mean the Bear Head LNG project had a slightly better chance than a snowball in hell of ever being built. (see
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Vesey, CEO of both the parent company, Liquefied Natural Gas Ltd., and of Bear Head LNG, said Tuesday in a telephone interview his company is very optimistic about its chances of building the LNG export facility at Bear Head, Richmond County.
The size of the company has nothing to do with the prospects for the Nova Scotia plant, he said. Liquefied Natural Gas Ltd. and Bear Head LNG like to maintain lean operations and so the plan for Bear Head is “project financed,” which helps with that goal.
“The best example I can give you is Magnolia (sister project to Bear Head, located in Lake Charles, La.), where we’ve got a partner lined up to provide the equity, which is US$1.5 billion. We’ve got bankers lined up to provide the debt, so our side … is a little bit of technology, and a little bit of marketing and administration. We try to be fairly small and not spend a lot of money but try and focus on the projects,” Vesey said.
He believes the best source of natural gas for Bear Head comes from Western Canada. Vesey figures investors from all over the world have invested in Western Canada for the energy resources and now it looks like a lot of investors whose only outlet was to take LNG and ship it to Asia are dumping their gas into the North American market at a spot where it doesn’t need it, thus driving down the price of natural gas.
“Let’s bring that gas east to Bear Head,” Vesey enthused.
“So, if you think about bringing gas to Nova Scotia, Bear Head would be the big player,” he said. “It’s about 1.4 billion cubic feet a day of feed stock for that one plant, probably have in the neighbourhood of about another 200 million bcf a day for gas into Nova Scotia in general.”
If Bear Head can facilitate bringing natural gas east, Vesey said, it’s not just to the benefit of Bear Head LNG, it’s good for the province.
“Which I think is meaningful because when I talked to some of the traders on my last trip there, they think it is going to have the highest gas in the world in Nova Scotia,” he said. “What we can do to help that is extremely important.”
The liquefied natural gas company hopes to use the TransCanada Corp. main natural gas pipeline from the west.
Vesey indicated that by the year 2020 the TransCanada mainline is going to be mostly empty, which would be advantageous for Bear Head because that pipeline could become a “bullet line.”
“What that means is you can ship the gas along without having to do a lot of intermittent trading along the way. The example I would give is, folks talk about Canadian gas coming down to the Gulf coast to facilities here. Physically that is very possible but that’s a heck of a lot of trading to get it there, probably 12 to 15 trading points between Canada and the Gulf of Mexico. And it’s a huge slug of gas, not a little parcel like trades are used to dealing with,” he explained.
The last part of the equation, Vesey said, is finding the most efficient way to get gas to Bear Head, using existing pipelines and reducing the amount of pipeline construction to do the job.
Vesey admitted many of the pipeline company executives in the west are a little shell-shocked right now. They were counting on getting the big Energy East project completed and now some of them are going to have to write “some fairly substantial cheques.”
The option for shipping LNG to Asia wasn’t as beneficial as many thought. Vesey said the East Coast offers a more efficient option because most of the pipelines are already built. Bear Head LNG’s goal is to construct the LNG facility; it’s just a couple of long-term toll agreements to get the supply of gas to the facility.
“Eastern Canada is a very interesting market to Europe, actually quicker to South America because of the Gulf Coast, . . . and if you use the Suez Canal, it’s quicker to the western half of Asia. It doesn’t limit you in any regard,” Vesey said.
“You can’t rush it. If you rush in the energy industry you make mistakes, so one of the things I’ve told the team is ‘this is a great project, the site is absolutely world class for LNG, the business environment in Nova Scotia is outstanding, the community, all the stars are lining up and we’ve just got to be patient.’”
By the year 2022, Vesey said, experts are predicting that demand for LNG will exceed supply, and when that happens it’s going to be for a long time because there isn’t enough new supply coming on the market.
Except for Bear Head LNG, if everything goes as planned.
http://thechronicleherald.ca/business/1516281-bear-head-remains-viable-says-ceo
Go BH!
(via the Bullet Line)
The site that God build for LNG!
