LNG Plans Tied to Supply, page-12

Comments from JG following the Moody's report I shared earlier this week.

Remember JG knows BH like no other and has optionality on sourcing and with almost all permits complete, support of local communities, no surprise his comments given focus on ideally sourcing from Marcellus. We'll know soon enough.

Nova Scotia LNG projects ‘face uncertainty’, report finds
A new report takes a pessimistic view of the viability of proposed liquefied natural gas projects in North America, including four in Nova Scotia.

Moody’s Investors Services issued a report this week that cited a drop in oil prices “causing LNG suppliers to curtail their budgets and will result in the cancellation of the vast majority of the almost 30 proposals in the U.S., 18 in Western Canada and four in Eastern Canada.”

In addition, Moody’s stated that the proposed projects in Nova Scotia “face uncertainty” as to whether they can obtain enough supply of gas.

“We believe that eastern Canadian projects are less likely to go forward because of the difficulty in importing sufficient gas supplies through the already gas-constrained New England region of the U.S.,” the report reads.

Indian company H-Energy is proposing a $3-billion LNG plant and export terminal in Melford, Guysborough County, while Nova Scotia LNG Inc. also has plans for a project in Guysborough County.

Pieridae Energy Canada of Calgary also wants to build an $8.3-billion venture at Goldboro. Australian firm Liquefied Natural Gas Ltd.’s Bear Head export facility outside Port Hawkesbury could have a capacity to move two million to four million tonnes per year.

If all four projects move forward, the total investment could exceed $15 billion.

But Moody’s warned that lower oil prices, as well as new supply from Australia and the United States, is pushing down prices for liquefied natural gas, forcing LNG suppliers to curtail their budgets.

However, despite some headwinds caused by the drop in oil prices, proponents of the proposed projects in Nova Scotia remain optimistic.

“Everybody is welcome to have their own opinions; I certainly don’t stand behind the opinions that Moody’s has placed,” said John Godbold, project director of Bear Head LNG.

“I do certainly think that larger companies are starting to look at where they’re going to invest their capital going forward. I certainly think that they have made some decisions to move away from oil, but when they move away from oil, in a lot of cases that I’m familiar with, they move from oil into gas.”

Godbold acknowledged that the sudden drop in the price of oil caused the firm to experience a “slight” market pause in terms of its project.

“But I think that, for us, has picked up since and we’re not really seeing from our market perspective a significant decline in interest,” he said, adding that the timeline for a final investment decision in 2016 and exporting gas in 2019 is still intact.

Godbold also said Bear Head is committed to obtaining a sufficient supply of gas.

“There’s a tremendous amount of discovery licences offshore Nova Scotia. We can also source gas from Western and Central Canada, as well as in the United States, particularly in the Marcellus shale.

“The issue really is how do you physically move that gas from the supply source to the LNG facility, and that really is one of Bear Head’s goals, is to make sure that that part of the value chain gets secured.”

Mark Brown, director of project development for Pieridae Energy, said it signed a 20-year deal with German utility E.ON to purchase half the 10 million tonnes of liquefied natural gas it hopes to produce each year.

“We believe that having a signed contract with a large European utility for 20 years is a very important step,” Brown said.

“We believe that we have pipeline access on our property; that’s another extremely important step.”

He said the company is in the midst of undertaking front-end engineering and design work and is headed toward a final investment decision by the end of the first quarter of 2016.

“When you look at a project of this scale, you’re looking at a very long-term horizon, and the short-term — or shorter-term — gyrations in commodity prices are only one factor in whether or not you look to pursue projects of this type.”

Andrew Parsons of H-Energy declined to comment on the specifics of the Moody’s report.

“We’re continuing to investigate the project and move forward,” he said.

http://thechronicleherald.ca/busine...-lng-projects-‘face-uncertainty’-report-finds

Go BH!