By NATHAN VANDERKLIPPE
TORONTO -- A small British Columbia natural gas export
project has moved closer to selling Canadian energy to Asia
after a pair of international investors agreed to help backstop
the $485 million project.
Bermuda-based Golar LNG had already committed some of its
LNG vessels to BCLNG, the pint-sized export facility backed in
part by the Haisla First Nation near Kitimat, BC Now Golar,
alongside an unnamed Asian firm, has agreed to partner in the
project, with Golar taking a 25% ownership stake in a facility
that stands to be the first in Canada to send natural gas
across the Pacific.
The partners have also agreed to assist with financing for
the Haisla, who hold a 27.5% stake in the bid to export 600,000
to 700,000 metric tons a year of LNG.
Financing is "the biggest question you have on whether a
project is going to go ahead," Haisla Chief councillor Ellis
Ross said. The new partnerships mean "that one of the biggest
hurdles of the project to go ahead is just about complete."
The project is not yet ready to build.
Final engineering is required to pin down an accurate price
tag. Although the major authorizations are in place, smaller construction permits must still be
secured from federal and provincial authorities.
The Haisla are confident enough in the project, however,
that they anticipate committing to pipeline space by the end of
July, with an expected 20 year agreement worth some $ 1.94
A final investment decision could come by the 3Q. Overseas
construction of liquefaction
equipment, which will be floated into place by barge, could
begin this winter, with the Haisla predicting first gas
shipments in 2016.
The BCLNG project is small relative to the
giant projects envisioned by companies such as Shell, which is
planning to move 12 million tons a year.
Yet for British Columbia, the possibility of a start to an
LNG project, no matter the size, drew a cheery response. Rich
Coleman, the provincial energy minister, was quick to take
credit for what he said will be "billions" of dollars in coming
"You'll see over the next number of months that there were a
lot of investments sitting on the sidelines waiting for the
outcome of our election," he said. "I think [the Haisla deal]
is probably an early indicator."
The Haisla say the new partners are primarily motivated by
the compelling economics of selling BC natural gas, although
the recent re election of the provincial Liberal government
"gave everyone a bit of comfort."
Many observers, however, remain skeptical that many of the
half dozen proposed West Coast LNG operations will be built,
given the tremendous cost overruns that have afflicted such
projects in places like Australia. Global competition for LNG
sales is also strong, and overseas buyers have sought to
depress the high international prices that have stoked so much
interest in getting gas out of North America, where prices have
BCLNG has deals in place to sell all of its projected
output, but those deals use North American prices as a basis,
rather than the higher oil indexed prices. An inability to sign
lucrative deals has hampered others in the LNG race, including
Chevron, backed Kitimat LNG, a project that has already spent
hundreds of millions to prepare a site on Douglas Channel, but
has struggled with sales agreements.
BCLNG is a very different project, however, relying on
existing technologies that can be built offshore and then
sailed to British Columbia. It will also use an existing
"It's a shrewd opportunistic approach," said Jihad Traya,
associate director North American natural gas with global
consulting firm HIS. "They can take advantage of a small
opportunity. And mark my words; we'll see a little bit more on
the LPG side like this." LPG is a liquid natural gas by-product
whose price in Western Canada has been severely depressed. For
exporters, its advantage is that it can be shipped to the West
Coast by train on existing rail lines.
Dow Jones Newswires