By REBECCA PENTY and GERRIT DE VYNCK
Companies considering liquefied natural gas exports from
Canada to Asia need more assurances about costs before they
can proceed, said Greg Kist, who heads a proposal led by
Petroliam Nasional Bhd.
Were trying to get to a point of some level of
high degree of certainty, Kist, president of the
Pacific Northwest LNG consortium, said Tuesday at the
Bloomberg Canada Economic Summit. Foreign
capitals concerned about wage inflation, the tax environment
and about our ability
to actually deliver in a timely fashion on environment
Energy companies are competing to build gas shipping
terminals on coasts around the world to meet rising demand
for the fuel. Global LNG demand by 2030 is expected to almost
double 2012 consumption of about 250 million metric tons, as
Asian economies expand and shift from coal and nuclear
generation, according to an assessment last year by Ernst
There are 17 coastal LNG proposals to process a total of at
least 28 billion cubic feet/day of gas, consultants Bentek
Energy estimated last month. Among Canadian proposals by
companies including Royal Dutch Shell, Chevron and Petroliam
Nasional Bhd, no final decisions have been made. LNG exports
from British Columbia will reach 1.8 billion cubic feet/day
by 2020, according to Bentek.
An agreement with the British Columbia government signed this
month by Petroliam Nasional, the Malaysian state company
known as Petronas, will guarantee certainty around taxes and
other fees for the company and its partners required for them
to make a decision on whether to move ahead this year, Kist
British Columbia is trying to erase its debt with royalties
and fees it plans to charge the LNG industry. The province
introduced details of its tax in February and is scheduled to
seek approval from the legislature in the fall.
At stake is the development of vast stores of gas trapped in
shale formations across Western Canada. The Montney, which
straddles British Columbia and Alberta, is estimated to have
449 trillion cubic feet of marketable gas alone, enough to
supply Canada for 145 years at 2012 consumption levels,
according to a January study by regulators in the two
provinces and the National Energy Board.
Energy producers are seeking new buyers for their Canadian
gas after modern drilling technologies let companies unlock
previously inaccessible supplies from tight rock buried deep
underground across North America, flooding the
continents market with the fuel and depressing prices.
US imports of Canadian gas by pipeline fell 22% in 2013 from
five years earlier, according to data from the US Energy
Information Administration, as the largest consumer of
Canadian gas meets more of its own demand.
As competition intensifies with proposals in Australia and
Mozambique, Canada is poised to bring online at most two project
s by the end of the decade,
Jeff Lyons, a partner at Deloitte who runs the companys
mergers and acquisitions advisory business from Calgary, said
at the conference.
The LNG industrys long-term potential depends on taking
lessons from the oil sands and keeping project
cost escalation at bay,
said Dave Collyer, president of the Canadian Association of
Petroleum Producers, who also predicted there may be two
built over the same period.
Its about getting an industry off the
ground, Collyer said.