Two Japanese buyers have agreed to buy Canadian gas: LNG Canada CEO

The $40-billion LNG Canada project is not the only large liquefied natural gas project proposed in the world, several of which involve some of the same partners involved in the Canadian project.

It’s expected final investment decisions on some of those other projects could come in 2019.

article continues below

But the Kitimat project is “the most competitively advantaged project” of all of them, LNG Canada CEO Andy Calitz told a group of more than 200 businessmen and women at a Greater Vancouver Board of Trade event Friday, October 26.

A little over three weeks ago, Royal Dutch Shell and its four partners announced a final investment decision on the $40-billion project.

One week later, Tokyo Gas and Toho-Gas announced they will be buying LNG from Mitsubishi Corp., which owns a 15% stake in the LNG Canada project, Calitz said. Mitsubishi owns some upstream natural gas assets through the Cutbank Ridge Partnership.

“The significance of that moment in some ways got lost, because for the first time Canadian gas has been sold to Asia,” Calitz said.

Earlier this week, on October 22, Calitz was at an industry conference in Nagoya, Japan, attended by all 44 LNG importing nations and 19 exporting nations.

“The most talked about project was the project called LNG Canada here, in your British Columbia,” Calitz said.

Getting the project to approval was an eight-year process that hit several hurdles, including a major downturn in oil, gas and LNG prices that put the project in a holding pattern.

“Indeed, if we had known all the difficulties at the outset of this project, I think we might have reconsidered,” said LNG Canada’s commercial director Rob Dakers.

Ultimately, Dakers said the NDP government’s decision to scrap the previously Liberal government’s special LNG taxes and approve a new “competitive tax structure” was what allowed the partners to pull the trigger and sanction the project.

There has been some confusion over the LNG Canada capital costs. It wasn’t clear at first whether the $40 billion figure is for full build out of a four-train LNG plant, natural gas pipeline and upstream gas development, or the two-train project that is currently planned.

Susannah Pierce, LNG Canada’s external affairs director, said the $40 billion capital cost is for a two-train plant. Trains are the processing units that chill natural gas into liquid form.

So, if the project is later expanded to four trains, that will mean a further investment of several billion dollars more.

The two-train LNG plant in Kitimat alone will cost about $18 billion. Not all of that money will be spent in B.C., however. About 65% of the total spending of $40 billion will be in Canada, Caltiz said.

A good chunk of the spending outside of Canada will be for the prefabricated LNG modules, which will be built in China and Southeast Asia.

In 2021, “the largest fabricated steel structures in Canadian history will arrive in Kitimat,” said LNG Canada executive project director Steve Corbin.

“At that time, we will have probably in the region of about 4,000 already working on our site,” Corbin said.

In addition to the Kitimat plant, $6.2 billion will be spent on the 670-kilometre Coastal GasLink pipeline, which will bring natural gas from Northeast B.C. to Kitimat.

In total, the LNG Canada plant, pipeline and upstream gas development will employ 10,000 workers at peak construction.

Caltiz said he’s confident the company can find those workers in Canada without having to hire foreign temporary workers. Once the project is complete, a total of about 1,000 permanent jobs will be created.

One potential hurdle that the project may still face is regulatory. Based on a jurisdictional challenge by Michael Sawyer, who also successfully challenged a pipeline associated with the now defunct Pacific NorthWest LNG projects, the National Energy Board will now consider whether or not the pipeline should have been a reviewable project.

The NEB was not involved in the gas pipeline’s approval because it typically only reviews interprovincial pipelines, whereas the Coastal GasLink would be built entirely in B.C.

But it will tie into a natural gas network that is integrated with other gathering systems and pipelines. The NEB therefore agreed earlier this week to consider Sawyer’s challenge.

If the NEB decides that it is a reviewable project, that could cause a delay, since it would have to conduct an environmental and regulatory review.

Even if it decides that the project is not reviewable, that decision could be challenged in court. Asked if LNG Canada is concerned that could delay the project, Pierce said: “This is something Coastal GasLink is looking at very closely.

“With any project you never remove all risk. I believe Coastal GasLink will see it through the process and is a mitigated risk. But I think they’re comfortable in their position that it’s still a project that’s still a project, which is under provincial jurisdiction.”

© Copyright 2018 Alaska Highway News

Read more from the Business in Vancouver

Comments

NOTE: To post a comment you must have an account with at least one of the following services: Disqus, Facebook, Twitter, Google+ You may then login using your account credentials for that service. If you do not already have an account you may register a new profile with Disqus by first clicking the "Post as" button and then the link: "Don't have one? Register a new profile".

The Alaska Highway News welcomes your opinions and comments. We do not allow personal attacks, offensive language or unsubstantiated allegations. We reserve the right to edit comments for length, style, legality and taste and reproduce them in print, electronic or otherwise. For further information, please contact the editor or publisher, or see our Terms and Conditions.

comments powered by Disqus
Sign Up for our Newsletter!

Popular News

Lowest Gas Prices in Chetwynd, Dawson Creek, Fort Nelson, Fort St John, Tumbler Ridge
British Columbia Gas Prices provided by GasBuddy.com

Community Event Calendar


Find out what's happening in your community and submit your own local events.