Although no final investment decisions were made in B.C.’s anticipated liquefied natural gas (LNG) export business before the close of 2014, Apache did announce that it would be selling its 50 per cent stake in the Kitimat LNG project to the Australian LNG company Woodside Petroleum Ltd., a deal that could very well have very a significant impact Northern Rockies Regional Municipality.
The agreement is expected to be finalized in the coming weeks, but once it closes it will have Chevron — one of the biggest oil companies in the world — paired equally with Woodside, one of Australia’s biggest LNG producers, on the export project. Apache sold their stake, along with a 13 per cent share of the Wheatstone LNG project in Western Australia, for a total of $3.7billion.
Zoher Meratla, a B.C.-based LNG consultant, said that this was a positive move for the province’s nascent LNG industry.
“Woodside has international experience in LNG, it has credibility with purchasers, and it’s a major player,” he said. “I can tell you firsthand that Apache is a world class company, they simply don’t have the LNG credibility that Woodside has.”
He said that when it came to buyers, that credibility is “critical.”
“Purchasers want to deal with somebody who has done it before, who has the experience in delivering a project on schedule, meeting delivery dates and things like this,” said Meratla.
Kitimat LNG was once throught to be the front runner to make a final investment decision, but the project faced a major stumbling block when Apache was forced to sell its shares by activist investors last summer.
The project has been approved by the National Energy Board to export up to 24 million tonnes of LNG per year, from a land-based facility on Bish Cove, near the town of Kitimat.
This project means a lot for the small town of Fort Nelson, in the Northern Rockies Regional Municipality (NRRM), since that is where most of the gas for the project would come from.
“We’ve been waiting three years,” said Fort Nelson mayor Bill Streeper. “We have had 30 businesses close in Fort Nelson in the last two years.” With Canfor closing two lumber mills in the town several years ago, LNG is all the municipality has to look forward to. “We are a one-industry town and that industry is natural gas,” said Streeper.
“If you go back to some of the original announcements, we should have been producing this year, plants completed,” he added. “Well, we all know that’s not going to happen.”
The mayor said he was sad to see Apache go, and described the town’s relationship with them as second to none. “They do care about communities. We had many meetings on the effect that Apache would have on our community, Apache wanted our opinions,” he said, adding that although he hasn’t met with them yet, he expects the same kind of relationship with Woodside in the future.
Streeper agreed that the Australian company’s interest in B.C. LNG was as a good sign. “They’ve got billions and billions of dollars behind them, and they’ve got the people that know what they’re doing, and there’s something they see, which is going to be good for our community.”
Apache announced in August that they were looking to get out of the LNG business altogether, citing pressure from hedge fund group Jana Partners LLC. Since then, they’ve continued to sell off oil and gas assets in Louisiana and the Anadarko Basin.
Woodside has made other moves on LNG in B.C., filing another export facility project description with regulators in August of 2014. This facility would be located at Grassy Point, north of Prince Rupert. That project's fate is unknown.