AltaGas shelves Douglas Channel LNG plans

'This is a tough energy cycle, but it will be back. We'll be back.'


Plans for a floating liquefied natural gas (LNG) export plant in Kitimat have been shelved, the first B.C. LNG project to be postponed indefinitely.

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AltaGas Inc., a partner in the proposed Douglas Channel LNG (DC LNG) plant, announced the decision to cancel the project in its fourth-quarter 2015 results, released Thursday.

The $500-million plant would have processed gas from the Northeast B.C. for shipment to Asia. It is the smallest of the 20 export projects proposed on the B.C. coast. 

"The DC LNG Consortium, comprised of AltaGas Idemitsu Joint Venture Limited Partnership (AIJVLP), EDF Trading Limited (EDTF) and EXMAR NV (EXMAR), announced today its decision to halt development of the DC LNG project due to adverse economic conditions and worsening global energy price levels."  

The company reported a net loss of $54 million in the fourth quarter of 2015, compared to income of $10 million in the fourth quarter of 2014. The project's website claimed Douglas Channel was "well positions to be an early exporter of LNG off the west coast of Canada," with an expected in-service date in late 2017. The plant would have connected to an existing gas pipeline and used a floating facility located near territory of the Haisla First Nation.  

There are around 20 LNG projects proposed on the B.C. coast, and the provincial government has consistently said that not all will go forward. 

Earlier this year, there was confusion over whether another Kitimat project, LNG Canada, was delaying a final investment decision. While lead partner Shell announced plans to postpone investment, LNG Canada itself said timelines had not changed. That project, which is much larger than Douglas Channel LNG, would process gas from the South Peace. 

AltaGas and Idemitsu Canada are proposing another LNG project, Triton LNG, which could be built in either Prince Rupert or Kitimat. The company is also building a chain of small LNG plants in Northeast B.C. for domestic markets, and is set to complete work on its $350 million Townsend gas processing plant north of Fort St. John this year. 

AltaGas is also seeking to build a propane export facility on Ridley Island near Prince Rupert.

John Lowe, executive vice president of AltaGas, said the project could quickly come off the shelf if prices improve. 

"This is a tough energy cycle, but it will be back. We'll be back."

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