LNG Canada breaks ground in Kitimat amid pessimism

Crews began preparation work at the site of LNG Canada last week, the proposed Kitimat facility that would liquefy natural gas from Northeast B.C. and ship it to Asia.

The company behind the $50-billion project told the Northern Sentinel newspaper that the initial clearing work would speed up construction should they decide to invest.

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But on a recent visit to Kitimat, Dawson Creek Chamber of Commerce executive director Kathleen Connolly saw little cause for optimism.

"Our chamber has sort of been cautiously optimistic for a long time (about LNG)," she said. "I think that what we heard repeatedly is that 'optimistic' has been taken out of that phrase and it's just 'cautious' now. I think that really was the takeaway."

Connolly shared her findings with local businesses last week. She won a spot on the Canadian Chamber of Commerce junket—sponsored by Encana, Suncor and Kinder Morgan—with an essay on resource development.

The four-day tour focused on the difficulties getting Canadian products to Asian markets—including gas, grain, timber and even sea urchins harvested on the coast. It included meetings with mining, seafood and agricultural trade groups, as well as the Canadian Association of Petroleum Producers. 

The buzz around LNG Canada was "much more subdued then it was even a year ago," she said.

"There are hotels that have been half-built and walked away from in Kitimat," she said.

LNG Canada would have major implications for the South Peace.

The LNG Canada partnership includes Mitsubishi, which is a member of the Cutbank Ridge partnership with Encana, one of the most active drillers in the South Peace area.

The North Peace, meanwhile, is banking on Petronas's Pacific NorthWest LNG, proposed near Prince Rupert.

From what Connolly heard, the LNG Canada proposal could be as far as 20 years out amid sagging LNG prices

The visit also drove home the difficulties with infrastructure.

"If we don't have modes of transport—that's pipelines, that's shipping, that's trucking—we're going to be in trouble," she said.

"We have the product, we have the customers, it's the in-between part that's a challenge and we need to figure it out."

LNG Canada plans to make a final investment decision on the project in 2016.


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