I think BG will probably wait to see if Petronas is going ahead...

BG Group pressing pause button on Prince Rupert LNG, citing market conditions

Vancouver Sun, Oct 29, 2014
http://www.vancouversun.com/business..._lsa=ce60-ff9d

B.C.'s LNG tax moves buoy Chevron’s interest

Globe & Mail , Vancouver, Nov 3, 2014 - http://www.theglobeandmail.com/repor...ticle21420331/

That's definitely good news, now all Chevron needs to do is find a buyer for Apache's stake.

Where is all this natural gas going to come from? All the articles focus on the port facilities, but is large scale drilling (and fracking?) going to be neccesary also? Does the gas extraction rely on the LNG facilities being built?

Aside from that, I hope this goes through. Not only for BC's economy, but I'd imagine LNG producers will be supporters of the Northern Gateway - the pipeline will be mutually beneficial.

Gas to come from shale from BC NE for the most part, depending on seasonality maybe Alberta (depends if there is geology to support a cheap storage site in BC).

That would probably be good news for Alberta then - I'd imagine most of that work would be based out of Grande Prairie, at least initially.

Fort St. John. Most of the back office work, geology, financing, and engineering is Alberta though.

That would be a slap in the face to British Columbia. Extract natural gas in NE BC, run the gas through pipelines in BC, then ship it from the west coast of BC, while the high paying corporate jobs are in Calgary. I hope the provincial government will be putting pressure on Petronas and others to have a large corporate presence in Vancouver. We're giving them a nice tax break only to have them outsource jobs to Alberta?

Not to worry :)

The serious LNG proposals are all consortiums of existing foreign energy companies... some with Canadian subsidiaries. They will (or have) incorporate new LNG companies to build and operate the plants, which for the most part will be HQ'd in Vancouver. Plus much of the engineering will be done in field offices in Vancouver and on site. Another good thing is that the financing for the plants is foreign, so LNG may bring much needed foreign investment into Canada's oil/gas industry, which has softened recently.

Almost all the jobs for construction and on-going operations/administration are BC based (although expect some fabrication to take place in Asia and it is unknown how many foreign workers will be involved). The provincial government will also get a boost in revenues from increased gas royalties :)

Of course Alberta will also benefit. Alberta is the centre of the nations energy industry. Engineering, designing/building/operating pipelines, drilling and servicing thousands of wells etc... Even Toronto will benefit through the financial aspects.

Most insiders are saying 3-4 plants are likely to be built. So the groups with existing experience and expertise with LNG infrastructure, shipping, relationships with large asian buyers and financing are most likely to proceed.

I'm just not sure about all that fracking...

Here is a snippet from the Pacific Northwest LNG (owned by Petronas 62%/Sinopec 15%/JAPEX 10%/Indian Oil 10%/PetroleumBRUNEI 3%) backgrounder:

I guess Saskatchewan, Newfoundland, and Nova Scotia have headquarters already?

Slap in the face? How about reality. If you want to be stuck with a small number of employees, having to pay relocation to recruit every single one, isolated from their professional networks, paying them more to maintain the same quality of life in Vancouver as in their existing lives then sure.

The large corporate support system is needed on the extraction side, and those jobs are already in Calgary. The pipeline office jobs are already in Calgary (and for Enbridge, Edmonton).

Having an office in Vancouver is neither here nor there. The corporate taxes will be collected in BC no matter what.

Building an active cluster that generates substantial uplift in Vancouver isn't really in the cards. For the lower mainland, this is purely a rentier venture.

So the BC government won't be expecting head offices in Vancouver?

Expecting, wanting, and being able to require is very different. Even favourable tax treatment is unenforceable, you don't need much to domicile a subsidiary company. Even in 2011, when BC accounted for 75% of Progress's production the head office was in Calgary. Look at this job listing: http://www.progressenergy.com/career...s/tax-manager/ the person responsible for planning PST and Carbon Tax planning will be in Calgary.

The cluster is just too big of a gravity well. There really isn't much advantage to the province except in a few office jobs and property tax to having the headquarters.

You are not entirely correct.

As previously mentioned - Yes, on the gas extraction/production/pipeline side the companies are already Alberta/Calgary - with most operations in the Fort St. John region - as it has been all along. But on the LNG side (new industry), the operations and administration jobs will be mostly BC/Vancouver.

Look at this job listing for a Senior Financial Analyst for Pacific Northwest LNG to be based in their Vancouver office ;)

http://pacificnorthwestlng.com/wp-co...st-Posting.pdf

Here is a BG group (UK based & partner with Spectra in another large LNG project) info sheet on their Canadian operations and contact info for their Vancouver office:

http://www.bg-group.com/229/where-we...nada/contacts/

Here is Spectra Energy (Houston based partner of BG Group for this project - http://www.spectraenergy.com/Operati...tation-System/), listing both a Vancouver and Calgary as regional offices for operations:

http://www.spectraenergy.com/Contact...ional-Offices/

Of course Chevron already has a large presence in Vancouver.

I don't think there will be a heavy corporate energy presence in Vancouver in the range of thousands and thousands like Calgary, as the subsidiaries do not require a large administrative office staff - about 130-150 as mentioned in the backgrounder for PNW. But I do understand that the CEO of Progress is relocating to Vancouver from Calgary to take over the reins at Pacific Northwest while still maintaining his role at Progress. I can see Petronas wanting to relocate their subsidiary Progress to Vancouver form Calgary eventually if the LNG plant is built, and there already is a large mining cluster there with all the geologists etc.

And yes, as you mentioned, the Lions share of gas extraction, pipeline construction/operation, LNG production & corporate activity will be in BC, so the taxes and royalties will be collected here regardless of where the HQ is, even if its mostly Texas and Asia in reality. Petronas executives from the head office are making regular trips to Vancouver and dealing directly with the BC government and regulatory agencies.

In any case, if the LNG plants are built - there will a definite impact on Vancouver on the corporate side (well over 1000 head office jobs plus spinoffs in legal and engineering, from very little LNG activity now). And Alberta will also get a boost on the gas extraction/exploration/pipeline side as it does not make sense to move (even part, other than Progress) of that cluster to Vancouver from Calgary. This could be good timing for Alberta too, with the looming slowdown in the oilsands (foreign money is drying up) and if these LNG plants get built here I'm sure we will need a few thousand workers from Alberta.

^ That 200 employees includes the Calgary office and Fort St. John. Is there a different backgrounder you are talking about than the link?

Nope. Pacific Northwest LNG does not currently have an office, nor any jobs offered in Calgary or Fort St. John - their affiliate Progress Energy does though on the gas extraction and supply side for the LNG plant - which is a separate operation. The transmission pipeline (for PNW) is to be built and operated by Transcanada, so there will be more Alberta (and BC - as TC recently expanded its Vancouver office) jobs there - again a separate operation.

Here is the link to the backgrounder. States that 130 'careers' will be offered at PNW LNGs Vancouver office, plus 330 jobs at its Prince Rupert plant/office once in production. Should the investment decision to go go forward be approved by head office in KL. Of course there will be many spin off support jobs around both locations too.

http://pacificnorthwestlng.com/wp-co...der_V.19.0.pdf

Ohhh, more signs of LNG progress! And boost for BC Hydro. This is for the (significant) ancillary power supply, not for gas compression.

BC Hydro and LNG Canada sign power deal

Nov 4 - Canadian Press - Victoria, BC
http://globalnews.ca/news/1653111/bc...gn-power-deal/



LNG Canada link for info on their partners/project and economic opportunities - http://lngcanada.ca/contact/

LNG Canada - started environmental assessment today.

Shell says LNG project in B.C. to cost up to $40-billion when complete

Financial Post - November 7, 2014

http://business.financialpost.com/20..._lsa=20d8-fa7b

Interesting tidbit from Vaughn Palmer's column from a few days ago regarding Royal Dutch Shell's recent global investor update conference call:

Still suspect that their FID will be sometime in 2016 though.

Yeah, many executives seem positive...but 'a bird in hand is worth two in the bush' :) Fingers crossed that a few get built and the fracking isn't as bad as some say... already increased drilling activity in the NE I understand - so another good sign.

It isn't ;)

There are issues with it for sure, but mostly not the hysterical nonsense seen in the media. And many of the criticisms levelled at it are in fact criticisms of the entire extraction process, not the actual fracking.

It's a hell of a lot cleaner than mining, at least.

Yeah, most of the issues in Pennsylvania were about water disposal, of which there were basically no rules due to super odd rules brought in under the republican troika in the mid 2000s. Companies were dropping off produced water full of radioactive and heavy metals at standard municipal water treatment plants that had no capacity to deal with them. In Canada, it is pretty normal to use a disposal well to get rid of particularly nasty waste from the process.

In places that aren't choke full of wells from earlier generations of gas and oil production fracking should be a bit safer. You don't have to worry about any migration except through your casing.

Still recall that Petronas was negative in terms of the BC LNG tax leading up to same. Now, it has been reported that they are satisfied with same. So be it.

Also note that Petronas, for whatever reason, still wants to go ahead with its FID next month in December. Was apprehensive of same due to the CEAA environmental certification, which may extend until next May. However, appears Petronas will receive its BC enviro certificate shortly.

And BC LNG minister Coleman met with Petronas in Kuala Lampur this past Tuesday on November 11. No word what transpired there.

Yet 3 days later, Japex, a 10% interest holder in Petronas proposed LNG facility and upstream NG assets, announced construction of its Japan Soma LNG import terminal.

Where will the LNG imports for same come from? Petronas BC LNG facility.

http://www.argusmedia.com/News/Article?id=948160

Japex would not commence construction without knowledge and confidence that FID will be issued by Petronas over here. My gut tells me that, in fact, Petronas will announce their FID next month. Stay tuned.

Thanks! Promising info. Import terminal to be located in Fukushima beside future 1200 MW gas generating facility.:tup:

^ There is enough LNG on the spot market right now that it shouldn't be a problem, but long term you would want to lock in.

Exxon becomes seventh member of B.C. LNG Alliance

VANCOUVER — The Globe and Mail - Nov 19, 2014
http://www.theglobeandmail.com/repor...ticle21656784/

Well, Petronas received their BC Environmental Assessment Certificate last week for its proposed LNG facility. Concurrently, Trans Canada Pipeline received its BCEAC last week as well for its connecting NG pipeline from NE BC to the west coast.

In any event some further news today from Petronas:

http://www.businessweek.com/news/201...e-lng-decision

Some questions for those in the know:

1. Do you think BC will set up a Norway-style sovereign wealth fund, or will it give away all the money to corporations like Alberta did? The PC's have eaten through the Alberta Heritage Fund and have gone into the red six years running, while schools and hospitals are crumbling. And if you criticize this, Albertans will cry "Unconstitutional! Hands off mah oil! NEP, NEP!"

2. If the loonie and oil prices continue to fall, will this be favourable or unfavourable for LNG exploration in BC?

3. Even with the office construction boom in downtown, does Vancouver risk running out of land to house these companies? Most of the downtown peninsula is condos, and I can't see land reclamation gaining widespread support.

4. Do you think a Horgan NDP government, or a Trudeau Liberal government, would be LNG-friendly?

Would say rather than giving all the money to corporations, the PCs have instead spent the money on the public, who want high services combined with low taxes = nothing put into the bank for the future.

I have been following the LNG developments fairly closely for a while now, but I am not employed by the energy industry. So my thoughts are:

1. BC should concentrate on paying off debt. The Libs have said that they intend to start a savings fund - and this is good and a small one should be started (annual deposits) subject to prevailing rates of return, but I hope reducing the debt and funding education/health is #1 priority.

2. The companies say that the plants are financially viable even if there is a further drop in oil prices (dragging down energy prices overall in Asia). As long as the NG gas is cheaper here than there. The LNG companies have room for the contract purchase prices in Asia to drop somewhat, but of course only they know exactly how much.

3. The LNG companies will have rather small offices in Vancouver (there is no ongoing exploration and likely little expansion) - they say 100-250 employees each. So, counting the spinoff jobs in engineering, financial and legal I guess I would hope there is enough demand for space to absorb what they are/will build DT over the next few years. That is if 3-4 plants go ahead.

4. Yes. The NDP have stated they are for an LNG industry, just so long as the natives and the communities affected (and all BC residents for that matter) benefit and not just the foreign companies. However, if a few plants go ahead the NDP don't have much hope of winning the next election... unless some kind of 'event' happens to disgrace the BC Libs. Plus, the agreements with producers would already be in place.

I think all Trudeau was concerned about was getting 'more' scientific evidence on fracking and its safety.. while that scares the energy crowd I think there is decent science behind it. We need energy.. and every source will have it negatives...the sources with lesser impact to the overall environment will be hard to pass up.

As was explained at a recent NAIOP event, much of the jobs are already taking place elsewhere: Calgary, London UK, etc., where the real skill-sets lie. Yes, some jobs will be placed in Vancouver, but not nearly as many as people would hope or like.

Is this the right way to go, keeping all the jobs in Calgary? I was hoping that the LNG boom would bring more head offices to Vancouver and increase overall wages, triggering a feedback loop--more VC and more head offices, more people coming here to make money.

Instead, I think we'll continue to be a city for people who have made money elsewhere. Pity.

Why are you so sure that the NDP will lose in 2017 if LNG exploration is successful? John Horgan is pro-energy and doesn't have the old-guard stink of Adrian Dix or Mike Farnworth. If he's smart enough to attack the BC Liberals' scandals (like BC Rail), cuts to MSP, Pharmacare, ICBC and Translink, plus their strong-arming of public school teachers, and if he can do this without looking like he's too close to the unions or environmentalists, The Liberals' victories are not exactly decisive; this is not like the prairies, where the Alberta PCs and Saskatchewan Party are literally invincible.

Anyway, this is not the politics subforums, so I will stop here.

Yupp, meanwhile high-tech expansion continues in Vancouver bringing real jobs to the city. Job creation in general is actually quite good in Vancouver and has been over the last few years, going off of the most recent Stats Can numbers. If LNG busts, which isn't entirely unlikely, it will hurt BC's future outlooks but I don't know if it will have as significant a negative impact on Vancouver. It would obviously be nice if LNG was a boon to the province, and created a lot of jobs in Vancouver, but if that isn't going to happen then at least one can take comfort in the fact that the city has not vested its future in LNG. Unlike what the government in Victoria seems to have done.

The thing about BC is, it is a lot more than just Vancouver.

Even if LNG adds only 500 to 1000 office jobs in Vancouver through 4 or 5 projects directly (which is still nothing to sneeze at) it will also add many spin off jobs in the metro-area.

The real winning locations will be the communities that the LNG facilities themselves will be located in, supplying many full time permanent good salary positions. And again, such industrial complexes will also add spin off jobs as well (blue and white collar).

It is annoying how people always only think about Vancouver.

And there are plenty of risky unstable industries that Vancouver has vested its future into, welcome to the real world. Vancouver just has the benefit (thanks to its size) of having a more diversified economy, but a crash in real-estate prices could devastate the city, much more than other locations in the province ;)

This is a good point. The benefits in Vancouver are minimal compared to the enormous benefits to some of the communities in the northern part of the province that currently have high unemployment rates. The decline in the forestry industry (as well as a few other resource based industries) has been hard in a lot of regions outside of Vancouver.

You don't notice it unless you leave the Lower Mainland, but a lot of people in BC are frustrated with how dominant Vancouver is in the province. I don't blame them. If you think about it, BC is one of the most unipolar provinces, and easily the most unipolar of the most populated provinces. The top 6 largest cities in BC are all in the Lower Mainland. Kelowna and Victoria don't even come close. Even in Ontario, where Toronto is "the centre of the known universe" :roll eyes: there is at least Ottawa to balance it out.

In a nutshell, who cares if it creates jobs in Vancouver... There are plenty of jobs being created there. What matters more is that jobs will be created in some of the smaller struggling communities.

First shoe has dropped
 

Some announcement, petronas has postponed their decision. Cost estimates coming in to high, LNG prices Falling with price of oil, this project is in trouble. If they have to make serious cost reductions could be a total resizing of the plant/pipeline and a couple year delay.:(

http://www.theglobeandmail.com/repor...ticle21923667/

I bet the projects have missed the window. Even before the drop in prices (LNG has traditionally been priced by energy value equivalent to oil) it was iffy BC could make the window. If I remember correctly the market should tighten up in the middle of the next decade again.

Well, firstly the current short-term oil price blip (6 months - 2 years) really does not have much to do with same. Petronas proposed LNG facility would not come on stream until 2019 in any event. That is another 4+ years.

Secondly, most LNG contracts linked to the JCC are oil-indexed yet they are typically S-Curve contracts. IOW, the price of oil has a basement of roughly $45 per barrel and a ceiling of $85 per barrel in these LNG contracts in order to protect and hedge both the seller and buyer.

And these are long-term 30+ year facilities. Not dependent upon todays short-term oil price flux.

Most LNG facilities are also contracted out for 80% - 90% of their capacity. Leaves another 10% - 20% available for spot sales based upon the then prevailing market.

In any event, none of the foregoing matters much to the proposed Petronas LNG facility as both Petronas and its partners are all end-users to boot. Unlike Shell or Chevron which are not-end users.

Petronas also intends to pool some of the production for its other existing contractual obligations.

I always assumed that a firm FID was not in the cards this December. Yet I certainly suspected that they would go for a soft FID. BTW, December, 2014 has always been the timeline date for their FID since the get go a few years back.

The reason? Petronas still requires its federal CEAA environment certificate. The 365 day clock stopped back in May (day 167) and only recently restarted. Means that the CEAA certificate will not be issued until sometime in April, 2015.

Cannot proceed with hard FID until that has been received. Albeit, it has been reported that they are quite confident that they will receive same based upon media reports. And since then they have satisfied the outstanding juvenile salmon issue with respect to Flora Bank (utilizing a 1.6 km suspension bridge instead of trestle requiring no dredging that would disturb the sensitive eelgrass beds on Flora Bank).

Petronas is also now apparently completely satisfied with the BC government with regards to all aspects under their control. Even the BC preem and LNG industry minister Coleman were mentioned in their press release today confirming same.

Another major current obstacle appears that Petronas wants the bidding contractors to sharpen their pencils after relatively recently receiving their bids.

In obvious reference to the delayed CEAA environmental certificate and construction bids higher than expected.

But this tidbit certainly stands out:

And will say one thing. Petronas has been quite aggressive from the get go - ever since they purchased Progress Energy.

Right now, I would wager that Petronas will make their FID sometime in mid-April, 2015. After they have received their CEAA certificate and finalized the financial terms with their contractors.

PS. When the head of Petronas late last week was quoted as saying that 75% of the checklist had been completed toward their FID, the other 25% obviously still remained outstanding.

Yup, certainly the delayed federal approval and a drop in oil prices give them reasons to see if they can't wring out a few more $$ from the province and demand more foreign workers. No doubt a drop in oil will have a downward pressure on all energy products and put all new large capital intensive projects on shaky ground.

Canada is a high cost environment (energy) for construction of energy infrastructure and it may take delayed projects and layoffs to bring down the rates.

China is expected to significantly ramp up LNG imports over the next ten years and surpass Japan as the world's largest importer, I have read that they have started construction on another 4-5 new LNG import terminals this year... somebody knows something... we'll see.

and on the heels of that....looks like oil will go down further. Canada may need the LNG terminals and the associated construction jobs more than ever....

Saudis escalate oil price war, sending crude slumping again

Dec 4, 2014 - Globe and Mail

http://www.theglobeandmail.com/repor...ticle21948473/

Yup, that's why I said 'small' offices in Vancouver. As explained before the LNG companies are consortiums of multi-national energy companies and will create (some have already) head offices in Vancouver for administration services. So, if 3-5 plants go ahead Vancouver would see ~2000+ jobs created downtown including spinoffs. Plus - thousands of jobs will be created during the years-long construction phase in Engineering etc. On the pipeline, gas exploration/drilling and supply end - stuff like engineering will mostly happen in Calgary where it is already established, but the majority of the (construction) jobs will still be here in BC.

The biggest impact will be the plant themselves, which will create thousands of ongoing production jobs in the northeast (export terminals) and northwest (NG supply) parts of the province.

I was so happy when I saw gas at 116.9 this morning, which I haven't seen since before the Arab Spring. Then I opened today's paper...

I wonder how much this will impact carbon tax revenues. Will Christy's dream of replacing the Patullo, or Dianne Watts' dream of LRT, be delayed also?

If anything it might raise revenues from the carbon tax. Lower prices in theory should increase demand and increased demand means more carbon tax collected. Worst case is it will be revenue neutral in all likelihood.

I'm sure this office will expand even more in the years to come :) This office is just gravy (10 jobs to start heh) and about time they finally figured it out... :)

National Energy Board to open office in Lower Mainland for community outreach and pipeline inspections


Vancouver Sun - Dec 4, 2014

http://www.vancouversun.com/news/Nat...394/story.html

So the drop in oil prices gives Petronas less cash to invest next year, so they want cheaper construction/engineeriing costs.

And, like mentioned, more foreign work:

Petronas wants engineering work for B.C. LNG venture to be shifted offshore

VANCOUVER — The Globe and Mail - Dec. 04 201

So , sounds most of the Canadian sourced engineering will be BC based, which is good news. No surprise about the majority of the materials being sourced overseas...cheaper and these are coastal plants so easy/cheap shipping. I still understand there will be some fabrication in North Van as well as on-site.

Also, looks like they will squeeze the Alberta gas well drillers and pipe layers to lower their prices.

A lot of things are changing in the Asian gas market that are pressuring the economics of BC LNG. On the plus side maybe the oil pipeline jobs will start looking better to Crusty as her LNG dreams go poof.

http://www.321energy.com/editorials/...sey120614.html

The huge gas export deals that Russia struck with China in May and October—with an agreed-upon price ranging from $8-10 per million British thermal units (mmBtu)—has likely capped investors’ expectations of Chinese natural gas prices at around $10-11 per mmBtu, a level which would make shipping natural gas from Canada to Asia uneconomic.

At these prices, not even British Columbia’s new Liquefied Natural Gas Income Tax Act—which has halved the post-payout tax rate to 3.5% and proposes reducing corporate income tax to 8% from 11%—can make Canadian natural gas globally competitive.

These tax credits are too little, too late, because Canada is years behind Australia, Russia, and Qatar’s gas projects. This means there’s just too much uncertainty about future profit margins to commit the vast amount of capital that will be needed to make Canadian LNG a reality.

Negative comments from Alberta. We must be getting close. ;)

I know, most of the comments from Alberta are hilarious and are dripping with a bizarre attitude of hoping for failure.

Ya. As if BCs LNG success comes at Calgary's expense.

I wouldn't say it is that. It is the BC attitude that this would be easy. In Alberta we have lived this for a long time, and know even vast resources are hard to develop. Outside of the business press the attitude in BC seems to have been 'we're in the money!'.

No doubt. Cannot get my head around same. Sound akin to some hard-core enviro Greens in the Metro Victoria area or some hard-left NDP types in east Vancouver.

Guess AB also has its fair share of enviro nutbars as well. Embarrassing for AB quite frankly.

To wit, the previous AB poster linked to an article that is wholly outta the mainstream and factually incorrect. I could respond to same but why bother. Hundreds of other global LNG articles out there, every day, that are also factually incorrect.

For example, Bill Gwozd of Ziff Energy Services of Calgary is renowned as a reputable NA natural gas specialist as well as an Asian LNG specialist who has prepared detailed reports on behalf of LNG proponents at the NEB. Very analytical stuff. Some of the best info out there. Not some poorly researched newspaper article.

Yet we get AB interlopers posting in this thread who deliberately attempt to both derail and mislead for some obvious nefarious purpose.

And, frankly, their ignorance and stupidity is bliss. Am not a type to ad hominem. But sometimes I have just gotta call em out.

Perhaps they are hard-core AB enviros? Perhaps they have some sort of strange grudge against BC for their perceived impressions against pipelines from AB to the coast?

Well they better think again. Just last week Insights West released an opinion poll of BCers and their attitudes of the Northern Gateway pipeline as well as KMs proposed twinning of the Trans Mountain pipeline.

Guess what? The majority of BCers do not oppose same. In fact, only 21% state that KMs TMP efinitely should not proceed. In that same vein, only 28% of BCers state that the NGP definitely should not proceed.

Again, some of the Albertans posting in this thread are either completely ignorant of LNG per se or have some other grudge against BC. Pity them and embarrassing for AB.