Quote:
Originally Posted by WarrenC12
You have some pretty rose coloured glasses on. LNG in BC is dead until the price comes back. AltaGAS officially cancelled their project today.
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The global LNG biz is a very (and I mean VERY) complex matter - likely 99.9% of folk don't understand same.
To wit, you are inferring LNG "spot prices" I assume? Not really relevant for the global LNG majors as their LNG facilities are typically 80% - 90% contracted out and JCC-linked.
And then you have various LNG biz models:
1. Fully integrated (natural gas supply/dedicated pipeline/terminal) model, whose ownership is also primarily comprised of "off-takers". In terms of BC that in includes:
The Petronas consortium as well as the Royal Dutch Shell consortium. For example, Petronas either utilizes the NG internally or utilizes same for other selling commitments while the rest of the partners are "off-takers". The current LNG "spot price" as well as the JCC-linked price is not really relevant to these guys. Furthermore, they are looking at a 40-year life cycle for the 2021 - 2061 time frame.
2. Fully integrated model, whose current ownership is comprised primarily of "sellers". In terms of BC, that includes:
Chevron/Woodside, ExxonMobil/Imperial Oil, and CNOOC/Inpex.
3. Tolling model, whereby an LNG facility purchases NG at the local hub (AECO Hub/Henry Hub) and charges a $1.50+ liquefaction fee to "off-take" counter-party, which also is required to provide LNG tanker for "pick-up". In BC, that includes the Alta Gas proposal, as well as about 15/20 of the other BC LNG proposals. Considerable drawbacks therein.
BTW, the statements in my previous post are all factually correct. I will re-iterate that with all of the facts at hand, I have a 99% confidence level that within the next 60-days (after final CEAA enviro certification is granted by late March/early April), shovels will be in the ground on the project. I have no doubt in that regard. At all.
To further corroborate my position, in mid-December the CEO of Petronas held a press conference in Kuala Lumpur and brought up the topic of the PNW LNG facility confirming:
1. That their conditional FID (of June, 2015) is awaiting final CEAA enviro certification "within next few months" and that they are confident that will receive same as it is their final hurdle;
2. That they are fully committed to the project;
3. That they have apparently been frustrated at the delays in receipt of CEAA certification;
4. That they will proceed with construction upon receipt of same and (after ~5-year build-out) they will begin LNG production in 2021. (which is also the year when analysts expect that global LNG markets "will re-balance itself".
• Video Link
PS. I have also a 99% confidence level as well that the Royal Dutch Shell consortium will proceed with FID toward the end of this year. Why? Similar reasons to Petronas and:
1. Last year, Royal Dutch Shell global CEO van Beurden categorically stated that the LNG Canada project was their highest global LNG priority;
2. Internally, LNG Canada has run their numbers and the "fundamentals are really sound"... and "remain positive when compared to competing LNG projects in areas like the Gulf of Mexico and Africa and Australia";
3. The Shell consortium was anticipated to make FID by June, 2016 but has deferred same to late, 2016 in order to integrate the recently acquired BG Group. Frankly, the BG Group does have some "dog" LNG assets;
4. And finally, with a 40-year export license recently granted by the NEB to the consortium, they are required to commence production by 2021/2022 or the licence will be revoked. With a December, 2016 FID and 5+ year build-out... fits in nicely time-wise for a 2021-2022 completion date.
But that's it for now. 15/20 LNG proposals in BC are just backed by promoters and will likely never see the light of day. The others - ExxonMobil/Imperial Oil, Chevron/Woodside, and CNNOC (Nexen)/Inpex will likely issue FIDs in the 2018 - 2020 time frame with initial production in the mid-2020 time-frame. But that's still years away.