Proposed West Coast BC LNG Terminals

[SOSS]

This may be a naive question but what will happen to the other 90,000 barrels per day? Does it get piped back to the source? Put into tailing ponds? Turn into green-house gases? Magically disappear?

"Funded by Black, a newspaper magnate who has 170 papers across North America, the seven-month project was undertaken by engineering firm Hatch Ltd. It lays out plans for the proposed Kitimat Clean complex, which would be able to process 550,000 barrels of bitumen into 460,000 barrels of refined fuel each day."

[MalcolmTucker]

Oh, refining changes the physical volumes because of chemistry and burning some of the oil as fuel. A bunch of stuff comes out:

Source: http://www.ilocis.org/documents/chpt78e.htm

Before that you have to upgrade though.

I would guess that the plan is to use a similar process to the North West Upgrader.


Source:

You can move solid remnants that may be hard to market up the chain, but every bit extra at the high end requires more equipment and energy input, which is what North West does.

The NGLs would be shipped back to as diluent by pipeline if it makes sense with prices at the time, or can be containerized for shipment off the continent, or special carrier (train or ship).

[craneSpotter]

Originally Posted by SOSS

This may be a naive question but what will happen to the other 90,000 barrels per day? Does it get piped back to the source? Put into tailing ponds? Turn into green-house gases? Magically disappear?

"Funded by Black, a newspaper magnate who has 170 papers across North America, the seven-month project was undertaken by engineering firm Hatch Ltd. It lays out plans for the proposed Kitimat Clean complex, which would be able to process 550,000 barrels of bitumen into 460,000 barrels of refined fuel each day."

I would guess petcoke. They say oilsands bitumen is ~15-16% by weight petroleum coke (high in sulphur). Also, there should be some asphalt too.

Petroleum Coke is Not Unique to Canadian Crude

Cokers have been an integral unit of many refineries since the 1930s, well before the introduction of Canadian crude sourced from oil sands. The vast majority of crude oils in the world will produce petcoke if they are refined in a refinery equipped with a coker, although the amount produced will vary. Arab Medium will yield approximately eight percent by weight as petcoke, while heavier crude oils from Venezuela, Mexico, or Alberta yield approximately twice as much petcoke.

http://education.afpm.org/refining/petroleum-coke/

[craneSpotter]

here is some info/news on the other proposed (massive) BC refinery. This one backed by Mexican conglomerate Grupo Salinas:

Pacific Future Energy appoints two former national chiefs to advisory positions

Vancouver Sun - Dec 10, 2014
http://www.vancouversun.com/business...026/story.html

Vancouver-based Pacific Future Energy has appointed two former First Nations chiefs to its team.

The company is one of two with ambitious proposals to limit damage from a massive oil spill by refining oilsands bitumen on the B.C. coast and then shipping the lighter, refined products, like gasoline, to buyers in Asia.

The proponents say that in a tanker accident, bitumen sinks to the ocean floor and is thus harder to contain and collect.

Pacific Future, which plans to build and run a $10-billion refinery, faces considerable skepticism, but aims to process 220,000 barrels of bitumen a day in its first module.

Company website:

http://www.pacificfutureenergy.com

Engineering Partner Simeco Milano

http://www.simecomilano.it

[MalcolmTucker]

Depends on the process, but you can upgrade coke and asphalt to product, or burn it for heat value (what Long Lake does), it just takes a lot of energy input (as hydrogen and heat) and special equipment to upgrade it, and if you can sell it as coke, your netback on the upgrading narrows, and it is better to sell as coke.

Kitimat Clean sounds like it would have four associated pipelines, natural gas (though the local grid is probably good), CO2, diluent, and dilbit/synbit.

[milomilo]

Originally Posted by craneSpotter

here is some info/news on the other proposed (massive) BC refinery. This one backed by Mexican conglomerate Grupo Salinas:

Pacific Future Energy appoints two former national chiefs to advisory positions

Vancouver Sun - Dec 10, 2014
http://www.vancouversun.com/business...026/story.html



Company website:

http://www.pacificfutureenergy.com

Engineering Partner Simeco Milano

http://www.simecomilano.it

This sounds like a win-win for AB and BC, LNG and oil sands proponents would do well to cooperate as it appears they are highly complimentary.

[MalcolmTucker]

Refining is an awful business (lots of excess worldwide capacity, hyper competitive, where integrated players have incentives to squeeze others out) where Canada has no comparative advantage, and game theory works out that most nations would prefer to build their own than tie into someone else's (since then they can access the fairly liquid market for crude instead of products, instead of being tied to ours).

A business where both your inputs and outputs trade as commodities you are at the whim of price cycles doubly so. For ease of trading the spread trades directly: http://www.cmegroup.com/trading/ener...p-futures.html A more detailed part is here: http://www.howardweil.com/docs/Repor...NINGReport.pdf

[lubicon]

Originally Posted by craneSpotter

True. I guess it was more that it was it Petronas subsidiary Progress Energy that was drilling up a storm. The liquids probably pay for the drilling!

True and true/almost true. 'Was drilling up a storm' is worth noting as they have recently cut back or are about to cut back on their drilling like pretty much everyone else it seems.

[craneSpotter]

Chevron has found a new partner for the Kitimat LNG project. Apache had announced earlier in the year it was pulling out of LNG worldwide.

Apache sells Kitimat LNG stake to Woodside
Dec 15, 2014 - Globe and Mail

http://www.theglobeandmail.com/repor...ticle22083406/

Woodside Petroleum Ltd., Australia’s second-biggest oil and natural gas producer, agreed to buy Apache Corp.’s stake in the Wheatstone and Kitimat liquefied natural gas projects and associated reserves for $2.75-billion (U.S.).

“I am confident that Woodside’s participation will have a positive impact in seeing these world-class LNG facilities through to first production,” G. Steven Farris, chairman and chief executive officer of Houston-based Apache, said in a statement. Apache will also get an estimated $1-billion for spending on the projects from June 30 until closing.

[SOSS]

Originally Posted by MalcolmTucker

Oh, refining changes the physical volumes because of chemistry and burning some of the oil as fuel. A bunch of stuff comes out:

Source: http://www.ilocis.org/documents/chpt78e.htm

Before that you have to upgrade though.

I would guess that the plan is to use a similar process to the North West Upgrader.


Source:

You can move solid remnants that may be hard to market up the chain, but every bit extra at the high end requires more equipment and energy input, which is what North West does.

The NGLs would be shipped back to as diluent by pipeline if it makes sense with prices at the time, or can be containerized for shipment off the continent, or special carrier (train or ship).

What a dirty yet remarkable process.

[Metro-One]

And yet that process creates byproducts used in the manufacturing of thousands of products, and daily activities.

[Stingray2004]

As for the "delayed" FID on Petronas' proposed LNG facility:

Japan’s MGC Joins Pacific Northwest LNG
19 Dec 2014, 8.49 am GMT

Kyoto, 19 December (Argus) — Japanese chemicals firm Mitsubishi Gas Chemical (MGC) is joining upstream firm Japex in the proposed 12mn t/yr Pacific Northwest LNG project in Canada despite an expected project delay.

MGC said today it has set up a wholly-owned subsidiary MGC Montney Holdings to acquire a 10pc share in Japex Montney, which owns a 10pc stake in the British Columbia project led by Malaysia's state-owned oil firm Petronas. The C$92mn ($79mn) acquisition will allow MGC to take 120,000 t/yr of LNG from the project once the deal is completed.

It plans to use the imported LNG from Canada as feedstock for its Japanese chemicals plants in an effort to improve its competitiveness. MGC has been working with Japanese upstream firms, including Japex, in natural gas exploration for the last 50 years. It produces natural gas onshore and offshore Niigata on Japan's west coast, using it as chemicals feedstock at its Niigata plant.

Japex's stake in Japex Montney falls to 45pc, as does Japan's state-owned energy agency Jogmec, following MGC's entry. Jogmec bought its stake in March last year in return for around ÂĄ22bn ($185mn) of equity financing, with the project helping Japan secure stable LNG supplies and cut its fuel purchasing costs.

MGC is committing to Pacific Northwest LNG despite Petronas delaying making a final investment decision on the potential C$36bn project from an original end-2014 target.

http://www.argusmedia.com/News/Article?id=966170

[Denscity]

Its a good sign that other international companies are still joining in.

[Stingray2004]

Originally Posted by MalcolmTucker

Refining is an awful business (lots of excess worldwide capacity, hyper competitive, where integrated players have incentives to squeeze others out) where Canada has no comparative advantage, and game theory works out that most nations would prefer to build their own than tie into someone else's (since then they can access the fairly liquid market for crude instead of products, instead of being tied to ours).

Totally agree. Something akin to 3 proposed refineries on BC`s NW coast right now. Frankly, don`t pay any attention to same. Just promoters without any expertise in same, no financial pockets, no energy major involved, etc.

The last refinery built in North America was in Alberta back in the early 1980`s IIRC. For an obvious reason.

Oil, of any grade, is typically sold to a refinery. And those refineries are situate near, or in close proximity to, major population centres.

These NW BC refinery proposals are just major pipe dreams. That`s all. Not worth their weight in salt.

[craneSpotter]

^Agree! Why on earth would Black be putting his own money into studies?! And I think the ofher guys are from the Tech world... 😳

The feds have restarted their enviro review for PNW LNG.

[MalcolmTucker]

For refining, one is Mexico money and one is Saudi money iirc. Both areas with recently built heavy oil refineries so natural partners. But yeah, I think there is a higher chance of one or maybe two of the large LNG plants being built in this cycle (the small ones are so small potatoes that they count regionally for jobs but overall impact is small).

[Denscity]

Just saw in the news today that any LNG pipeline in BC will be banned by the government from being converted to transport oil or diluted bitumen. This came up during environmental assessments and talks with First Nations.

[Alpine]

I've been watching gas prices slink below $1.20/L for the first time since the Arab Spring protests, and below $1/L for the first time since the financial crisis.

Should I be panicking about the potential fizzle of the LNG boom, ancillary job growth in Vancouver, and debt-busting sovereign wealth fund?

[craneSpotter]

Originally Posted by Alpine

I've been watching gas prices slink below $1.20/L for the first time since the Arab Spring protests, and below $1/L for the first time since the financial crisis.

Should I be panicking about the potential fizzle of the LNG boom, ancillary job growth in Vancouver, and debt-busting sovereign wealth fund?

Not sure why you would 'panic'? Unless you are one of the few doing prep work right now. We really have nothing to lose - the BC economy is supposed to post decent growth over the next few years in any event. Housing costs in the LM could maybe come down a bit tho haha.

The plants would be built for market conditions in 2019-2021. That market is anyone's guess...just depends if the LNG plants can sign enough supply contracts now, at the right price. I guess it's a good thing the price of NG in North America has gone down along with oil, as that is a main LNG input cost.

recent story on the very subject you ask - the industry still thinks 3 plants will be built by 2020:

http://www.cbc.ca/news/canada/britis...tudy-1.2892505

Cheers.

[craneSpotter]

well, an update from Exxon. Their time-line was submitted along with their application to the BC Environmental Assessment office. Hope to have their environmental certificate by 2016, and go from there. Makes me think that a positive FID from Petronas this year is more likely.

Exxon plans to spend up to $25-billion to export B.C. LNG

VANCOUVER — The Globe and Mail - Sunday, Jan. 11 2015

http://www.theglobeandmail.com/repor...ticle22406569/

Exxon Mobil Corp. plans to spend up to $25-billion on a B.C. terminal to export liquefied natural gas, saying it has the global expertise to make the Canadian project viable.

The U.S. energy giant is positioning itself to make up ground on Malaysia’s state-owned Petronas, which is widely viewed by industry experts as the front-runner among 18 entrants in the race to export LNG from the West Coast. But Petronas decided last month to delay its decision on whether to forge ahead with its Pacific NorthWest LNG joint venture near Prince Rupert, citing the need to decrease anticipated construction costs, overcome environmental hurdles and consult further with First Nations.

Irving, Tex.-based Exxon Mobil and its Canadian unit, Imperial Oil Ltd., disclosed the strategy for the first phase of their West Coast Canada LNG project, or WCC LNG, in a 141-page report.

“Exxon Mobil Corp. has more than 40 years of LNG project development experience, with interests in liquefaction capacity of approximately 65 million tonnes per year in Qatar, Indonesia and Papua New Guinea,” according to the report filed by WCC LNG to the B.C. Environmental Assessment Office.

WCC LNG hopes to secure a provincial environmental assessment certificate by the end of 2016. Engineering studies are slated to be completed in 2017. That would clear the way for WCC LNG to make a final investment decision in 2017 on constructing an export terminal at Tuck Inlet, near the community of Prince Rupert in northwestern British Columbia...

...“British Columbia’s advantages for participating in the global trade of LNG include low ambient temperatures on the north coast, proximity to international markets where natural gas is in high demand and extensive gas resources from the Western Canadian Sedimentary Basin to support the export industry,” WCC LNG said in its study. “Asian and global LNG markets offer a new long-term opportunity for Canadian gas.”

BC also hits on one of the other important 'main' criteria that these firms looks at for LNG plant locations ... stable political and investment environment.