Beyond the Shell/BG merger issues - the dropping LNG price and possible supply glut will push back the large BC LNG projects as they won't be profitable at $6-7/mmbtu. June is coming up quickly will be interesting to see what Petronas does, but I expect postponement until we see sustained prices above $12.
http://www.vancouversun.com/Shell+pr...829/story.html
However, van Beurden has identified Canada alongside Australia, Brazil, Qatar, and United States as its “big five” areas of interest, going forward. In its presentation to investors, Shell identified LNG in Canada as one of the “options”, along with Gulf Coast export and upstream gas.
Amid a sharp focus on cutting capital expenditure, The Hague-based giant is already involved in the $1.5 billion 2.5 mtpa Elba LNG export joint venture with El Paso Pipeline Partners LP, and would soon own BG’s 15-mtpa LNG export plant in Lake Charles, La., with a current capital cost of $9.2 billion.
“If you look at the Gulf Coast, they have projects under construction. They would want to expand with their cheapest dollars — it would take so much less money,” said Dirk Lever, managing director, institutional equity research for energy infrastructure at AltaCorp Capital Inc. “B.C. LNG projects have many hurdles to cross,” including approval from First Nations, Lever noted.
B.C., which is hoping for at least three of the 18 proposed projects to get off the ground, boasts that its proximity to the Tokyo port could shave off as much as $1.50 per million British thermal unit in transportation costs, compared to Gulf Coast projects.
“Shell’s about to write a check for $70 billion to acquire BG. The first thing they ought to be doing is saying, ‘OK, what have we got; which ones .”
If Shell decides to proceed with its LNG plans on the West Coast over the next year, it will likely be in the backdrop of LNG prices that have collapsed from US$15 per MMBtu in September to US$7.50 currently, and could slip to US$6 in the second half amid a supply glut, according to Bank of America Merrill Lynch.