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Aurora LNG Scraps Terminal, Second BC Cancellation in Two Months

The crowded liquefied natural gas (LNG) market on Thursday took its second Canadian casualty this summer, when an Asian partnership scrapped a jumbo terminal project on the Pacific coast of British Columbia (BC).

Aurora Liquefied Natural Gas Ltd., which entered the export race in late 2013, echoed Pacific NorthWest LNG’s announcement in July to cancel its project by explaining that a lengthy feasibility review failed to find a profitable path for building a production and overseas delivery package from scratch in remote northern BC.

The Aurora scheme’s costs were estimated at C$17-20 billion ($13.6-16 billion) for a facilities network capable of loading up tankers with 3 Bcf/d. The project in 2014 obtained a 25-year National Energy Board export license, and a BC environmental review was underway.

Like the Pacific NorthWest team led by Malaysia’s Petronas, Asian veterans of the LNG trade sponsored the second BC casualty. Aurora was sponsored by the Nexen Energy subsidiary of China’s CNOOC Ltd. and Japanese conglomerate INPEX.

Also like the Pacific NorthWest group, the Aurora partners declared intentions to continue developing northern BC natural gas deposits, but for changed market targets across Canada and the United States.

“The current macro-economic environment does not currently support the partners' vision of developing a large LNG business at the proposed Digby Island site,” Aurora management said.

The location near BC’s northern-most port, a short hop from the Alaska Panhandle’s southern tip, made Aurora a potential candidate to be a customer for TransCanada Corp.’s proposed Prince Rupert Gas Transmission. The pipeline project was suspended after Pacific NorthWest’s cancellation in July.

Aurora has estimated that their combined drilling lease spreads in the northern Horn River Basin, Cordova and Liard shale deposits contain up to 48 Tcf of natural gas.

“Upstream operations from the partners' Horn River natural gas assets in northeast British Columbia will continue,” said Aurora.  “The partners will also monitor the North American gas market to evaluate future upstream and downstream investments according to market conditions.”

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