While big liquefied natural gas (LNG) projects remain stalled in British Columbia (BC), competition is emerging for making a small start on overseas tanker deliveries from the northern Pacific coast.
A new Texas contender to put western Canadian production on the global gas market -- Houston-based Western LNG LLC -- has surfaced in an engineering contract announcement and a BC dispute over limited pipeline capacity.
Wison Offshore & Marine announced a technical service agreement with Western to devise a low-cost floating LNG (FLNG) production vessel, launching a "strategic relationship" that will have "integrated capabilities from concept to delivery."
Wison also circulated an optimistic statement by Western president Davis Thames, a former executive of a pioneer of LNG exports from the United States, Cheniere Energy Inc.
"Combined with the availability of abundant, low cost gas in western Canada and geographic proximity to the largest LNG market in the world, Western's delivered costs will compare favorably to other low-cost LNG suppliers from around the world," Thames was quoted as saying.
With financial backing from Apollo Global Management LLC, Thames described Western's goal as "to successfully deliver a mid-scale greenfield LNG export facility with costs per ton in line with much larger brownfield facilities on the U.S. Gulf Coast."
The company did not respond to a request for as yet undisclosed information on the facility's proposed location, size, cost, construction schedule or plans to obtain a Canadian gas export license from the National Energy Board (NEB).
But an indication of the project's scale and development stage has surfaced in a dispute before the BC Public Utilities Board (BCPUB) over a pipeline reservation by a rival Canadian-owned plan. By taking up currently vacant delivery space, the arrangement potentially affects Western's hopes to hold down costs.
Western is opposing BCPUB approval of a deal by Pacific Northern Gas (PNG) to commit spare capacity for 20-50 million cubic feet per day to Triton LNG, an Altagas Ltd. vehicle for starting Pacific coast exports from Ridley Island at Prince Rupert.
PNG, an Altagas regional utility subsidiary in BC, has assured the BCPUB it is willing to add capacity when Western LNG matures past the idea stage. But the pipeline reports its Canadian affiliate is pulling ahead by putting its money where its plans are.
The contested reservation deal includes a C$500,000 (US$384,646) option payment by Triton for an initial 20 MMcf/d reservation on PNG, plus a commitment to ante up more fees if the plan grows closer to the 50 MMcf/d agreement maximum. The BCPUB is scheduled to review the case for the rest of this summer.
Triton took out a 25-year NEB export license for up to 315 MMcf/d in 2014. But in 2016, plans to erect a big LNG terminal for all the allowed volume were suspended, after the project failed to land long, high-priced Asian sales contracts that would cover the cost.
A compact version of Triton is a potential sideline for a 1.2-million-tons-per-year propane export terminal Altagas is currently building for about C$500 million on Ridley Island. Shipments are scheduled to start in 1Q2019.
The potential companion economy-model Triton LNG facility is in planning stages with no details settled or disclosed. PNG says its Altagas BC coast affiliate is working on "a proposed small modular LNG or methanol export project."