Aboriginal entrepreneurs picked up a share in Canada's budding energy trade with Asia when the National Energy Board (NEB) granted a 20-year export license to BC LNG Export Co-operative Ltd. The permit enables the C$600-million (U.S. dollar at par) project to load up tankers with 250 MMcf/d of liquefied natural gas (LNG) from a terminal on British Columbia's (BC) north Pacific coast at Kitimat.
Haisla Nation, the native society at Kitimat, owns 50% of the development in a partnership with LNG Partners LLC of Houston. Though much smaller than a rival LNG export terminal already approved nearby, aboriginal leaders told the NEB that the venture will enable their community's business arm to support civic improvements from jobs to health care and education (see Daily GPI, Dec. 5, 2011).
Also known as Douglas Channel Energy Partnership, the scheme adds further wrinkles in production and marketing to emerging seafaring exports beyond the Canadian industry's traditional mainstay markets in the United States.
The LNG will be made by production trains built on barges. Supplies will be drawn from a sales co-operative of producers, using a monthly bidding process as an outlet for developing shale gas fields in northern BC.
Like Canada's first Asian delivery project -- C$4.5-billion KM LNG, owned by Apache, EOG Resources and EnCana Corp. -- BC LNG has not yet revealed sales deals. Marketers are using export permits as hunting licenses to drum up contracts in China, India, Japan, South Korea and Taiwan.
KM LNG obtained an NEB permit for 20 years of exports of up to 1.4 Bcf/d late last year, from a terminal to be built on a Kitimat industrial land site owned by the Haisla (see Daily GPI, Oct. 17, 2011). The port already has supply connections to BC production via the pipeline systems of Pacific Northern Gas and Spectra (formerly Westcoast). Shale gas and LNG developers are also supporting a new link, Pacific Trail Pipeline, which has environmental approvals and is advancing through final regulatory permitting stages.
In granting the BC LNG export license, the NEB said "demand growth in Asia provides a new opportunity for Canadian producers to diversify their natural gas export markets." The board noted that no interveners in the case disputed the project's bright economic forecasts, and that several strongly supported its potential to improve industry revenues.
Asian demand was rated as likely to grow at a brisk pace, averaging about 3.7% per year, for the next two decades. LNG was forecast to fetch a premium value of US$11-18/MMBtu around the Pacific Rim because the region, having no counterpart to the competitive North American market, links gas prices to oil.
The NEB said BC LNG's supply pool has to date signed up 13 members. "The co-operative structure may allow smaller natural gas producers to participate in a market that otherwise would have been cost-prohibitive due to the high, front-loaded costs associated with developing a liquefaction project," the board said.
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