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Oregon LNG Requests Canada Export License

A second U.S. export terminal project on the Pacific Coast is reaching north to Canada for shale production to turn into Asia-bound tanker cargoes of liquefied natural gas (LNG).

Oregon LNG Marketing Co. is applying to the National Energy Board (NEB) for a 25-year license to ship overseas 13.25 Tcf of Canadian gas as LNG, at a rate of 473 Bcf/year or 1.3 Bcf/d.

The plan calls for shipments to begin as early as 2019 from a plant to be built for $6 billion on the Oregon coast, near Astoria. The project is in line before the U.S. Department of Energy for a license to send LNG out to countries without free-trade agreements, the NEB application indicates.

Oregon regulators in December granted a three-month extension of Oregon LNG to review the plans (see Daily GPI, Dec. 31, 2013).

An affiliated U.S. pipeline proposal seeks to build an 82-mile link enabling the tanker terminal to draw all its gas from shale deposits awaiting future drilling in northern British Columbia (BC) and collection for export from Canada by the TransCanada Corp. or Spectra (Westcoast) transmission networks.

The scheme closely parallels U.S. and Canadian regulatory applications by Jordan Cove LNG, also in Oregon, which is reaching north to BC for 15.6 Tcf of gas to be shipped aboard tankers from a rival Oregon coast terminal project at Coos Bay to Asia at a rate of 62.5 Bcf/year or 1.6 Bcf/d.

Unlike Jordan Cove, Oregon LNG is an all-American enterprise 80% by Leucadia National Corp., a Wall Street holding company with interests in beef packing, financial services, manufacturing, entertainment, real estate and medical supplies. Jordan Cove’s owner is Veresen Inc. (formerly Fort Chicago Energy Partners), a Calgary specialist in pipelines, gas liquids and power.

As the 13th entry in the lineup for 20- to 25-year overseas export licenses before the NEB, Oregon LNG raises the total volume that Canadian projects hope to launch into the tanker trade to 203 Tcf, sailing the oceans at a rate of 8 Tcf/ year or 22 Bcf/d.

“There is simply a huge abundance of natural gas to serve Canadian needs for hundreds of years, actually a considerably longer resource life than in the U.S.,” says a study done by California-based Navigant Consulting Inc. to support Oregon LNG’s NEB application.

The consultants cite studies by Canadian authorities -- including the NEB, BC and Alberta regulatory agencies -- that indicate the national endowment of shale gas supplies is in an astronomical range of 1,400 Tcf or more.

Total North American LNG exports, including both U.S. and Canadian terminal projects, could eventually reach 8-10 Bcf/d by the 2040s, Navigant predicts. But the shale gas resources spread across the continent are so big that the industry is rated as harboring potential to satisfy all U.S., Canadian and overseas demand for a century or more.

From the viewpoint of LNG export projects with northern U.S. sites on the Oregon coast, Canadian shale gas will stay a bargain compared to U.S. production, Navigant says. The consulting firm predicts the price of BC and Alberta production will stay in a range below $5.50/MMBtu for years to come and still be less than $7.00/MMBtu as late as the mid-2040s, while the Henry Hub standard for U.S. gas goes higher by $1.00/MMBtu or more.

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