With most of the preliminary work completed for the proposed liquefied natural gas (LNG) export terminal in Kitimat, British Columbia, Chevron Corp. and joint partner Apache Corp. are in a “great competitive spot and on schedule” to become one of the ultimate exporters in the growing waiting line, Chevron upstream chief George Kirkland said Friday.

“The permits are in place for exports for the site, and for most agreements for the pipeline route with First Nations, with 15 of 15 agreed,” he said during a quarterly conference call. “We’re in quite a lead on the early part of the project…There’s more work, but it’s moving quite well.”

Chevron late last year took a half-stake in KM LNG, becoming a 50-50 partner with Apache (see Daily GPI, Dec. 26, 2012). As designed, KM would use two trains to export up to 1.4 Bcf/d (see Daily GPI, Sept. 14, 2012).

The partnership has a advantage in “dealing with those that want to buy gas,” said Kirkland, “which puts our project, in many ways, above others. Buyers that want to buy gas sooner are in a very good position.”

Asked how the LNG would be priced, Kirkland said the partners “don’t expect Henry Hub linkage. We expect the equivalent value will come in an equity sell-down. We expect to have partners and buyers to offer volumes to, and we think that’s better than Henry Hub pricing…Henry Hub, like any index, has variability, which means it can go up or down. We believe we can get the same or better situation for buyers with their participation…equity in the project…

“We can do that because Apache and Chevron hold 50% each. We hold very strong interests in the resources so we have the ability to move that way. Our goal is to maintain our first-mover advantage, but at the same time move the project at the right speed.”

Apache and its former partners had been shooting to sanction the project this year, but it’s more likely to be given a final investment decision in 2014, said Kirkland.

“After having done all of the appropriate technical work, all of the commercial work, then we can get down to getting a sale for 60-70% of the position. We’ve had some initial discussions with Asian partners, but we will not disclose the ones we are talking to at this time.”

The San Ramon, CA-based oil major earned $5.4 billion ($2.77/share) in 2Q2013, compared with $7.2 billion ($3.66) in the year-ago quarter. Sales and other operating revenues were $55 billion, compared with the a year ago, when they were $60 billion. U.S. upstream earnings of $1.08 billion fell from year-ago profits of $235 million on higher operating and depreciation expenses, and lower crude oil production.

Net U.S. production was 659,000 boe/d, flat from a year ago. Production increases in the Marcellus Shale in western Pennsylvania, the Delaware Basin in New Mexico and at Perdido in the Gulf of Mexico were offset by normal field declines elsewhere, Chevron said.The net liquids component fell 1% in the latest quarter, while net natural gas output increased 3% to 1.23 Bcf/d.