The growing size and complexity of several liquefied natural gas (LNG) export projects in western Canada is casting some doubts about their viability, according to the CEO of one of the similar proposed West Coast export projects in Oregon. Ultimately, this may work to the advantage of U.S. LNG export projects that are relatively simple in comparison.
Peter Hansen, CEO of Oregon LNG, the import-export project slated for the mouth of the Columbia River, told NGI Thursday that the financial and regulatory complexity seems to be increasing for projects aimed at Kitimat and other West Coast British Columbia locations (see Daily GPI, Sept. 18).
“It is pretty clear from what I read that all the Canadian projects are turning into mega-projects,” Hansen said. “That is the only way they are going to work when you have many billions of dollar required for pipelines. Once they are mega-projects, costing many billions of dollars, then life does get harder. It now takes a slew of banks to get these projects going.”
In contrast, Hansen contends that Oregon LNG’s plans for a $6 billion terminal and pipeline project at Warrenton, OR, are relatively simple (see Daily GPI, July 6). He has stressed the project’s “direct access” to huge supplies of Canadian gas with a short (nine- to 10-day) sailing time to the Asian market.
“The Pacific Northwest is a perfect shipping location for LNG, and construction costs are a lot lower down here where you have an unemployed workforce,” said Hansen, noting that his project also can rely mostly on existing infrastructure upgrades as opposed to whole new projects.
“We don’t need brand new mega pipelines,” he said. “Once you are into mega-size projects, they just take a long time. That is just the way the world works. We are trying to keep our project as simple as possible. It is not simple in the permitting process, but other than that, it is a pretty straightforward project in terms of the infrastructure.”
He called the proposed Williams’ Northwest Pipeline Co. upgrades and the project’s 86-mile connector pipeline “small potatoes, compared to these mega pipelines and, of course, the proposed Alaskan [North Slope] LNG project [see Daily GPI, Oct. 5].”
Hansen thinks the big projects also need to push for oil-indexed pricing, and he thinks Japanese buyers are “eager” to get away from that type of supply contract (see Daily GPI, Oct. 11). Oregon LNG, much like the model being applied by Sempra Energy for its Cameron LNG export project (see Daily GPI, May 4), is a tolling facility looking for partner-buyers.
“We are actively looking for equity partners, so there would be an opportunity for smaller partners to not only use a tolling model but also be an equity owner; they would have a stake in the link between the production fields and their own markets,” Hansen said. “That’s got to be attractive to a lot of buyers.”
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