On my recent visit to Northeast BC I was exposed to cities that are
preparing for something bigger. Obviously going from Metro Vancouver or if you're
coming from Calgary or Edmonton both cities don't measure up but what you do
notice, is a lot construction, Highway improvements and you sense that most
people are doing well financially. You see somewhat big name brands starting to
establish a presence in the area, from new Hotels such as Best Western Plus
being constructed and scheduled to be ready for November 2016, to Restaurants like Brown's Socialhouse, Original Joe's and Bosa Properties renovating the Dawson Creek Mall and so the
list goes on.
The announcements made over the last few months continue to grow and
prove that it’s a matter of WHEN and not IF. The year 2016 will be an important
time for the BC LNG industry as it's no surprise the current state of the oil
and gas industry is weak, so I wanted to share some facts surrounding these
projects.
There are currently 21 proposed Liquefied Natural Gas projects for
British Columbia.
The 2 most notable projects are Pacific North West LNG (Petronas) and
LNG Canada (Shell), which may reach final investment decisions (FID) in 2016. Combined
the capital investment for both of these projects totals $76,000,000,000.
Pacific North West LNG (Petronas) - $36 billion
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Last year, it announced a conditional final
investment decision. One of the two conditions – a project development agreement with the province on taxes androyalties – has been ticked off.
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But one remains outstanding – an environmentalcertificate from Environmental Assessment Agency (CEAA).
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That approval has been delayed by environmental
concerns over the potential impact on salmon rearing eelgrass beds from a
trestle and suspension bridge that would pipe LNG to a loading terminal
off Flora Bank.
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“With respect to all other valued components,
the agency concludes that the project is not likely to cause significant
adverse environmental effects taking into account the implementation of the key
mitigation measures”
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Last week Malaysian oil and gas giant
Petronas confirmed it has leased two floors of office space at ParkPlace Tower in Downtown Vancouver, totalling 34,000 square feet.
LNG Canada (Royal Dutch Shell) - $40 billion
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At a recent address to the Vancouver Board of
Trade, LNG Canada CEO Andy Calitz said the consortium Shell leads is still on
track to make a final investment decision in 2016.
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LNG Canada announced last week that the projects final investmentdecision would be postponed nine months.
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Despite the delay, LNG Canada CEO Andy Calitz
said he remains optimistic. “LNG Canada is in great shape as a project,” he
said, adding that the co-owners chose to make a final investment decision in
the fourth quarter of 2016.
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LNG Canada already has all of its provincial and
federal environmental approvals, not to mention the support of key First
Nations, notably the Haisla.
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Christie Clark said LNG Canada is well
positioned. “I was pleased to see that Shell has reconfirmed its intention to
make a final investment decision this year. Even in these uncertain times,
which have affected their timeline, they’ve reconfirmed that they want to go
ahead with this project,” she said.
B.C. Minister of Natural Gas Rich Coleman has stated that four
additional FIDs could be reached in 2016 by two major plants and two smaller
plants, bringing the total to six. Douglas Channel, a smaller liquefaction
facility located on a barge off the coast of Kitimat, is a likely candidate.
However, the Company is currently disputing a 25 per cent excise levy imposed
by Customs Canada on the import of its floating terminal which could prevent a
2016 FID if a resolution is not achieved soon. Other potential candidates for
2016 FIDs include the Woodfibre LNG Project near Squamish and the Tilbury LNG
Project in Delta.
We cannot underestimate the impact of the global economic
climate on the timing and nature of such FIDs (i.e. whether they end up being
positive or negative). Recently, certain analysts have suggested that the
prospects of B.C.’s LNG industry are grim in light of low oil and gas prices
and falling demand. Japan’s move to restart its nuclear reactors is a likely
factor contributing to this fall in global demand. However, the long term
economic prospects are more optimistic, particularly given the decades-long
timelines of most LNG projects. Future demand for LNG may also receive a boost
as more countries adopt increasingly stringent environmental policies,
particularly in the wake of the 2015 Paris Climate Change Summit, and actively
shift away from coal generation. Furthermore, oil prices could turn around
rather swiftly, particularly in the event of escalating conflict in the Middle
East.
Shifting focus to upstream developments, LNG proponents are
continuing to build new gas processing infrastructure in northeast B.C.
Construction on Veresen’s new Sunrise gas processing plant, worth an estimated $860-million
near Dawson Creek began in October of 2015. The plant, the largest built in
Western Canada in the last 30 years, will deliver 400 million cubic feet of gas
per day to TransCanada's Nova Gas Transmission Line, with completion slated for
2017. Also construction on another plant of similar size, worth $715-million,
near Fort St. John is expected to begin this year.
As you can see, since my first discussion on Northeast BC there have
been a lot of positive announcements regarding the region and the industries
they rely on. I think the most important factor for BC, and rightfully so is to
ensure the environment and nature is not harmed in a way that is irreversible.
Most people enjoy and live in BC for its Super Natural setting and we do owe it
to our children and future generations to keep it that way. I believe the BC
Government and Canada Government are ensuring that these companies, which will
benefit from our natural resources’, also make it a top priority to protect and
ensure the environment is able to thrive now and once these companies exit the
sites. Saying that I don’t think we should stopping these companies and the
economic benefits they provide as long as they are responsible in all areas of
what they are doing. The Economic Benefits are enormous for our province and
country and cannot be ignored or pushed away. Funding can be established for
better Healthcare, Education, improving and maintaining infrastructure, etc... Stay tuned as we follow the progress of B.C.’s LNG export industry throughout what should prove to be an eventful year.
Northeast BC Investment
Seminars & Events
Visit Fort St. John & Dawson Creek
Interview with CBC Radio regarding Northeast BC (Audio)
Seminars & Events
Visit Fort St. John & Dawson Creek
Interview with CBC Radio regarding Northeast BC (Audio)