Minister confident LNG investment decisions will be made by next year
A provincial cabinet minister is confident at least one liquefied natural gas (LNG) company will make a final investment decision either by the end of this year or at least by this time next year.
“My hope is that by the end of 2015, hopefully we’ll see three,” said aboriginal affairs and reconciliation minister John Rustad who was on a brief tour of the region last week.
Although the northwest is regarded as the hotbed for potential LNG projects, he said one near Squamish shows great potential.
Woodfibre LNG, owned by a company controlled by an Indonesian billionaire, has expectations of producing LNG by 2017.
It has yet to receive environmental approval for a project that would export 2.1 million tonnes of LNG a year, making it one of the smaller proposals being promoted in B.C. It would be built on a former pulp mill site, has access to an existing natural gas pipeline and access to power.
In making his prediction, Rustad did acknowledge the billions of dollars it costs to build natural gas pipelines and liquefaction plants.
Financial troubles have stopped, at least for now, development of the BCLNG facility near Kitimat. Small in nature (its gas would come from the existing Pacific Northern Gas pipeline), the project was the first to receive environmental and regulatory approval.
Initial plans called for it to be under construction by this year.
And Apache, an equal partner with Chevron in the Kitimat LNG project, has announced plans to sell some of its ownership stake because of increasing costs.
“You have to remember that anyone of these projects dwarfs what is now the largest industrial project in B.C. and that is Rio Tinto Alcan at $3.3 billion,” said Rustad. “The [LNG] plants themselves are $10-15 billion.”
That’s why Rustad said it isn’t unusual for companies to sell off portions of their projects to other companies.
“It’s tough for a company to raise that kind of capital,” said Rustad.
If anything, Rustad added, it should be comforting to know that the largest energy companies in the world are interested in northwestern B.C.’s LNG potential.
“And we’ve got the gas supply to support a number of these projects,” he said. “We’ll try now to pick those early winners and keep trying to support them as they come through.”
Rustad did say it was important for the province to keep moving forward because the same companies interested in projects here are also looking at projects elsewhere.
“We’re in a race and time is important,” he said.
Rustad, who is also the MLA for Nechako Lakes, spoke to business and other groups on his stops in Prince Rupert and Terrace.