Parallel Universe - Canadian LNG Blues

Canadian LNG projects are similar to The Alaska LNG effort with some upstream and climatic differences. (LINK TO LNG-N-BC)

A week ago I would have predicted success for the Petronas led Pacific Northwest LNG project but apparently the project economics are not meeting client expectations (Globe and Mail Link). 

At 19.2 MMTPA, the PNW LNG project has about the same capacity as the Alaska LNG project. Gas is supplied to the PNW project via the Prince Rupert Gas Transmission Project which is 560 miles long (240 miles shorter than the Alaska LNG project).  Unlike Alaska, significant upstream development is required to provide gas to the PNW pipeline.

A final investment decision was due this month.


LINK to Map of BC Gas Pipelines

LINK to BC LNG information (BC Environmental Assessment Office website)

LINK to PNW Data

PETRONAS statement regarding LNG development in British Columbia

Quote: PETRONAS and its partners have decided to defer the project’s $36 billion Final Investment Decision (FID) pending further clarity on substantive items of importance to ensure that critical project components align with economic viability of the Project and competition from other LNG producing countries. Costs associated with the pipeline and LNG facility remain challenging and must be reduced further before a positive FID can be undertaken.

North Slope Producer Applies for LNG Export Licence

If you think this is good news for the Alaska gas line and LNG project you would be wrong.

The 4 BCF / 30 MTPA LNG project is being developed by WCC LNG, an entity owned by  Exxon Mobil and Imperial Oil Resources. The project will be built in the Kitimat and Prince Rupert area.

• LINK TO APPLICATION DOCUMENTS
• LINK TO APPLICATION

There's talk of an Alaska LNG project announcement soon (no later than 30 Jun 13).  That may just be wishful thinking -The WCC application has all but one of the ingredients needed for an Alaska LNG project, i.e. it's not in Alaska.

The project will be based on Canadian shale gas resources but may ultimately recieve gas from other sources:

The LNG Terminal will access gas primarily from the WCSB. Given the  ntegrated nature of the North American gas markets and pipeline network, gas supply could also potentially come from other Canadian or North American basins over the life of the LNG Terminal.

 So maybe some day an Alaska gas line to Canada may send gas to an export terminal in Canada. By someday I mean decades from now.

This news combined with the Petronas Canada LNG project announcement leads me to believe that Canada will export LNG before North Slope gas is exported.


The cost of the WCC project is not stated and the project is not approved yet.  This non-Alaska Exxon Mobil LNG terminal may become a powerful bargaining chip in negotiations with the State of Alaska.  Alaskans won't like that and I'll bet Exxon Mobil comes out the winner no matter which project goes forward.

The good news for Alaska, is that the Canadian upstream is not as developed as the North Slope upstream which means the unit cost of West Coast Canadian LNG may be within 10% of the cost of North Slope LNG exported from South Central Alaska - that 10% may offer room to negotiate.