The key word is “speculation”.
lets put it this way if Petronas which has 90% of its gas sold does not go ahead then none will, but we should know by June unless the Enviromental Assesment is delayed again.
Agreed. This is the only proposed project in BC that has back-end gas purchase contracts already in place…if this one does not go through, then fat chance of any of them happening.
Also the EA process was stopped againa for the 2nd time last month I believe as they needed some more information…no word on if it has started again or not…who knows.
We will know by the end of June either way.
We are lucky that we have a diversified economy in PR in case none of this happens and it is nice to know that our city at least will take away 15+ million from one of these projects, regardless of whether the FID is positive or negative.
I don’t follow the industry close enough to fully understand all of the issues so it confuses me when I read that Petronas has 90% of its gas sold, while also reading this:
"We expect that global liquefaction capacity will be well in excess of demand for the remainder of this decade, as demand will grow more slowly than supply,” according to the report, titled “Lower oil prices cause suppliers of LNG to nix projects.”
Petronas’ decision doesn’t seem to be tied to demand but the recent drop in oil prices:
“Petronas appears to be leaning toward deferring this project, as lower oil prices have reduced its cash flow and it directs more investments domestically to Malaysia.”
There is lots of uncertainty surrounding oil prices now with some forecasters suggesting a bleak outlook while others have a more optimistic outlook over the medium to long term. Hopefully there will be enough certainty to move at least one local project forward.
[quote=“Crazy Train”]
I don’t follow the industry close enough to fully understand all of the issues so it confuses me when I read that Petronas has 90% of its gas sold, while also reading this:
"We expect that global liquefaction capacity will be well in excess of demand for the remainder of this decade, as demand will grow more slowly than supply,” according to the report, titled “Lower oil prices cause suppliers of LNG to nix projects.”
Petronas’ decision doesn’t seem to be tied to demand but the recent drop in oil prices:
“Petronas appears to be leaning toward deferring this project, as lower oil prices have reduced its cash flow and it directs more investments domestically to Malaysia.”
There is lots of uncertainty surrounding oil prices now with some forecasters suggesting a bleak outlook while others have a more optimistic outlook over the medium to long term. Hopefully there will be enough certainty to move at least one local project forward.[/quote]
The Petronas LNG project is much less tied to world LNG demand/supply because they already have built in gas deals with Korea Gas, Petroleum Brunei, Japex & India Oil who have purchase contracts built into their ownership structure of the PNW terminal, these were conditions of their purchase. In addition, Petronas being a state-run gas provider in Malaysia, will be using the gas from this terminal for its own purposes as well, rather than selling it to world market (unlike the other gas companies proposing LNG terminals in this region). This is likely why this project is seen as the most likely to succeed.
The price of oil certainly has an impact on a FID from Petronas, because a lower world oil price is eating away at Petronas’ bottom line capital, which is what they need to build this project. That being said, while oil prices are hurting their world wide revenue bottom line, it is creating a more positive cost environment here in Canada for them to build. An LNG terminal built right now, is cheaper to build than it was in December. So costs will have certainly come down in regards to labour/matierals/taxes and Canada’s weaker dollar (directly tied to lower oil prices).
The other projects being proposed are both affected by global LNG supply/demand AND the cost of oil…including the BG project, the Shell & Chevron projects in Kitimat and the Exxon project at Tuck Inlet.
I don’t think we will see a decision on PNW until the end of August. The CEA was delayed because a sediment trend analysis done for Lax Kw’alaams showed a serious risk of erosion and siltfication to Flora Bank from the hundreds of piles in the trestle and berth. The Petronas experts are preparing their own modeling hoping to defend against this. Their model is not expected to be finished until the end of April. The 365 day CEA clock is stopped at day 240 waiting for this new modeling. They chose a very bad site.
Thank you bthedog for the information. That was what I suspected.
In regards to the last comment, I agree that Lelu wasn’t the best choice for obvious reasons but considering the possibility of BG group being sold to Shell, who also has significant interest in a terminal in Kitimat, could it be possible that the Petronas project moves takes over the Ridley island location that has been designated for the BG project? Speculation but possible.
actually Petronas last month stated their modelling does not show any significant harm to the sediment, so right now the CEA is studying both scientific review. as for the day counter, don’t think that is accurate, for the CEA was supposed to announce in October but delayed it by 6 months to gather more information, and using that information the BCEA gave it their approval, right now it is just fine tuning the proposal. I think that day counter was just for public input, which is no longer available.
In October Petronas put in their new design. On February 23rd the Canadian Environmental Assessment Agency asked for more information. ceaa-acee.gc.ca/050/details- … tion=80032 I met with PNW and what they said agrees with your info namely their early 2D models don’t show risk from sediment transport changes. The trouble is the CEA was not satisfied with those models and asked for more info. on Feb 23rd.
It would be wonderful if Petronas could move to Ridley. PNW is doing 3D models now but the study which showed that there is serious risk was not based on models it was based on extensive sampling and analysis which is highly respected and has won out in the courts over modeling.
benzinga.com/news/15/04/5414 … r-approval
NEB recommends approval of TransCanada’s pipeline project for PNW LNG.
BC Natural Gas Minister on recent meeting with Petronas “I came out of Malaysia as optimistic, if not more optimistic, than I’ve ever been,” in regards to a positive FID from Petronas for PNW LNG.
If any LNG project is going to go thru I’m pretty sure it will be the one from PETRONAS.