Realizing that a new column on LNG, even early in this new year, was overdue, I started to type.
Then I remembered the memorable moment from Bambi when Thumper’s mother scolds him for making fun of the awkward fawn: “If you can’t think of anything nice to say, don’t say anything at all.”
Well I guess that takes care of the column.
However, pretty sure the editor will forcibly suggest I have come up on the short side so here goes.
Pacific Northwest LNG (Petronas)
It is no surprise that Petronas is undertaking a full review of the $27 billion project. Months before the federal government was to deliver its verdict on the project, the company had said that, even if the feds approved it, such a review would take place.
The surprise came in a Bloomberg story that said, according to “two people familiar with the negotiations”, the review would include looking at a major design change.
(Incidentally, while I do not much like using information from unidentified people, Bloomberg has over the years been a very reliable source so I’ll let it slide on this occasion.)
That major change is that while the liquefaction plant would still be located on Lelu Island, the shipping terminal would be moved to a site on Ridley Island, thus avoiding the Flora Bank which has been the focus of much of the opposition to the project as originally designed on the grounds that it would damage vital salmon habitat.
The amazing thing is it has taken Petronas so long to come up with a new design given as much as two years ago it was screamingly obvious that was the only way it was ever likely to get majority First Nations support.
But then Petronas is a government-owned company so they have had a free ride on development in their home country of Malaysia and didn’t seem to grasp that things were very different here.
So, let us assume the redesign quells First Nation opposition and the lawsuits – four at latest count – melt away. Does that mean Petronas and its partners will give the green light?
Not if Reinhardt Matisons, Woodside executive president for trading and shipping, is right.
He told Australia’s WestBusiness he believed that given the LNG oversupply, uncertainty over nuclear power in Japan and the reluctance of buyers to enter into long-term contracts, companies would have a hard time justifying big LNG projects for some years to come.
And at $27 billion and a production target of nearly 20 million tonnes per year, Pacific Northwest LNG would certainly qualify as one of those.
However, Matisons is looking at things from the point of view of a publicly traded company with shareholders to answer to, something Petronas doesn’t have to worry about.
One final point: I would be shocked if Petronas and partners made any decision on whether the project was a go or not before the May provincial election. After all, if the New Democrats win, the landscape could change dramatically.
This is a 50:50 Chevron/Woodside project and what Woodside boss Peter Coleman said at a conference of LNG buyers and sellers held late last year in Japan offers little hope of this one coming off the back burner.
Specifically, he said that Woodside’s focus in the near term would be on expansions and extensions of existing low cost operations, note existing.
As for Chevron, the silence on Kitimat has been deafening.
LNG Canada (Shell)
FOOTNOTE: Given all the hype on LNG just four years ago, the current reality is of course disappointing. However, it will not always be so. India, Pakistan and a myriad of smaller countries are now buyers and will be purchasing more in coming years meaning demand will eventually overtake supply.
It’s a long tunnel, but there is a glimmer of light at the end of it.
Retired Kitimat Northern Sentinel editor Malcolm Baxter lives in Terrace, B.C.