A BG Delay on a final decision on LNG for Prince Rupert?

As we're quickly learning on the North Coast, the landscape of the still incubating LNG industry on the North Coast can change fairly quickly.

Less than a year ago we were looking at the prospect of two potential projects for the North Coast, now we have four projects in different stages of evolution, with varying estimates of time lines for any kind of decision making.

And now, for one of the more prominent of North Coast proposals, some messages it seem are being sent that there may be a delay on making a final decision on a go ahead.

It's been but four days that have passed since the representatives of the BG Group provided Prince Rupert city council with a bit of an international primer on the LNG industry, with the BG representatives outlining that an investment decision on the North Coast project could be made by 2016.

However, in the fast paced world of the LNG industry, things change fast and that may already be an out of date timeline.

As the Financial Post reported Wednesday, the British energy giant may be considering a delay of at least a year before they make a final decision on whether they will go ahead with their 16 billion dollar Prince Rupert export terminal decision.

The Financial Post suggests that instead of 2016 for a decision date, that  the new target date for a final go ahead could be 2017, with the first shipments of LNG then shifting to the year 2022 at the earliest.

The article also highlights a number of factors that could have an impact on any decision to move forward,  high among them concerns of LNG companies regarding British Columbia's proposed LNG tax.

The province has apparently heard that message pretty clear, with plans to work out a compromise still in development out of Victoria.

Also in the mix of issues that could weigh over any decision, are lower commodity volumes. lower prices and the ability to line up contracts with Asian buyers.

The cautionary note that should give North Coast residents cause to not get too caught up in the LNG euphoria just yet, comes from oil industry observer Robert Desbarats of Calgary. Who provides a bit of balance to the current anticipations of boom times for the region.

“The fact that they’re spending money out there today, which they are, and it’s big money, doesn’t guarantee that they’re going to make an investment decision to go forward with the project.”

Some wise counsel we imagine to keep handy over the next few years, as plans in progress and final decisions come to move forward... or not.

You can review our complete collection of items on the LNG industry on the North Coast from our Archive pages.

Cross posted from the North Coast Review

BG Group provides LNG primer for Prince Rupert City Council

Representatives of the BG Group provided an LNG primer for Prince Rupert City Council on Monday night, a thirty six minute overview, that offered up a wide range of background on the LNG industry in the world view and BG's place in that global industry.

Dr. Andrew Walker and Miss Madeline Whittaker joined BG's local representative Herb Pond at the council table to provide the snapshot look at what the LNG industry looks like at the moment and where the company sees the industry over the next ten to fifteen years.

There was a fair amount of review on the nature of supply and demand and where Canada may find itself in that global supply situation over the next decade and beyond.

Following that LNG review, Council members were offered the opportunity to ask questions of their guests, seeking to find more insight into the industry and BG's plans for development of it's Ridley Island terminal location.

Councillor Kinney was the first to ask a question of the guests, inquiring what they would expect from the City of Prince Rupert. Dr. Walker outlined that projects such as these require a push to get them into existence, getting stakeholder alignment is key and that the project has to work for both BG and the community.

He suggested that the community should take the lead towards that alignment. He observed that over the years he had seen many of these supply chain projects fail owing to lack of alignment with the community that they are looking at.

Councillor Cunningham asked how many LNG projects that BG believes may be sustained in the area.  Speaking as to the buyer behaviour aspect of the question, Dr. Walker observed that the likely outcome would be that the province would see three LNG projects in the region by 2025, but not on the same timeline as the province has outlined.

City Manager Long offered up his thanks for the guests attendance to City Council and for the scope of the answers that were provided.

Councillor Cunningham followed up with a question on the progress of BG's Environmental Assessment. Miss Whitaker provided the timeline moving forward with a filing anticipated towards the summer.  To his question as to when a start up may be, Miss Whitaker outlined that depending on the process ahead, a final investment decision could be made by 2016 with a potential start up of operations by 2021.

Councillor Thorkelson had questions on employment regarding the proposed development, asking if BG had any plans to bring in any temporary workers from out of country. Miss Whitaker took to the microphone again, advising that the first preference of BG was to hire local workers as possible, and that the company was working with the Premier's working group on labour to maximize the benefits for the local region first.

Councillor Thorkelson followed up with a question as to when that employment plan would be outlined allowing the city to make plans for housing and other services that may be required.

Miss Whitaker advised, that the modelling on employment requirements work is still underway, BG anticipates coming back to the community later in the summer to outline some of their findings on the theme of a workforce for the project.

The Mayor advised the BG group that their information on employment requirements would be appreciated and that the city has already tasked staff with the prospect of making plans for future growth and service requirement that may come from the development of LNG facilities in the community.

Mr. Krekic, the city planner asked a question of Dr. Walker, inquiring as to the market dynamics in place and how BG would gauge the LNG industry compared to the oil industry.

Dr. Walkers' answer provided a bit of a comparison between the two industries and the variety of factors that could impact on price points and supplies, with gas being more of a diversified market.

Following that exchange, the Mayor thanked the BG guests for their contribution to the evening.

You can review the LNG lesson for yourself through the February 24th edition of the City of Prince Rupert Video Archive.

The session starts up at the three minute mark and continues on until about the 39 minute mark.

We have more on LNG development proposals for the North Coast on our LNG archive page.

Cross Posted from the North Coast Review