LEXPERT MAGAZINE
|
NOVEMBER/DECEMBER 2017 73
| LNG DEVELOPMENT |
Canada's biggest competitor
in the race to join the LNG big leagues is
the United States, and it is much closer,
with seven projects approved and under
construction, and four more approved but
not yet started. In fact, according to a re-
port by Reuters, the country is expected to
become the world's third-largest exporter
of liquefied natural gas as early as 2018.
Proposed export facilities in the United
import terminals and invested heavily in
pipeline infrastructure. Many of those fa-
cilities are now being converted for export.
Canada never had to import natural gas.
at means most of the long-haul pipelines
to the Pacific coast and major LNG storage
facilities will have to be built from scratch,
making it much more expensive.
Canada's regulatory regime is also a
stumbling block, according to Ignasiak,
who says he knows of projects it has killed.
"And it's not because Canadian regulation
is too strict. When I talk to clients look-
ing at projects in Canada, that is not their
concern. ey know in return for those
regulatory standards they have a degree of
political stability and benefit from a very
stable regime."
So what is the problem? He says it's the
complete lack of certainty around time-
lines associated with the various regula-
tions. "ey want to know that, if they
comply with all the standards, having made
that investment, they're going to receive the
approvals to proceed with a project."
e length of time it takes to get a proj-
ect from a proposal into operation has a sig-
nificant impact on its profitability.
"If you invest a billion dollars prior to
construction, it makes a big difference to
your net present value if you get to start
construction in four years as opposed
to eight." e longer it takes, he says, the
more difficult it becomes to recover that
initial investment.
Delay and uncertainty: two words proj-
ect investors hate.
Petronas and its partners may
have le, but there are companies that
continue to explore Canada — BC in par-
ticular — as a hub for liquefied natural gas
export facilities. ey include ExxonMobil
and Imperial Oil Resources Ltd., which
are evaluating the potential for the WCC
LNG project located just northeast of
Prince Rupert.
e partners are exploring regulatory
approvals, investment climate and business
considerations, although the project is still
in the early stages and a final investment
decision is not expected anytime soon.
Nexen Energy, a division of Chinese energy
giant China National Offshore Oil Corp.
(CNOOC), and Japan's INPEX Corp. are
also still looking at Aurora LNG, a $20-bil-
States have one massive advantage over
Canada, says Martin Ignasiak, co-chair of
the regulatory, environmental, Aboriginal
and land group at Osler, Hoskin & Har-
court LLP in Vancouver: the infrastructure
is already there.
Until the shale revolution, the US was a
net importer of natural gas, mainly from
Canada. It designated industrial land
mainly around the Gulf of Mexico, built
"Most of these LNG projects were
conceived of at a time the LNG price
was about US$15 or US$16. It's now
[in September] down to US$5 or US$6
… What we need to do is prepare for
the next window."
ALICIA QUESNEL
>
BURNET, DUCKWORTH & PALMER LLP
