And they are fracking too!
Accounts of billion-dollar cost overruns and logistical nightmares in the year-end financial and operating results of oilsands producers should give pause to companies lining up to be part of the looming LNG boom in northern B.C.
A half-dozen megaprojects have been proposed by consortiums - including some of the world's biggest energy companies - that could come on stream late this decade and make Canada a significant entrant into the lucrative Asian LNG market.
B.C. Premier Christy Clark has called LNG the economic equivalent to Alberta's oilsands.
Like the oilsands, liquefied natural gas is a capital intensive business with a decades-long commitment to investments. It's also a rapidly evolving industry as technical innovation and economies of scale are poised to deliver large volumes of gas globally after decades of promise.
The B.C. government has said it wants three LNG plants in operation by 2020.
On Monday, Shell Canada, with its partners, became the latest company to receive an LNG export license from the National Energy Board.
They want to build a plant that will reportedly cost $12 billion to export up to 24 million tonnes of liquefied gas a year for 25 years beginning in 2019.
The technology to ship LNG by ocean-going tankers was developed in the 1950s, although advances to lower transportation costs since the 1990s have allowed for development of pools of "stranded" gas once considered too far from markets.
The big shale gas reserves that Shell, Chevron, Exxon and others are tapping into in northeast B.C. are an example of how fracking and LNG are creating opportunities for North American gas producers.
As oilsands have demonstrated, the challenges of developing a technically complex project in a remote northern location only get worse when there are rivals competing for the same workers, heavy equipment, building materials and steel.
An overheated economy in the oilpatch and unforeseen logistical challenges were listed as significant reasons when Imperial Oil last week revealed the final price tag for its Kearl oilsands project was $5 billion over budget at $12.9 billion.
Suncor Energy, which reports its 2011 financial results today, and partner Total Canada are still studying what CEO Steve Williams has called "challenging" economics before deciding whether to proceed on the $20-billion Voyager upgrader announced in 2006.
Announcing a project is the easy part. Delivering a multi-year development on time and on budget in an ever-changing market is much more of a challenge.
In B.C., there has been a series of announcements for tidewater LNG plants at Kitimat and Prince Rupert in the last two years.
Companies are looking to profit from a gas glut in North America by shipping gas to Japan, South Korea and, increasingly, China, where prices are often five to six times higher than Canada or the United States.
Natural gas supplies about 20 per cent of the world's energy and LNG accounts for 10 per cent of the total gas supply but it's growing at double digit rates annually.
There are only about 15 countries that export LNG and fewer than 20 that import and "reg's" the clean-burning fuel. As a result, the opportunities are attractive.
Just last week, Calgary pipeline company AltaGas and Japanese refiner Idemitsu Kosan agreed to study the feasibility of exporting two million tons of LNG per year by 2017, even though neither is currently in the LNG business. Most of the consortiums - Apache is partnered with Chevron, Shell joined with Mitsubishi and PetroChina, PETRONAS purchased B.C. gas producer Progress - have global operations with complex supply chains and established customers.
The export plants - which cool methane to -162 C to convert it from gas to liquid - proposed for northwest B.C. would be deemed small or medium sized on a global scale. Some of the new LNG plants in Australia are twice as big and will challenge Canadian exports.
The bigger issue for Canadian LNG exports is an emerging price war and the transformation away from LNG pricing linked to oil. The gas price in Asia at the end of the decade could be much lower than when projects were announced.
Last fall, Cheniere Energy signed a groundbreaking deal for its under construction Sabine Pass LNG plant in Louisiana that set prices based on natural gas prices at the nearby Henry Hub rather than oil prices at the destination.
There is another big difference about LNG compared with oil-sands. While oilsands producers have all the bitumen they ever need beneath their feet, the new LNG plants require a steady supply of gas to keep operating.
B.C. must also develop the gas fields and pipelines to support LNG exports. To keep the export plants it has approved supplied in local gas, it seems unlikely a B.C. government will introduce regulations that would curtail fracking even if it proves not as profitable as once envisioned.
Stephen Ewart is a Calgary Herald columnist sewart@calgaryherald.com
© Copyright (c) The Calgary Herald
Read more: Ewart: Oilsands situation a cautionary tale for LNG projects
STOP THEM BEFORE THEY KILL BC WHEAT!!!
Accounts of billion-dollar cost overruns and logistical nightmares in the year-end financial and operating results of oilsands producers should give pause to companies lining up to be part of the looming LNG boom in northern B.C.
A half-dozen megaprojects have been proposed by consortiums - including some of the world's biggest energy companies - that could come on stream late this decade and make Canada a significant entrant into the lucrative Asian LNG market.
B.C. Premier Christy Clark has called LNG the economic equivalent to Alberta's oilsands.
Like the oilsands, liquefied natural gas is a capital intensive business with a decades-long commitment to investments. It's also a rapidly evolving industry as technical innovation and economies of scale are poised to deliver large volumes of gas globally after decades of promise.
The B.C. government has said it wants three LNG plants in operation by 2020.
On Monday, Shell Canada, with its partners, became the latest company to receive an LNG export license from the National Energy Board.
They want to build a plant that will reportedly cost $12 billion to export up to 24 million tonnes of liquefied gas a year for 25 years beginning in 2019.
The technology to ship LNG by ocean-going tankers was developed in the 1950s, although advances to lower transportation costs since the 1990s have allowed for development of pools of "stranded" gas once considered too far from markets.
The big shale gas reserves that Shell, Chevron, Exxon and others are tapping into in northeast B.C. are an example of how fracking and LNG are creating opportunities for North American gas producers.
As oilsands have demonstrated, the challenges of developing a technically complex project in a remote northern location only get worse when there are rivals competing for the same workers, heavy equipment, building materials and steel.
An overheated economy in the oilpatch and unforeseen logistical challenges were listed as significant reasons when Imperial Oil last week revealed the final price tag for its Kearl oilsands project was $5 billion over budget at $12.9 billion.
Suncor Energy, which reports its 2011 financial results today, and partner Total Canada are still studying what CEO Steve Williams has called "challenging" economics before deciding whether to proceed on the $20-billion Voyager upgrader announced in 2006.
Announcing a project is the easy part. Delivering a multi-year development on time and on budget in an ever-changing market is much more of a challenge.
In B.C., there has been a series of announcements for tidewater LNG plants at Kitimat and Prince Rupert in the last two years.
Companies are looking to profit from a gas glut in North America by shipping gas to Japan, South Korea and, increasingly, China, where prices are often five to six times higher than Canada or the United States.
Natural gas supplies about 20 per cent of the world's energy and LNG accounts for 10 per cent of the total gas supply but it's growing at double digit rates annually.
There are only about 15 countries that export LNG and fewer than 20 that import and "reg's" the clean-burning fuel. As a result, the opportunities are attractive.
Just last week, Calgary pipeline company AltaGas and Japanese refiner Idemitsu Kosan agreed to study the feasibility of exporting two million tons of LNG per year by 2017, even though neither is currently in the LNG business. Most of the consortiums - Apache is partnered with Chevron, Shell joined with Mitsubishi and PetroChina, PETRONAS purchased B.C. gas producer Progress - have global operations with complex supply chains and established customers.
The export plants - which cool methane to -162 C to convert it from gas to liquid - proposed for northwest B.C. would be deemed small or medium sized on a global scale. Some of the new LNG plants in Australia are twice as big and will challenge Canadian exports.
The bigger issue for Canadian LNG exports is an emerging price war and the transformation away from LNG pricing linked to oil. The gas price in Asia at the end of the decade could be much lower than when projects were announced.
Last fall, Cheniere Energy signed a groundbreaking deal for its under construction Sabine Pass LNG plant in Louisiana that set prices based on natural gas prices at the nearby Henry Hub rather than oil prices at the destination.
There is another big difference about LNG compared with oil-sands. While oilsands producers have all the bitumen they ever need beneath their feet, the new LNG plants require a steady supply of gas to keep operating.
B.C. must also develop the gas fields and pipelines to support LNG exports. To keep the export plants it has approved supplied in local gas, it seems unlikely a B.C. government will introduce regulations that would curtail fracking even if it proves not as profitable as once envisioned.
Stephen Ewart is a Calgary Herald columnist sewart@calgaryherald.com
© Copyright (c) The Calgary Herald
Read more: Ewart: Oilsands situation a cautionary tale for LNG projects
STOP THEM BEFORE THEY KILL BC WHEAT!!!
