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Canada’s LNG Potential

By Roger S. Conrad on Apr. 24, 2014

The rest of the companies with ownership interests in Canada’s proposed liquefaction capacity includes many familiar names from Australia’s recent construction boom:

  • BG Group CNOOC (Hong Kong: 883, NYSE: CEO);
  • ExxonMobil Corp (NYSE: XOM);
  • Inpex Corp (Tokyo: 1605, OTC: IPXHY);
  • Korea Gas Corp (Seoul: 0364660);
  • Mitsubishi Corp (Tokyo: 8058, OTC: MSBHY)
  • Royal Dutch Shell (LSE: RDSA, RDSB; NYSE: RDS A, RDS B); and
  • Woodside Petroleum (ASX: WPL, OTC: WOPEY).
     

You can read our take on many of these companies in Australian LNG Survey and Picks.

AltaGas (TSX: ALA, OTC: ATGFF) and Spectra Energy Corp (NYSE: SE), both of which own pipelines and other midstream assets, represent two of our favorite bets on the potential for Canadian LNG exports.

AltaGas last month emerged as a possible buyer of the insolvent Douglas Channel LNG project, in a possible partnership with Belgium’s Exmar (Belgium: EXM, OTC: EXMRF) and privately held gas marketer EDF Trading.

The midstream operator, which also owns hydropower assets and regulated natural-gas distribution utilities in the US and Canada, continues to work on the extension of its Pacific Northern Gas pipeline to the Kitimat region in British Columbia. The company also owns a gas distribution facility and related storage capacity in the area.

In conjunction with 50-50 partner Idemitsu Kosan Co. (Tokyo: 5019,  OTC: IDKOY), AltaGas has proposed a terminal to export up to 700,000 metric tons per year of liquefied petroleum gas (propane and butane) by 2016. The pair expects to make a final investment decision on the LPG facility by mid-2014.

The partners have also collaborated on Triton LNG, a proposed LNG export facility with a nameplate capacity of 2.3 million metric tons per annum. CEO David Cornhill, however, has indicated that British Columbia’s proposed tax scheme has pushed back a final investment decision on this project to 2015. In fact, the company may elect to move ahead with a deal for the Douglas Channel LNG project instead.

Regardless of what happens on the LNG front, AltaGas has ample opportunity to grow its cash flow and dividends via organic expansion and acquisitions.

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