Prospects for Canadian LNG development this decade look bleak.
Even Chevron Corp (NYSE: CVX) and Woodside Petroleum (ASX: WPL, OTC: WOPEY) have dragged their feet on setting a firm start date for the proposed Kitimat LNG export facility in British Columbia.
Although the near-term environment likely will delay final investment decisions on many of these other projects, the companies involved are large enough to hold out for market conditions to improve.
Canada’s relative proximity to Asia, the primary source of future demand growth, and immense resource base creates a powerful incentive for these export plans to move forward (eventually).
Prevailing market conditions didn’t deter Petronas and its partners from announcing plans to go ahead with their Pacific Northwest LNG project, pending approval from the Legislative Assembly of British Columbia and a regulatory decision on its environmental assessment.
But the Douglas Channel LNG project looks likely to be the first to cross the finish line, with the consortium behind the projects expected to make a final investment decision in the fourth quarter of 2015.
This barge-based liquefaction facility—a joint venture between AltaGas (TSX: ALA, OTC: ATGFF), Idemitsu Kosan (Tokyo: 5019, OTC: IDKOY), Exmar (Brussels: EXM, OTC: EXMRF) and a unit of Electricite de France (Paris: EDF, OTC: ECIFF)—will sport a nameplate capacity of 0.55 million metric tons per annum.
That’s 6 percent of Kitimat’s capacity and 2 percent of Imperial Oil (TSX: IMO, NYSE: IMO) and Exxon Mobil Corp’s (NYSE: XOM) proposed WCC LNG export project.
Douglas Channel’s small size helps to limit capital expenditures and the number of hoops that the partners must jump through to obtain environmental approval.
Bringing this floating LNG export facility onstream would be a coup for AltaGas and unlock additional value from its midstream assets. Douglas Channel isn’t the Canadian company’s first collaboration with Idemitsu Kosan; the two companies recently completed terminal to export propane and butane from Ferndale, Washington.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Sep. 26, 2017
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.