Cost-competitive LNG projects still have a chance in B.C., says Steelhead CEO

LNG projects that are globally competitive, cost-wise, still have a chance in British Columbia, with a window of...

Nigel Kuzemko | Steelhead LNG

LNG projects that are globally competitive, cost-wise, still have a chance in British Columbia, with a window of opportunity most likely in 2020-21, said the CEO of Steelhead LNG Nigel Kuzemko.

Kuzemko said Steelhead’s planned pair of LNG plants in the province are a good example.

“The current market forecasts show a growing market — at between 5-7% — into the future for LNG,” said Kuzemko. “The approvals for Australian projects were three, four years ago and since then there are no new projects approved in the Pacific Basin, which leads to the conclusion that 2020-21 will be the time that a supply gap will re-appear.

“However, this forecast is pessimistic as it assumes that there is no increase in demand due to current low prices, which is likely to be too conservative,” he added.

During the summer, Steelhead and the Malahat First Nation announced a mutual benefits agreement and long-term lease supporting the proposed development of Malahat LNG.

This is a new LNG facility to be situated on the shoreline of Malahat Nation-owned land, formerly known as Bamberton, approximately eight kilometres south of Mill Bay on Vancouver Island.

The proposed facility, expected to have a capacity of up to six million tonnes per annum (mtpa), would include floating liquefaction facilities moored to the shoreline and minor supporting land-based infrastructure.

This is the second proposed project by Steelhead.

On July 8, 2014, Steelhead LNG applied to the National Energy Board for five licenses to export in the aggregate of up to 30 million tonnes of LNG per year for 25 years.

Steelhead has since confirmed to the NEB that one six-mtpa-licence will be allocated to Malahat LNG, while the other four six-mtpa-licences will be allocated to the company’s proposed project at Sarita Bay.

Asked whether consolidation amongst the various planned projects may happen in B.C., or whether Steelhead would consider selling or bringing partners into its own projects, Kuzemko said “consolidation may occur but it’s difficult to see it happening given the projects themselves. The economics will be challenging, especially for the large land-based projects versus FLNG [floating LNG] projects.

“All assets in all companies are for sale at the right price but we are not planning on this happening.”

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