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Two Indigenous-led LNG developments raise hopes of new West Coast natural gas export projects

Indigenous, LNG -

Two Indigenous-led LNG developments raise hopes of new West Coast natural gas export projects



CALGARY — After a string of cancelled liquefied natural gas projects in British Columbia, a pair of new proposals led by Indigenous groups is reinvigorating hope that additional Western Canadian natural gas exports to Asia could finally become a reality.

The Nisga’a Nation, whose traditional territory is north of Prince Rupert near the Alaska border, and a Calgary-based consortium of natural gas producers called Rockies LNG Partners, plan to file a project description for the Ksi Lisims LNG project in the next month or two, the Financial Post has learned.

“I am pleased to advise all of you about a collaborative endeavours agreement the Nisga’a Nation has recently entered into for the assessment and development of an LNG facility in the Nass Area,” Nisga’a president Eva Clayton wrote in a letter to members of her community in March. The letter is the only publicly available information about the project published to date.

“We are working with Western LNG and Rockies LNG Partners to advance an LNG project named Ksi Lisims LNG, a name graciously provided by the Nisga’a Executive,” Clayton wrote, adding that the Nisga’a have been trying to attract an LNG project to the community for over a decade.

An accompanying fact sheet outlines the scope of the LNG project, which would be a floating liquefaction facility capable of producing 12 million tonnes of the super-cooled natural gas per year near the village of Gingolx. The project aims to be a net-zero LNG facility and would generate 4,000 construction jobs.

The Nisga’a did not respond to questions about the project. Talks between the community Rockies LNG Partners are ongoing on how to structure the project.

The Royal Dutch Shell Plc.-led $40-billion LNG export project in Kitimat is the only project that has secured final investment decision from its backers. Woodfibre LNG, a smaller project located in Squamish, B.C., is awaiting a final approval from its Singapore-based owner Pacific Oil & Gas Group.

The projects are the only two survivors after a string of cancelled multi-billion-dollar LNG export projects — including the $36-billion Pacific NorthWest LNG project near Prince Rupert and Exxon Mobil Corp.’s $25-billion West Coast Canada LNG project.

But the two new projects — the Cedar LNG project and the Ksi Lisims LNG project — have injected fresh optimism in the Canadian oilpatch, and are moving forward with strikingly different ownership structures than those that were scrapped by international oil majors in recent years.

Both projects have given natural gas producers drilling in Alberta and British Columbia new confidence that LNG projects might still be built to ship chilled gas to Asia, Raymond James analyst Jeremy McCrea said.

“There have been a lot of lessons learned over the last decade over the best way to go about doing this so that a project actually does get built,” McCrea said. “I think what it comes down to is these companies all looked at the process in terms of, ‘What were the mistakes those projects made?’ The big one was there wasn’t proper consultation with the First Nations groups. That’s the big difference now with these projects.”

On June 15, the Senate passed Bill C-15, which calls on the Canadian government to bring Canadian laws into line with the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), which is a series of articles ratified by the U.N. enshrining Indigenous rights including the right to self-determination.

Bill C-15 is expected to cause more direct partnerships with First Nations groups on resource projects because UNDRIP requires “free, prior, informed consent” on projects.

As the new projects move forward and LNG commodity prices have strengthened around the world, gas buyers are once again reaching out to Canadian gas producers and looking to ink supply contracts.

Both PetroChina Canada Ltd. and KOGAS Canada Ltd., which are partners in the $40-billion, under-construction LNG Canada export project are in talks with Calgary-based natural gas producers to secure gas for the under-construction gas liquefaction project.

Neither PetroChina or KOGAS responded to requests for comment.

LNG prices have also firmed up lately, with the Japanese JFK benchmark up nearly 366 per cent to US$10.92 per mmBtu in May , compared to rock-bottom prices during the same period last year. Delays in new projects should  make for a tighter market in the next few years.

The market could see up to 9 million tpa of supply removed between 2026 and 2030, disrupting global balances, according to Rystad Energy, which expects LNG prices to remain above U$8 per MMBtu in 2025.

Indeed, market dynamics have changed to such a degree that buyers are now concerned about gas supply in Western Canada, according to McCree, the Raymond Jame’s analyst.

https://www.msn.com/en-ca/money/topstories/two-indigenous-led-lng-developments-raise-hopes-of-new-west-coast-natural-gas-export-projects/ar-AALCfmx


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