Exxon and its Canadian partners have filed to move forward on a new LNG project in western Canada
ExxonMobil (ticker: XOM) and its Canadian partner Imperial Oil Ltd. (ticker: IMO) have taken a step forward in the process of developing the WCC LNG project in British Columbia, Canada. WCC LNG filed an environmental assessment and project description for its proposed project on January 7, initiating the environmental pre-approval process for the liquid natural gas (LNG) project.
While filing for an environmental assessment is still a relatively early phase in the process of constructing a LNG terminal, the move indicates XOM’s intention to continue moving forward with the project, which could represent a $25 billion investment for the company. Pius Rolheiser, a spokesperson for Imperial Oil, told CBC news that “potential investment would depend on a range of factors, including outlooks for long term markets, competitive fiscal arrangements [and] the general investment climate.”
WCC LNG expects that the project could employ up to 6,000 workers during the peak of construction during the first phase of the project, which has an initial capacity of 15 million tons per annum (MTA) of LNG (approximately 267 MMBOE) from Tuck Inlet, Prince Rupert, British Columbia, according to the company’s project description. Ultimately, XOM plans for the project to produce 30 MTA (approximately 534 MMBOE), or about 180 Mcm/day (approximately 1,132 MBOEPD).
The project was approved for a license to export 30 MTA for 25 years on December 16, 2013. Based on the company’s projected schedule for WCC LNG, construction could potentially start in 2017. The project is being designed with a minimum of 25 years of production life, but could be extended for another ten years, out to 2058.
Moving forward where others have faltered
The Pacific NorthWest LNG project, headed by Malaysia’s state-owned Petronas, has also looked to develop B.C.’s LNG industry, but stalled out in December. Petronas said that the estimated $11.4 billion investment required to move the project forward was not justifiable given the current price environment.
Despite costs that have put other projects on the sideline, Exxon appears to be undaunted. When asked why Exxon and Imperial would choose to enter into B.C.’s fledgling LNG, Mr. Rolheiser said the potential was worth the investment. “The National Energy Board study in Canada concluded that Canada will have more than enough energy to meet its growing needs, with potentially significant amounts of energy available for export.”
Rolheiser said the company is waiting for the outcome of the assessment of the project description by the B.C. Environmental Association while it continues to engage local communities and stakeholders on how best to develop the project.
Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.