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Wednesday, March 13, 2013
Chevron Drives Kitimat LNG Export Project Forward
By Michael Hansen @ 7:38 PM :: 5027 Views :: Energy, Jones Act

Chevron Drives Kitimat LNG Export Project Forward

by Michael N Hansen, President, Hawaii Shippers Council

The Financial Times reported on March 12th that John Watson, President and CEO, Chevron Corporation, said at a recent presentation to analysts in New York that they would be seeking long term contracts  based on the price of oil for exports from their newly acquired joint venture liquefied natural gas (LNG) terminal at Kitimat, British Columbia, Canada.

 

The Hawaii Shippers Council (HSC) has been showing the several planned LNG export terminal projects at Kitimat as probable sources of LNG for Hawaii.  These proposed terminals would have several transportation advantages including the relatively moderate distance to Hawaii and the Jones Act does not apply to this international trade so a foreign flag LNG carrier (a highly specialized tanker designed for the carriage of LNG) could be used avoiding the problems of sourcing coastwise eligible ships. 

 

In addition to the Kitimat LNG projects, the HSC has been showing other planned West Coast of North America and Alaska LNG export terminal projects as possible sources of LNG for Hawaii including:

·    Alaska Southcentral LNG Project – ExxonMobil, BP, ConocoPhillips & Trans-Canada – development of the North Slope gas fields including Prudhoe Bay and Point Thompson and construction of a Trans-Alaska gas pipeline to the tidewater and LNG export terminal probably at Valdez, Alaska.

·    Jordan Cove LNG Export Terminal Project at Coos Bay, Oregon – would tap into the U.S. gas market through the gas pipeline hub at Malin, Oregon, by means of the proposed Pacific Connector Pipeline. 

 

As we reported on March 6, 2013, ConocoPhillips announced on March 5th that they would be mothballing their Kenai LNG Export Terminal due to declining production from the Cook Inlet gas fields, eliminating one of the LNG sources originally identified by the HSC for Hawaii.

 

The Chevron Kitimat project is known as KM LNG Operating General Partnership with their planned Bish Cove Terminal was originally a joint venture with Apache Corp. holding 40%, Encana Inc. 30% and EDG 30%.  In December 2012, Chevron acquired the Encana and EDG shares and now hold a majority 60%.  Industry analysts advise the HSC that Chevron’s acquisition means that the project now has sufficient resources to move ahead and anticipate a completion date prior to the originally projected 2015.  However, as the Financial Times reported, Chevron is seeking customer contracts first, before going forward.

 

The downside of John Watson’s recent comments for Hawaii’s nascent LNG plans are that Chevron is planning to price their prospective LNG exports from Kitimat on the basis of oil as opposed to lower pricing for domestic U.S. natural gas using the Henry Hub standard.

---30--- 

The Hawaii Shippers Council (HSC) is a business league organization incorporated in 1997 to represent cargo interests – known as “shippers” – who tender goods for shipment with the ocean carriers operating the Hawaii trade.

 

Please contact the HSC at email pacmar@hawaiiantel.net if you wish to be placed on our email list.

 

Financial Times: Chevron explores first Canada gas exports

Seeking Alpha: The Canadian Players in the booming LNG sector

 

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