Low prices, LNG doubt supplement to disappointment levels for healthy gas producers

Greg Kist admits he was burnt out when he quiescent as boss of Pacific NorthWest LNG during a finish of 2014, as a Vancouver-based try led by Malaysian appetite hulk Petronas modernized a luckless goal to build a liquefied healthy gas devise in B.C.

“I indispensable to decompress,” a 57-year-old gas attention maestro says of his preference to lapse to his home and family in Alberta.

Once hailed as a starved new consumer of western Canadian healthy gas, a nascent LNG attention was staggered by devise delays and all though halted by disappearing tellurian cost trends, heading to Petronas cancelling a devise in 2017.

Meanwhile, Kist went into retirement mode and avoided a healthy gas business for a subsequent integrate of years.

So it’s startling that Kist now finds himself behind in a thick of things as boss and CEO of Rockies LNG Partners, a consortium of 9 healthy gas producers who invited him behind with a guarantee to try again to jumpstart an LNG trade project.

The wish is that a former college basketball players’ knowledge in LNG and a healthy gas business will assistance them to pierce their gas from a oversupplied and underpriced markets of North America to a betrothed land in Asia.

“I consider a subsequent 6 months are vicious for us,” Kist pronounced in an talk in a downtown Calgary offices of Birchcliff Energy Ltd., one of a consortium members.

The gas producers wish to attract partners to build and work what could be a 12-million-tonne-per-year LNG devise to open by 2026, when forecasts advise LNG direct will surpass supply. That means an investment preference contingency be done by a finish of 2021.

Gas attention insiders used to contend a resolution to low prices is low prices — when prices go down, reduction is constructed and nonesuch creates prices go adult again.

But that hasn’t happened. In Mar 2013, Canada constructed about 14 billion cubic feet per day of healthy gas. Six year later, a National Energy Board reports prolongation had increasing by 16 per cent to 16.2 billion cf/d, notwithstanding no arise in pricing trends.

U.S. experiencing shale gas boom

Meanwhile, Canada’s largest gas customer, a U.S., is experiencing a shale gas bang that led to domestic prolongation reaching 109 billion cf/d in March, adult 35 per cent compared with 81 billion in a same month in 2013. Near-term prices in a U.S. have recently forsaken to three-year lows on a bolt of gas.

In mid-July, a organisation of 9 Alberta producers — separate to Rockies LNG though with some common membership — expelled an open minute perfectionist a range support a devise underneath that kingship credits would be released to producers who willingly cut prolongation to boost low gas prices when supply overwhelms tube capacity.

Complaints about bad gas prices and interruptions in gas sales due to tube outages are common as Calgary-based healthy gas producers hurl out second-quarter results.

Painted Pony Energy Ltd. reported recently it was regulating some of a possess healthy gas to reinstate higher-priced diesel fuel in some well-completion operations, a pierce it says could save $100,000 per well.

Meanwhile, Perpetual Energy Inc. reported shutting down wells producing dual per cent of a sum outlay since it was some-more essential to buy inexpensive gas on a marketplace to prove a supply contracts.

In Western Canada, “dry” gas has turn an unloved byproduct as producers continue to cavalcade wells seeking a light petroleum liquids constructed with a gas, generally in a Montney arrangement that underlies a northern Alberta-B.C. border, pronounced Ian Archer, associate executive of North American healthy gas with IHS Markit.

Condensate commands prices in line with crude

One product in particular, condensate, commands prices in line with U.S. benchmark wanton oil since it is indispensable to intermix oilsands bitumen to concede it to upsurge in a pipeline. Canada constructed 417,000 barrels per day of condensate in March, adult from usually underneath 150,000 bpd in Mar 2013. Meanwhile, it still imports condensate from a U.S.

“They’re drilling for condensate and infrequently a volume of condensate is only, say, 20 or 30 per cent of a good (volume), though it’s going to be 40 or 50 per cent of a revenue,” pronounced Archer.

“Then they have that 70 per cent gas volume they have to understanding with.”

There have been some-more than 20 proposals to build LNG projects on Canada’s West Coast though construction has usually begun on one, LNG Canada, and it’s not approaching to open until 2023 or 2024.

It would take in adult to 2.1 billion cubic feet per day of healthy gas though many or all of it is approaching to come from northern B.C. wells owned by partners in a project.

That’s not good adequate for a submissive members of a Rockies LNG group, pronounced Kist.

“If we demeanour behind over a story of LNG projects worldwide and positively in Canada, they’re flattering most tranquil by vital general entities. Those entities tend to demeanour after their possess opportunities, not indispensably a opportunities for a writer groups.”

Article source: https://www.cbc.ca/news/canada/calgary/natural-gas-producers-1.5243340?cmp=rss