A Chevron logo appears at a gas station in Miami on July 25, 2011. The Canada Energy Regulator says it has approved an application from Chevron Canada to export natural gas from the Kitimat LNG project for a term of 40 years over environmental opposition. THE CANADIAN PRESS/AP, Lynne Sladky

A Chevron logo appears at a gas station in Miami on July 25, 2011. The Canada Energy Regulator says it has approved an application from Chevron Canada to export natural gas from the Kitimat LNG project for a term of 40 years over environmental opposition. THE CANADIAN PRESS/AP, Lynne Sladky

Chevron’s move to exit Kitimat LNG project a dash of ‘cold water’ for gas industry

Canada Energy Regulator approved a 40-year licence to export natural gas for Kitimat LNG

The decision by Chevron Corp. to try to sell its 50 per cent stake in the Kitimat LNG project on the B.C. coast throws a symbolic dash of “long-dated cold water” on growth in the Canadian natural gas industry, an analysis says.

The California-based company announced the potential sale in its 2020 budget, adding it would also cut funding to gas-related ventures including Kitimat LNG and its shale gas fields in the northeastern United States.

It also announced a charge of at least US$10 billion against its assets because of expected lower long-term prices for oil and gas.

“With (Tuesday’s) budget, Chevron threw some long-dated cold water on the Canadian gas macro, as the company announced they are reducing funding for the Kitimat LNG project,” said analysts at Tudor Pickering Holt & Co. in a report Wednesday.

“While we don’t think investors were baking in any long-term gas demand related to the project, any advancements likely would have been well received.”

The analysts pointed out Chevron has access to about 100 million cubic feet per day of gas production to supply the proposed project to super-cool and ship out as much as 2.3 billion cubic feet of gas per day.

Chevron’s move is the latest in a string of setbacks for B.C.’s nascent liquefied natural gas industry which once boasted nearly 20 proposed projects with the implied promise of a new higher-priced export market in Asia for Western Canada’s abundant natural gas resources.

READ MORE: LNG Canada project gradually taking shape

Chevron is not the first company to want out of Kitimat LNG — it bought its 50 per cent stake from Calgary-based Encana Corp. and Houston-based EOG Resources, Inc., in December 2012.

In the same transaction, Houston-based producer Apache Corp. raised its stake in Kitimat LNG from 40 per cent to 50 per cent. But two years later, under pressure from activist investors, it sold that stake to Australian Woodside Petroleum Ltd., which remains Chevron’s partner.

Malaysian energy giant Petronas cancelled its Pacific NorthWest LNG project in 2017 and later joined the Royal Dutch Shell-led $40-billion LNG Canada project, which remains the only project under construction after being green-lighted in 2018.

Finance Minister Bill Morneau said Wednesday the federal government still sees a “very positive opportunity” for LNG in Canada, suggesting Chevron remains committed to seeing the project move forward despite its efforts to rebalance its asset portfolio.

READ MORE: Coastal GasLink receives first delivery of pipe sections

Earlier this month, the Canada Energy Regulator approved a 40-year licence to export natural gas for Kitimat LNG, doubling its previous licence duration and nearly doubling the potential output of the facility to 18 million tonnes of liquefied natural gas per year, a substantial increase over the previous 10-million-tonne licence which was set to expire at the end of this year.

Chevron said its decisions are part of its global portfolio optimization effort focused on improving returns and driving value.

“Although Kitimat LNG is a globally competitive LNG project, the strength of Chevron Corp.’s global portfolio of investment opportunities is such that the Kitimat LNG Project will not be funded by Chevron and may be of higher value to another company,” Chevron said in a statement.

“Chevron intends to commence soliciting expressions of interest for its interests in the Kitimat LNG Project. No timeline has been set to conclude this process.”

The company said it would continue to work with Woodside and government and First Nations partners during the process.

The Kitimat LNG project includes upstream natural gas lands in the Liard and Horn River Basins in northeastern B.C., the 471-kilometre Pacific Trail Pipeline and the gas liquefaction facility at Bish Cove near Kitimat.

Dan Healing, The Canadian Press


Like us on Facebook and follow us on Twitter.

Just Posted

It doesn’t matter where or how you received a COVID-19 vaccination, to receive the second immunization everyone must register on the ‘Get Vaccinated’ system health officials said, on May 11. While numbers are down Prince Rupert has not yet ‘zero’ cases as of numbers reported for May 2nd to 8th. (Image: BCCDC)
Prince Rupert still not at ‘zero’ COVID-19 cases

For second immunizations everyone in Prince Rupert and region must register, health officials said

Food programs such as the BC Fruit and Veggies program are important to student learning and students would be at a loss without them, Jeremy Janz principal of Pacific Coast School said, on May 13. Full tummies are the best way to start the day for Prince Rupert students, Natalia White (11) and Nikisha Johnson (12) who attended the official launch of the Breakfast Club of Canada program at PRMS on Feb. 25, 2020. (Photo: K-J Millar/The Northern View)
School fruits and veggies may be cut, said BC Liberals

P.R. students healthy food knowledge grew from the BC School Fruit and Vegetable Nutritional program

Gabriel Bureau president of the Prince Rupert Teachers union said on May 13 that SD 52 52 announced teacher lay-offs has broken the trust. (Photo:K-J Millar/The Northern View)
Teacher job losses are unnecessary, lay-off notices may be issued today, says PRDTU

Prince Rupert District Teachers Union says trust has been broken

Courtnay Girbav has been creating a little magic along the McClymont Trail in April with the initiation of a memorial fairy garden. The garden’s golden Buddha was recently found to be missing on May 2. (Photo: K-J Millar/The Northern View)
Fairy garden magic along McClymont Trail

An enchanted garden created in memory of a deceased friend has golden statue stolen

Prince Rupert Regional Airport is on track for flights to resume to the local airport on June 23. New airport federal funding was announced on May 11 to assist with COVID-19 recovery.  (Northern View file photo)
New federal airport funding takes off

Flights on track to resume June 23 at Prince Rupert Regional Airport

Daily confirmed COVID-19 cases reported to B.C. public health, seven-day rolling average in white, to May 12, 2021. (B.C. Centre for Disease Control)
B.C. preparing ‘Restart 2.0’ from COVID-19 as June approaches

Daily infections fall below 500 Friday, down to 387 in hospital

Bradley Priestap in an undated photo provided to the media some time in 2012 by the London Police Service.
Serial prowler acquitted of duct tape possession in B.C. provincial court

Ontario sex offender on long-term supervision order was found with one of many ‘rape kit’ items

Steven Shearer, <em>Untitled. </em>(Dennis Ha/Courtesy of Steven Shearer)
Vancouver photographer’s billboards taken down after complaints about being ‘disturbing’

‘Context is everything’ when it comes to understanding these images, says visual art professor Catherine Heard

Trina Hunt's remains were found in the Hope area on March 29. Her family is asking the public to think back to the weekend prior to when she went missing. (Photo courtesy of IHIT.)
Cousin of missing woman found in Hope says she won’t have closure until death is solved

Trina Hunt’s family urges Hope residents to check dashcam, photos to help find her killer

Chief Public Health Officer Theresa Tam listens to a question during a news conference, in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Restrictions will lift once 75% of Canadians get 1 shot and 20% are fully immunized, feds say

Federal health officials are laying out their vision of what life could look like after most Canadians are vaccinated against COVID-19

Police are at Ecole Mount Prevost Elementary but the students have been evacuated. (Kevin Rothbauer/Citizen)
Gardener finds buried explosives, sparking evacuation of Cowichan school

Students removed from school in an ‘abundance of caution’

A COVID-19 patient receives oxygen outside a hospital in Jammu, India, Wednesday, May 12, 2021. (AP/Channi Anand)
B.C. donates $500K to Red Cross COVID-19 relief efforts in India

The money will provide oxygen cylinders and ambulances for patients in communities grappling with the virus

Superintendent Aaron Paradis, community services officer with the Surrey RCMP, during a media availability about a recent drug bust in Port Coquitlam. (Photo: Lauren Collins)
Police seize 13 million ‘potentially fatal doses’ of pure fentanyl at B.C. drug lab

The evidence was seized at large, illicit drug manufacturing site in Port Coquitlam

B.C. Public Safety Minister Mike Farnworth debates the province’s latest measure to control crime, March 10, 2021. The legislation allows police to impound vehicles used to transport weapons and further restricts sale of vehicle and body armour. (B.C. legislature video)
B.C. seeking ways to ‘name and shame’ gangsters, minister says

Mike Farnworth appeals to family members to talk to police

Most Read