Douglas Channel LNG project taken over by consortium

Douglas Channel LNG project taken over by consortium

A consortium including Calgary-based midstream and energy firm Altagas Ltd. has taken possession of the proposed Douglas Channel LNG project through a plan of arrangement that ends a Companies’ Creditors Arrangement Act process.

The Douglas Channel LNG Consortium includes AltaGas and partner Japanese energy marketer Idemitsu Kosan Co., Ltd. with one-third ownership, along with EDF Trading Ltd., a subsidiary and wholesale market operator of Electricite de France S.A., and Belgium-based liquefied natural gas shipper EXMAR NV.


The partners propose a barge-based LNG facility near Kitimat, B.C., to supercool and liquefy western Canadian natural gas for export. The project site is secured by a long-term lease with the Haisla Nation and initial nameplate capacity is to be 550,000 tonnes per year.

“The consortium is excited to advance this small-scale floating LNG project and is looking forward to a long and mutually beneficial relationship with the Haisla Nation, building on the newly signed long-term land and water lot leases,” said David Harris, president and chief operating officer of AltaGas, in a news release Wednesday.

“The project provides natural gas producers in Western Canada a new market for their products. PNG customers who live and work in northwestern B.C. can expect to benefit from lower natural gas rates.”

AltaGas owns Pacific Northern Gas Ltd., a pipeline that would be used to connect the project on the West Coast with natural gas producers. In its news release, it said the consortium expects to make a final investment decision in fourth quarter of this year, targeting 2018 for first exports.

Robert Kwan of RBC Dominion Securities said the news was expected and doesn’t change his outlook for AltaGas.

“While the expected investment is modest (roughly $100 million net to AltaGas as set out at the 2014 investor day), we believe that the project will allow AltaGas to prove out the concept to potential future customers of its larger scale Triton LNG project,” he wrote in a note to investors.

“That being said, against the backdrop of the current commodity price environment, Triton LNG remains a longer-term project in our view.”

AltaGas and Idemitsu have said that if Douglas Channel LNG goes ahead, Triton LNG would be located at the same site. Triton LNG has a National Energy Board permit to export up to 2.3 million tons of LNG per year.

EXMAR is to develop and operate the floating liquefaction facility, while EDF will be the LNG offtaker.

“The project is well positioned to be an early exporter of LNG off the West Coast of Canada with unique competitive advantages,” said EDF chief executive John Rittenhouse in the release.

Hisao Sato, Idemitsu general manager, said the project offers “numerous long-term benefits” to Japanese LNG buyers and will demonstrate British Columbia’s ability to quickly deliver scaleable LNG to the global marketplace.

Bart Lavent, managing director of EXMAR LNG Infrastructure, said the site in sheltered, ice-free waters is a perfect fit for the LNG barge and an ideal location for LNG deliveries to Asia.

The B.C. Supreme Court approved a plan of arrangement for Douglas Channel LNG in late October.

Analysts have said they expect only one to three B.C. LNG export terminals to be operating by 2025 from a list that has grown to about 20 proposals.

Share Button