TransCanada Corp. and Petro-Canada are the latest energy giants to throw a hat into the liquefied natural gas (LNG) ring.
But building new LNG plants is proving to be a tough sell to people who live near the proposed facilities.
TransCanada and Petro-Canada plan to build a $660- million LNG plant in northern Quebec. The plant would be able to receive, store and re-gasify imported LNG, and ship by pipeline about 500 million cubic feet per day of natural gas.
Hal Kvisle and Ron Brenneman, CEOs of TransCanada and Petro-Canada, respectively, both see LNG as a crucial component of their companies’ future strategy to meet the ever-increasing demand for natural gas in North America.
The proposed plant in Quebec, on Gros Cacouna Island adjacent to an existing harbour, is one of about 40 LNG facilities either announced or on the drawing board for North America’s coasts.
TransCanada would operate the Cacouna Energy plant while Petro-Canada would supply the LNG.
The companies, which expect the regulatory approval process to take two years, would like to have the facility up and running toward the end of the decade.
Leading oilpatch executives expect the industry to invest about $100 billion on LNG terminals and related infrastructure over the next decade.
But in the U.S., several of the dozens of proposed new LNG plants have run into opposition from local neighbours.
They’re worried about everything from dropping property values to terrorist attacks on the huge sea-going tankers that carry the super-cooled, liquefied gas.
Earlier this year, TransCanada and partner ConocoPhillips of Houston had to abandon plans for a new LNG plant near Portland, Me., after the community voted against leasing the land needed for the facility.
Another challenge facing TransCanada and Petro-Canada in wanting to build a new LNG plant in Quebec is a rival proposal by Gaz Metropolitain – the province’s biggest natural-gas distributor – and partners Enbridge Inc. of Calgary and Gaz de France.
Gaz Metro and its partners have proposed a $2.7-billion project that includes a deepwater port and LNG terminal near Quebec City.
At this point, the TransCanada and Petro-Canada LNG plant has the inside track to succeed, simply because it would be built on an island next to an existing harbour.
The project is also considerably less expensive – by some $2 billion – than the rival plan led by Gas Metro, which would entail winning local support for a new deepwater port and LNG plant downstream of populous Quebec City.
The Spectre of Sudan
Talisman Energy Inc.’s former oil venture in Sudan continues to haunt the company.
A U.S. District Court has rejected Talisman’s motion to dismiss a lawsuit against the company that concerns its operations in Sudan.
The lawsuit, filed in New York state in 2001 by the Presbyterian Church of Sudan and other plaintiffs, accuses Talisman of “complicity in genocide and war crimes” during the nearly four years it operated in Sudan.
The country is still being torn apart by a vicious, decades-long civil war.
Talisman calls the claims, which haven’t been proven in court, outrageous and plans to defend itself.
The company has always insisted that its presence in Sudan helped promote peace and development.
Even though Talisman has failed so far in getting the lawsuit tossed from court, there’s no guarantee the matter will ever go to trial.
The company hasn’t even hinted yet at the possibility of an out-of-court settlement.
But to avoid an embarrassing and costly trial, Talisman may have to offer some sort of financial compensation to Sudanese who, the lawsuit claims, were forced to flee their homes as part of the Sudanese government’s plan to depopulate oil-rich regions.
Meanwhile, EnCana has put its oil assets in Ecuador up for sale, according to several reports.
The assets include a 36.3-per-cent stake in a 500-kilometre, 450,000- barrels-per-day pipeline and oil reserves estimated at 350 million barrels, which could fetch about $2 billion.
Financial analysts say the company needs the cash to help pay down its debt.
EnCana is also embroiled in a dispute with the Ecuador government over a $120 million US tax refund that the company insists it is owed. The matter goes to an international arbitration panel hearing on November 8.
But, like with Talisman in the Sudan, EnCana’s operation in Ecuador – in which the OCP Consortium oil pipeline was built through pristine Amazon rainforest over the objections of local native communities – is drawing flak from local and international groups.
EnCana CEO Gwyn Morgan may have decided it’s better to pull the plug now than stay in the country and wait for the inevitable flurry of lawsuits from human rights groups.
That’s Tucker, Not Sucker
Husky Energy Inc. has taken a big step to ensure that its $500-million Tucker oilsands plant doesn’t end up with mammoth cost overruns that have plagued other new or expanded oilsands operations.
Husky awarded SNC-Lavalin Group Inc.
of Montreal and PCL Construction Group Inc.
of Edmonton a $290-million turnkey contract for the Tucker project.
It’s the kind of contract that makes both companies responsible for going over budget.
Husky CEO John Lau says Tucker is one of the first of the new oilsands projects to use such as lump-sum turnkey approach to build the facility – although turnkey contracts are more common with international projects. The two engineering firms will build the central processing plant for the Tucker project, located 30 kilometres northwest of Cold Lake. SNC-Lavalin and PCL expect to begin construction at the site this fall, with production to begin in late 2006 or early 2007.
Syncrude Canada earlier this summer delivered a raft of pink slips to personnel after an expansion project on its oilsands plant near Fort McMurray ballooned to $7.8 billion from initial estimates of $4.8 billion.
Deh Cho Say No
The first big monkey wrench has been tossed into the planned $5-billion Mackenzie Valley pipeline project.
The Deh Cho First Nations in the Northwest Territories have filed a legal action in the N.W.T. Supreme Court, arguing that the federal government is violating the aboriginal group’s rights.
The 4,500-member Deh Cho say Ottawa has refused their request to allow two of their representatives to join a seven-member joint federal-territories review panel that will decide on the project application – expected to be filed any day now.
Their statement of claim asks the court to consider granting an injunction to stop the regulatory review process for the Mackenzie Valley project until the Deh Cho are included or, alternatively, to order that any decision by the panel be deemed invalid.
Forty per cent of the route for the 1,350-kilometre pipeline would cross Deh Cho lands in the southern part of the N.W.T.
But don’t blame the natives for this move, which could delay the project from its planned completion around 2009. The Deh Cho still don’t have a settlement from the federal government of their land claim. And the blame for moving slower than a slug on Valium to resolve that issue rests squarely with Ottawa.
Swatting Suncor & Shell
Suncor Energy Inc. and Shell Canada Ltd.’s separate petrochemical facilities in Ontario have been slapped by that province’s environmental SWAT team.
Ontario’s Ministry of the Environment has ordered 12 petrochemical plants in the Sarnia area, including those operated by the two Alberta-based companies, to comply with the province’s environmental laws.
The ministry said a recent inspection by its SWAT team found problems with Suncor Energy Products Inc.’s plant, including having no permits for installing and using equipment that could cause pollution, as well as no waste audit and waste-reduction work plans as required by regulations.
Problems with Shell Canada Products Ltd.’s plant, according to the ministry, included improper storage of waste materials, no permit for changes made to an onsite sewer system, and no permits for installing and using equipment that could cause pollution.
The SWAT team’s inspections didn’t find any immediate effects on human health. But the ministry has given all 12 petrochemical plants specific deadlines to comply with the law or face further action, including possible court action.
(Mark Lowey can be reached at mark@businessedge.ca)
