Newspaper article The Canadian Press

Chevron: Finding a New Partner Just One Hurdle for Kitimat LNG Project

Newspaper article The Canadian Press

Chevron: Finding a New Partner Just One Hurdle for Kitimat LNG Project

Article excerpt

Chevron: many hurdles for B.C. LNG project


CALGARY - Many hurdles remain before U.S. oil giant Chevron Corp. can decide the fate of its planned liquefied natural gas project in Kitimat, B.C., and finding a new partner is just one of them, CEO John Watson said Friday.

"It's not a schedule-driven project. It's an economics-driven project," Watson told reporters ahead of the annual Spruce Meadows Changing Fortunes Round Table in Calgary.

This summer, Chevron's partner in the project, Texas-based Apache Corp., announced it was getting out of the liquefied natural gas game, putting the future of the Kitimat LNG project in question.

Chevron, headquartered in California, has said it has no interest in increasing its 50 per cent share of the project. That leaves it up to Apache to sell its half-stake in accordance with an agreement it signed with Chevron, said Watson.

But even without the uncertainty over the partnership structure, a number of items need to be crossed off the list before a final investment decision can be made.

Chevron needs sales contracts with customers, clarity concerning British Columbia's fiscal regime, more knowledge of its resource potential in northeastern B.C. and support from First Nations.

But Watson, who is also chairs Chevron's board, said there is time for all of those conditions to be met, as he expects the world demand for LNG to stay strong for decades to come.

"If you look forward, energy demand worldwide will be growing roughly two per cent a year for the next 20 years. Much of that growth will be in natural gas. It will be displacing coal for environmental reasons. It will be displacing nuclear for environmental reasons and it will be meeting growing demand," said Watson.

"The purchasers are anxious to have supplies from reliable locations such as Western Canada. There does need to be a meeting of the minds when it comes to price, so that price can underpin the economics in a world where costs have risen. …

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