Shell says it is postponing a final investment decision on LNG Canada, its proposed liquefied natural gas terminal in Kitimat that would process gas from the South Peace. But the head of LNG Canada says the joint venture is "still very much on track."
The company announced it would put off its decision after a 44 per cent drop in profit in the last quarter of 2015. Shell, leader of a joint venture that includes Korea Gas Corp., Mitsubishi Corp. and PetroChina, had earlier indicated an investment decision would come in late 2016.
In an email, LNG Canada CEO Andy Calitz told the Alaska Highway News "we are still very much on track for our Joint Venture Participants to make a final investment decision late this year."
That seems to contradict the company's fourth-quarter 2015 results, released Thursday, which stated the company was "postponing final investment decisions on LNG Canada," canceling a sour gas project in Abu Dhabi and delaying a deep water project in Nigeria. The CEO's statement did not indicate when the LNG Canada decision would be made.
"We have always stated that our Joint Venture Participants plan to make a final investment decision in 2016," Calitz wrote. "We are pleased, given the current oil and LNG prices, and turmoil in global energy markets, that the Joint Venture Participants in LNG Canada are still working towards a final investment decision for the proposed facility later this year."
Asked about the postponement, Dawson Creek Mayor Dale Bumstead said the timeline presented by LNG Canada didn't seem to be different from what he'd heard all along.
"That was always my belief, that it was going to be later this year," he said of the investment decision Thursday morning. "They didn't say they're not doing it. They said they're delaying it because they've got to refocus."
LNG Minister Rich Coleman told the Alaska Highway News the quarterly report didn't change his understanding of the project's timeline either.
"I talked to the CEO today, we were in a meeting together. Nothing really has changed," he said. "There was some language in their annual report that some people decided to sort of question, but the fact of the matter is, they've told me for two months or more that they were looking towards the end of the year, last quarter, to make their final investment decision in 2016."
Dawson Creek Chamber of Commerce Director Kathleen Connolly, who visited the project last fall, said today's news adds to the uncertainty around LNG Canada.
"I think we've seen this coming for awhile," she said. "If you looked at the combination of factors they're facing, it would be a reasonable business decision to say we can't do this right now. It's been building to this for awhile."
The Shell-led project would process natural gas from Encana's Cutbank Ridge Partnership for export to Asia. It would employ 7,500 people during peak construction.
Shell says it has had to shift resources after heavy fourth-quarter losses.
"Operating costs and capital investment (across Shell) have been reduced by a total of $12.5bn as compared to 2014, and we expect further reductions in 2016," Shell CEO Ben van Beurden said in a statement.