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Old 10-15-2018, 03:11 PM   #1
bizkitgto
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LNG Canada project is a go, there was about 10 projects on the books in BC. If just 2 or 3 more get approved could we be back to double meat at Subway days again?
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Old 10-15-2018, 03:17 PM   #2
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No, most of the detailed engineering is outsourced to Japan for the LMG processes, Europe for the fancy tanks and China for the easy stuff. My understanding is module fabrication will be done in China as well.

So you are left with foundation and site design in Calgary plus project management. So I would say limited impact for Calgary. Construction may provide fly in fly out type work but that will be spread out throughout western Canada
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Old 10-15-2018, 03:22 PM   #3
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Not by itself, but it will mitigate some of the damage. The gas wells themselves will be owned and operated by companies that are all HQ'd in Calgary. So drilling, completions, production, reservoir, pipeline, servicing etc. will be done mostly by companies who have a significant presence here and most of those people live here. Any return to drilling as a result of these projects will be beneficial to DT Calgary. Won't be double meat, but we might be able to afford actual meat products.
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Old 10-15-2018, 06:00 PM   #4
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No, most of the detailed engineering is outsourced to Japan for the LMG processes, Europe for the fancy tanks and China for the easy stuff. My understanding is module fabrication will be done in China as well.

So you are left with foundation and site design in Calgary plus project management. So I would say limited impact for Calgary. Construction may provide fly in fly out type work but that will be spread out throughout western Canada
Benefit to Calgary will be higher nat gas prices in western Canada, which would get tons of folks working if gas drilling could be justified again.
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Old 10-15-2018, 06:24 PM   #5
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Benefit to Calgary will be higher nat gas prices in western Canada, which would get tons of folks working if gas drilling could be justified again.
I don't know about tons of people. The gas price would have to triple before anything exciting started to happen on the employment front.
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Old 10-15-2018, 07:15 PM   #6
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The other issue is that the Western Canadian gas market is oversupplied today, but LNG Canada won't start moving gas until around 2023. So on the E&P side of things, it won't be reviving much in the near term. It does give some light at the end of the tunnel for gas producers however, especially if additional LNG projects get built.
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Old 10-15-2018, 07:27 PM   #7
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I don't know about tons of people. The gas price would have to triple before anything exciting started to happen on the employment front.
LNG in Australia has taken gas prices here to $12-$15/gj...they were $3.50/gj. LNG is a game changer.
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Old 10-16-2018, 06:09 AM   #8
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LNG in Australia has taken gas prices here to $12-$15/gj...they were $3.50/gj. LNG is a game changer.
Great for producers but terrible for consumers. Our heating bills would sky rocket if gas hit $12 to $15/gj. Many people seriously would not be able to heat their homes. Half of our electricity is produced by NG as well so our power bills would spike too.

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Old 10-16-2018, 06:14 AM   #9
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12-15 dollar Nat Gas would also crush the oil sands. Fuel cost is a significant portion of Expenses.
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Old 10-16-2018, 07:22 AM   #10
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Now I am not an LNG expert by any means, and I don't have a detailed understanding of this project, but I'm pretty sure Petronas/et al will be able to fill this terminal from 2023 virtually in perpetuity. Seems to me, they've spent the last years drilling gas at a loss to prove their resource, and FID is made now with all the takeaway spoken for through the foreseeable life of the project. Once capacity for takeaway is built, Petronas and Shell (and maybe the other project partners in Horn River shales? Kogas? Mitsubishi? Are they still in there?) will just scale up drilling and fill it up.

Average joe E&P is not accessing the global gas market unless this is a harbinger of more LNG projects.

I may be proven wrong about the long term impact, but I have a hard time seeing this shifting the Western Canadian gas market all that much, aside from maybe taking a little bit of pressure off Station 2.

Of course if this opens the door for more projects, then all bets are off, but that's a long, twisted, politically ridiculous ways off.
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Old 10-16-2018, 07:42 AM   #11
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Petronas and friends won't be buying gas, you're right, they'll just sell there own. However, right now they're selling a lot of gas at Station 2 that they will instead ship to Asia. Lower supply in western Canada should mean higher prices. Also, if one works we will probably get more.

I don't think $12/GJ is likely either here, but even if we started getting $3-4 I think a lot more of the liquids rich gas would be economic again.
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Old 10-17-2018, 02:35 PM   #12
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Great for producers but terrible for consumers. Our heating bills would sky rocket if gas hit $12 to $15/gj. Many people seriously would not be able to heat their homes. Half of our electricity is produced by NG as well so our power bills would spike too.
The Montney has the potential to be one of the most prolific gas plays in the world, with a world-class top 5 proven resource play. It does need higher prices for it to be viable long term, but any increase in price will drive much higher production. I think prices wont rise substantially even with significant LNG exports.
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Old 10-17-2018, 04:24 PM   #13
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LNG in Australia has taken gas prices here to $12-$15/gj...they were $3.50/gj. LNG is a game changer.
Much of that cost is also due to the various Australian state level governments restricting exploration and development of new NG sources and prohibiting fracking.
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Old 10-17-2018, 07:15 PM   #14
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Much of that cost is also due to the various Australian state level governments restricting exploration and development of new NG sources and prohibiting fracking.
They also have been forcing closure of all the coal power producers haven't they?
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Old 10-17-2018, 08:35 PM   #15
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The Montney has the potential to be one of the most prolific gas plays in the world, with a world-class top 5 proven resource play. It does need higher prices for it to be viable long term, but any increase in price will drive much higher production. I think prices wont rise substantially even with significant LNG exports.
Totally agree. That amount of gas in place in the Montney is staggering.
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Old 10-17-2018, 09:29 PM   #16
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They also have been forcing closure of all the coal power producers haven't they?
Yeah, ~10% of their coal fleet has been shutdown in the last couple of years and only partially replaced by wind and solar, so increased natural gas demand for electricity plus exports means Australians now pay high retail prices for both NG and electricity.


I guess out of two bad options, it's better to be oversupplied with energy than under supplied.
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Old 10-17-2018, 10:58 PM   #17
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Much of that cost is also due to the various Australian state level governments restricting exploration and development of new NG sources and prohibiting fracking.
Yes. The shortage on supply carried the LNG price to the market. The LNG here is 95% contracted on oil linked contracts. Those prices are still achieved despite what else is going on. The public and industry are feeling the hurt of short supply.

The WCS differential is cool to chat about in the short term, but unstranding Canadian NG is the future. A world NG price of $5.50 - $12/GJ is achievable when the plants FID.
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