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REPORTING · 1st May 2014
Walter McFarlane
Andy Calitz, CEO of LNG Canada made an announcement on Wednesday, April 30 in Vancouver, British Columbia. Premier Christy Clark and Minister of Natural Gas Development Rich Coleman were in attendance.

“We are here today at this table to sign a Joint Venture Agreement of the LNG Canada Project and so establish LNG Canada Development Incorporated. This is an exciting day and a great step forward for our project. It is the symbol of coming together of four leading companies, Shell, PetroChina, Co Gas and Mitsubishi Corporation to create one operating entity,” said Calitz.

He expressed they will be using the development experience, financial strength and access to markets in order to aspire to become a leading LNG developer in Canada. This step will allow them to move forward with the signing of agreements with Contractors and Suppliers. Their goal is to provide LNG to Asia, beyond and abroad, construct an LNG Plant at Kitimat, bring gas to Kitimat via a pipeline built, owned and operated by Trans Canada Pipelines.

The company’s interests in the project have changed. Shell now holds 50%, PetroChina has 20% and the remaining companies hold 15% interest each. Each company will receive cargo based on the percentage which they hold, but will bring their own gas, book their own capacity and own the LNG plant.

“It is important to note that today is not a final investment decision to construct the project. Projects of this magnitude are challenged by significant financial investment and risk,” said Calizt. “We have a number of uncertainties to overcome and work to do. That work includes our environmental filing with the Environmental Assessment Office, the Oil and Gas Commission, Continued consultation with First Nations and the Local Community of Kitimat and also Terrace, front end engineering design, gas development strategies and plans from North East British Columbia, some very important labour arrangements, modularization plans and some final cost estimate before we make the final investment decision.”

He asked the Province of BC and the Federal Government for continued support. He pledged to work with both to make the project a reality. He said LNG Canada is enthusiastic about the great opportunity provided by the Province of BC.

Clark recognized the people who would be signing the Joint Venture Agreement were some of the leaders of the world’s top companies and she was delighted to reach another milestone to building a natural gas industry in BC.

“No doubt today does represent another very important milestone towards realizing what will be a generational opportunity, not just for British Columbia but for all of Canada in creating a liquefied natural gas industry here. This Joint Venture agreement is a signal of that progress, not just for this project but for all LNG projects and for investors all around the world, a vote of confidence that in British Columbia, we are prepared to work with investors on all fronts, to ensure these projects can succeed,” said Clark.

She said today was a big step forward, two days before she launches her 5th International Trade Mission. She will be traveling to Malaysia to meet with proponents of Malaysia, Singapore and Hong Kong so they can continue to build and promote the LNG industry in BC. She was looking forward to the final investment decision.

A media question period was held after the documents were signed.

Calitz said there is a lot of work which needs to be done before there is a final investment decision. This work will take 18 to 24 months. LNG Canada is concerned about where the Asian price of gas will go, whether they have enough labour, and getting the pipelines through the mountains. When all the work is done, the board will make a final investment decision.

Clark stated she hoped to see final investment decisions in many of the projects by the end of the year, but expected the decision of LNG Canada to take longer than this. She admitted these decisions come from the private sector. She was happy with the agreement which was signed this morning.

Clark was asked about the need for temporary foreign workers to fill positions as needed, as the Federal is currently reviewing the program. Clark argued temporary foreign workers should fill temporary jobs. While they will be needed to fill gaps during peak construction time where there will not be enough British Columbians to fill, Clark wants to make sure British Columbians get the jobs first by making sure the people have all of the skills training.

There were plenty of questions about the impact which lower prices in Asia would have on the LNG Market. Calitz stated the debate would continue and every project in BC would be impacted by price. This could impact the final investment decision. They expect changes in the industry to take place on a monthly basis and will factor the changes in to the final decision.

Clark stated the private sector does not make major investment decisions if they do not think there is going to be a return on it. She did not think there would be steps like the agreement if there was not a market for BC Gas.

“The other advantage that British Columbia has is that we will never sacrifice our reputation as a dependable, reliable, honourable trading partner. When people do business in British Columbia on natural gas, they know we won’t play politics with it, they know that we will keep our promises about where the tax levels will be and how they are going to be treated as trading partners, and that’s with respect,” said Clark.