Royal Dutch Shell is delaying its final investment decision (FID) from the anticipated April 2016 timeline to December on the proposed LNG Canada terminal in Kitimat.
In its 2015 fourth-quarter report, Royal Dutch Shell, a 50 per cent stakeholder in the project, stated that a final investment decision will now be made in late 2016, however, LNG Canada said the news is not startling and very much in keeping with their timeline.
“Shell’s quarterly results [Thursday] included information that the LNG Canada project FID decision will occur right at the end of this year. This is not inconsistent with information LNG Canada has shared with the community,” Kirsten Walker, LNG Canada spokesperson, said in a prepared statement.
“We have always stated that our joint venture participants plan to make a final investment decision in 2016. 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 toward a final investment decision for the proposed facility late this year.”
Business analysts had expected the consortium of Royal Dutch Shell, PetroChina, Mitsubishi Corp., and Korea Gas Corp., in partnership with the Haisla First Nation to make a decision in April whether or not to proceed with the $40-billion (Cdn) project.
Shell released its 2015 fourth-quarter results that showed a 44 per cent drop in earnings due mainly to slumping oil prices, a major factor in the postponement of the FID.
“The LNG Canada joint venture partners have agreed that due to market conditions, it makes sense to shift the FID decision to late 2016. In the meantime, the joint venture will continue to work on the competitiveness of the project,” Tara Lemay, a Shell Canada spokeswoman, said in a statement.
Shell did not stop there noting they have already begun to drastically cut expenses.
“Operating costs and capital investment have been reduced by a total of $12.5 billion as compared to 2014, and we expect further reductions in 2016,” said Shell CEO Ben van Beurden.
LNG Canada and the Province of British Columbia were quick to point out that the announcement by Shell is, given market conditions, quite promising.
Premier Christy Clark, who campaigned on having at least one small LNG operation up and running in 2016 and three more by 2020, told reporters in Ottawa that the announcement was actually positive.
“To me the good news in that, when you see energy projects getting cancelled all over the world, and you see producers cutting their capital investment in Alberta, in countries across the globe, (LNG Canada) announced that they’re re-committing to the project in British Columbia,” the Vancouver Sun reported. “The date’s changed but their commitment to it hasn’t, and you see that they’ve put it in writing.”
Katharine Birtwistle of LNG Canada also issued a statement saying “we are still very much on track” to make a decision in late 2016.
Susannah Pierce, director of external relations for LNG Canada, said despite the announcement current site preparation will continue.
“This doesn’t impact our early work projects,” she said. “It’s still very, very critical to prove to our joint venture partners … we have a very viable site.
“We still have a very full year of work ahead of us.”
by Todd Hamilton