Enbridge enters LNG race

Trying to work out a form line on the list of probable/possible runners and riders in the great LNG chase has been complicated enough to date.

Trying to work out a form line on the list of probable/possible runners and riders in the great LNG chase has been complicated enough to date.

But last week’s apparent entry of a dark horse has made it even more so.

Each year Enbridge holds a meeting for analysts called – what else? – Enbridge Day. This year’s event was held October 4 in Toronto and webcast for those of us living outside the centre of the universe.

During his presentation Stephen Wuori, president of liquids pipelines said “We also see in the longer term, beyond 2015, the need for LNG export from Northeast BC,”, adding that the price differential between North American and Asian prices “is just too large to ignore”.

Later Al Monaco, president of gas pipelines took it a step further, saying, “We’d be interested in LNG export…right all the way to the LNG export facility.”

And revealed Enbridge was already in discussions with natural gas producers on the subject of LNG exports.

Speaking to Reuters following the meeting, Enbridge CEO Pat Daniel said the company the company would prefer to supply natural gas to a Kitimat liquefied natural gas plant in British Columbia over any other export project in western Canada.

And Enbridge is interested in joining one of two proposed Canadian LNG projects to ship natural gas to Asia.

Well, that one is clearly not the BC LNG Co-operative since it will be getting its gas via the existing Pacific Northern Gas pipeline.

Which only leaves the KM LNG project – assuming “proposed” means only those which have applied for a natural gas export licence.

And that makes perfect sense in that KM LNG partners Apache/EOG/Encana are natural gas producers, not pipeline companies.

So why not get Enbridge to build and operate the Pacific Trail Pipeline from Summit Lake tot he Kitimat LNG plant?

There is a slight wrinkle in that PNG has an agreement with KM LNG that it will be paid to operate and maintain the line for the first seven years.

But given PNG happily sold its 50 per cent share in the PTP line earlier this year, I am sure its shareholders would be equally happy to be bought out of that operational agreement in exchange for a dividend boost.

We certainly live in interesting times.

 

Malcolm Baxter