KLNG puts call out for potential clients
By Cameron Orr, Kitimat Northern Sentinel, December 03, 2008
Kitimat Liquid Natural Gas (KLNG) expects strong natural gas reserves in Western Canada. low geopolitical risks and the flexibility of its proposed LNG plant in Kitimat will be major factors in attracting potential users and investors.
Last Tuesday the company issued a call for formal expressions of interest from potential users of the liquefaction facility.
Ilene Schmaltz, vice-president of supply marketing for KLNG, said the move is to ensure fairness and that it hears from all possible candidates.
She said that when the company announced in September it was switching from import to an export, “we got a lot of calls from interested parties wondering as to the availability of terminal capacity or off-take or potential equity.”
As a result, Schmaltz explained. “What we thought we would do is make it more of a formal process to ensure we contacted any potential party that may be interested in our facility.”
A terminal capacity deal would see a party get the rights of a certain amount of LNG processing capacity while off-take refers to the LNG exports.
Schmaltz couldn’t discuss how many parties they have already talked to, but noted, “we have had several companies already tell us they intend to submit responses to our request for expressions of interest.”
Although KLNG hasn’t talked about what capacity they need buttoned down to make the project a go, she said the bulk of their capacity would have to be contracted before they would proceed.
“I would say that we would more than likely be able to go ahead with our project if we had at least 80 per cent of the capacity contracted for,” she said.
While global economic woes are dominating the headlines these days, KLNG is not greatly concerned that will affect the overseas customer base for their product.
“We’ve found over the last few weeks...is that most of these companies that are looking for LNG - the Asian buyers in particular - are long-term thinkers,” said Schmaltz.
“In the long-term they know they are going to continue to need LNG on an ongoing basis well into the future.”
When she attended a Kitimat city council meeting in September, Schmaltz had noted the ‘icing on the cake’ for changing the terminal from a regasification facility to a liquefaction plant was the prospect of numerous natural gas reserves going online in the near future.
Last week she told the Sentinel that in informal discussions with the producers she had been assured that these reserves are still going to be developed.
“Will there be a delay? We’re not sure, but a lot of producers are still actively drilling and exploring,” Schmaltz said. “It still looks very positive.”
The company is still waiting for federal regulatory approval on their facility, but she said the process is going very well and KLNG expects the approval early in 2009.
They are also waiting to receive an amendment for their already granted provincial approval (required since they changed the terminals function) and waiting to hear from the BC Environmental Assessement Office if any further steps need to be taken.
“We’re hoping to be able to finalize our commercial arrangements and get re-permitted in 2009,” said Schmaltz. “If we’re able to do that by the end of 2009 we could start construction as early as late next year or early 2010.”
On that timeline, the 36-40 month construction phase would put them online in early 2013.
Interested parties wanting to fill out an expression of interest have only a limited time as KLNG hopes to have all EOIs in by mid-December.
“Then we’ll take a look at them and decide who we want to proceed with,” she said. Those decisions will likely be made early in the New Year.
KLNG still expects to export five million tonnes of LNG annually.
Kitimat LNG Request for Expressions of Interest
Kitimat Liquid Natural Gas (KLNG) expects strong natural gas reserves in Western Canada. low geopolitical risks and the flexibility of its proposed LNG plant in Kitimat will be major factors in attracting potential users and investors.
Last Tuesday the company issued a call for formal expressions of interest from potential users of the liquefaction facility.
Ilene Schmaltz, vice-president of supply marketing for KLNG, said the move is to ensure fairness and that it hears from all possible candidates.
She said that when the company announced in September it was switching from import to an export, “we got a lot of calls from interested parties wondering as to the availability of terminal capacity or off-take or potential equity.”
As a result, Schmaltz explained. “What we thought we would do is make it more of a formal process to ensure we contacted any potential party that may be interested in our facility.”
A terminal capacity deal would see a party get the rights of a certain amount of LNG processing capacity while off-take refers to the LNG exports.
Schmaltz couldn’t discuss how many parties they have already talked to, but noted, “we have had several companies already tell us they intend to submit responses to our request for expressions of interest.”
Although KLNG hasn’t talked about what capacity they need buttoned down to make the project a go, she said the bulk of their capacity would have to be contracted before they would proceed.
“I would say that we would more than likely be able to go ahead with our project if we had at least 80 per cent of the capacity contracted for,” she said.
While global economic woes are dominating the headlines these days, KLNG is not greatly concerned that will affect the overseas customer base for their product.
“We’ve found over the last few weeks...is that most of these companies that are looking for LNG - the Asian buyers in particular - are long-term thinkers,” said Schmaltz.
“In the long-term they know they are going to continue to need LNG on an ongoing basis well into the future.”
When she attended a Kitimat city council meeting in September, Schmaltz had noted the ‘icing on the cake’ for changing the terminal from a regasification facility to a liquefaction plant was the prospect of numerous natural gas reserves going online in the near future.
Last week she told the Sentinel that in informal discussions with the producers she had been assured that these reserves are still going to be developed.
“Will there be a delay? We’re not sure, but a lot of producers are still actively drilling and exploring,” Schmaltz said. “It still looks very positive.”
The company is still waiting for federal regulatory approval on their facility, but she said the process is going very well and KLNG expects the approval early in 2009.
They are also waiting to receive an amendment for their already granted provincial approval (required since they changed the terminals function) and waiting to hear from the BC Environmental Assessement Office if any further steps need to be taken.
“We’re hoping to be able to finalize our commercial arrangements and get re-permitted in 2009,” said Schmaltz. “If we’re able to do that by the end of 2009 we could start construction as early as late next year or early 2010.”
On that timeline, the 36-40 month construction phase would put them online in early 2013.
Interested parties wanting to fill out an expression of interest have only a limited time as KLNG hopes to have all EOIs in by mid-December.
“Then we’ll take a look at them and decide who we want to proceed with,” she said. Those decisions will likely be made early in the New Year.
KLNG still expects to export five million tonnes of LNG annually.
Kitimat LNG Request for Expressions of Interest
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