Australian power large Woodside follows Chevron and bails on LNG mission in northwest B.C. – Kelowna Capital Information
What was being promoted as a second massive liquefied natural gas project for Kitimat is on its way to being shelved now that Australian energy giant Woodside has announced it is backing out.
The company – which owns 50 per cent of Kitimat LNG – announced earlier this week that the project, designed to develop a new source of LNG supply to Asian markets, no longer fits into its development plans and it will now focus on opportunities bringing a higher shareholder return.
In doing so it is following Chevron, which owns the other 50 per cent, in backing out. That company put up its share for sale in late 2019 and with no apparent purchasers, said in March it would stop putting money into the project.
Woodside said it will spend between (US) $40-60 million in winding up its responsibilities, in a statement released on May 18.
Its project assets include the proposed 480-kilometre Pacific Trail Pipeline from northeastern B.C. to the proposed plant site at Bish Cove.
Anticipated costs for all phases of Kitimat LNG were in the $30 billion range.
“The Kitimat LNG proposal was designed to develop a new source of LG to supply Asian markets in the latter part of this decade,” Woodside said in a release. “However we have decided to prioritise the allocation of capital to opportunities that will deliver nearer-term shareholder value.”
It says it is now concentrating on a final investment decision for an LNG project in Australia and an oil project off the coast of Senegal, but will still continue to work under their joint venture with Chevron to protect the value during the exit.
Woodside’s announcement caused an uproar among local northwest B.C. leaders with regards to the fate of KLNG and other major investments in the region.
Skeena BC Liberal MLA Ellis Ross took to social media on Monday to talk about the Australian giant’s pullout from the Kitimat LNG project.
“There’s something wrong when a $30 billion project, fully permitted, cannot get sold in an international market,” Ross said in a Facebook live video posted on May 17.
Ross, who was also the former chief councillor of the Haisla Nation, raised concerns that the way the province of B.C. operates, when it comes to economic development is not conducive to attract investments.
He said that B.C.’s politicians have done nothing outside of praising existing industry and have not taken enough measures to encourage the survival of investments in the province.
“What they do is tax the business community, who then move their operations to the U.S. or elsewhere. To me this means that the people of British Columbia are being shortchanged,” Ross said.
Referring to the jobs that the LNG Kitimat project would have brought in, Ross said that it would benefit future generations, in the communities where they are set up. If there are no jobs, there are going to be no taxpayers and the deficits are going to affect future generations and usher in inflation, he said.
The MLA also took a dig at the NDP government and said that they are “chasing all these investments out of B.C”. for “short-term politics.”
Kitimat Mayor Phil Germuth said that the council will be meeting with Woodside and Chevron in the near future to discuss their plans for the venture’s assets in the area and to ensure that the companies’ divestment occurs in a manner that will open future economic opportunities for the community and region.
“The District believes that Kitimat LNG is still a socially, economically, and environmentally viable project; however, we understand that the project has struggled to secure a new proponent to progress the project forward within the current global economy,” said Germuth.
The mayor also stated that Kitimat is uniquely situated with necessary infrastructure and resources making it an optimal location to connect Canada to global markets.
“We are confident that the assets, which have been dedicated to the Kitimat LNG project for several years, will attract new investors and new opportunities for our community, region, and nation,” said Germuth.
As the demand for LNG from large energy consumers, like India and China, has increased, according to Reuters, three North American projects have halted development in the last few months, including Kitimat LNG, as Qatar has significantly increased supply. COVID-19 has also led to price drops.
-With files from Rod Link and Binny Paul
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