Quote:
Originally Posted by MalcolmTucker
The capex is not unrecoverable or stranded without LNG. Unlike let's say Sakhalin where there is no local market. The local market can carry the asset, around $11 billion spent for and by progress if you count that spending as purely for LNG, and I would say generously another billion in regulatory and engineering processes.
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PNW LNG CAPEX to date:
1. June 2011 - Petronas invests $1.1 billion in a nat gas field, owned by Progress Energy, in NE BC's Montney basin to pursue future LNG exports;
2. June, 2012 - Petronas makes takeover offer of $5.5 billion for Progress Energy. Another unnamed suitor makes a rival offer. Petronas later ups offer to $6 biliion for Petronas (a 80% - 90% premium over TSX). BTW, unnamed suitor turns out to be ExxonMobil, which later purchases Celtic Exploration (with major NE BC Montney basin lands position) for $3.1 billion for its own future LNG facility requirements;
3. November, 2013 - Petronas expends another $1.5 billion to purchase lands from Talisman in the Montney basin in NE BC;
4. March, 2014 - Petronas completes another Montney basin purchase in NE BC for $130 million;
Petronas LNG CAPEX to date: ~$8.7 billion.
5. Pre-FEED (front-end engineering and design) completed - $hundreds of millions (utilizing PWC [PriceWaterHouseCoopers] global LNG industry standard expenditure);
6. FEED - Petronas utilized 3 separate FEED engineering consortiums for project. According to PWC... global LNG industry standard expenditure of $1 billion+ per FEED: $3 billion;
Petronas LNG CAPEX to date: ~$12 billion;
7. Petronas (Progress Energy upstream) commences drilling in 2013 terms of "proving up reserves" for its proposed LNG facility. From 2013 - 2015, expends another $~7 billion ($2 billion/$2.5 billion/$2.5 billion); Petronas had just an initial pre-FID goal of 15 trillion cubic feet of proven nat gas reserves - they surpassed same at over 20 trillion cu. ft. As a rule of thumb, 1 trillion cubic feet of proven nat gas reserves is required for every 1 million tons per annum LNG for a 20 year period.
8. Add in another ~$1 billion for 3 1/2 years for CEAA regulatory work, additional drilling to date, etc., etc.
Petronas LNG CAPEX to date: ~$20 billion;
That's "major coin" and the Petronas consortium also has "major skin" in their proposed BC LNG project. They certainly did not expend same for AECO Hub nat gas sales. The remaining CAPEX outlays after final FID:
1. ~$11 billion for west coast LNG terminal on Lelu Island; (Petronas consortium CAPEX)
2. Trans-Canada Pipelines CAPEX:
a) ~$6 billion Prince Rupert Gas Transmission pipeline project;
b) $1.4 billion North Montney mainline;
And, ergo, the total ~$36 - $37 billion Petronas consortium CAPEX is summarized above... the same CAPEX figure as reported by the MSM over the years.
BTW, the tolling charges payable toward TCP by PNW LNG? More than made up for by the "ambient temp." in Prince Rupert. Comparatively speaking, LNG terminals in Texas, Australia, Qatar, Africa, etc. typically suffer from extreme heat (unlike relatively cool Prince Rupert). Think of placing a freezer outside in 30C+ temps and the cost of operating same.
Quote:
Originally Posted by MalcolmTucker
I doubt we will see cargos until ten years from now. When everyone with offtake needs can buy spot cargos for less than the Canadian refrigeration costs, I suspect even the FID will be a go slow option.
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The global LNG biz is much more complicated than that. You have your LNG tolling model (U.S.), your fully integrated model (Australia, Canada, etc.) and a subset thereto - partial off-takers/mostly off-takers. Just for starters.
Unlike other global LNG majors that rely upon 90% of their capacity on JCC-linked long-term contracts with a 13% - 14% price slope, with the remaining ~10% or so capacity available for the spot market... these matters are not material to the Petronas LNG consortium as it involves off-takers themselves and will also be utilized for Petronas' own internal obligations.
The spot market is a small portion of the overall global LNG market and, with over-supply over next several years, yes some off-takers will take advantage of same. However, other complex LNG matters come in to play involving CAPEX per million ton installed LNG capacity, annual upstream OPEX, shipping costs, security of supply, diversity of supply, geo-politics, etc., etc.
And when the Petronas consortium issues final FID (December, 2016 is my guess)? Will take 5 years and 4 months (CEAA filings) before LNG can be shipped, which means sometime in mid-2022. And the global LNG supply is projected to be in negative territory in 2022 as well (not really material for the Petronas LNG consortium though):
