With energy prices collapsing and industry struggling to stay viable, Pacific NorthWest LNG needed less, not more government costs and regulations […]
As of last week, AECO/NOVA prices went into negative territory, sending an acute price signal that excess capacity must be shut-in. Even if negative prices are a temporary perturbation, Canadian oil and natural gas have historically traded at wide discounts to global benchmarks due to excess regional supply. Due to constraints on local markets and regional logistical infrastructure, the discount is likely to persist. Future LNG projects are expected to provide price uplift and narrow the Canadian basis in the future. Given the endemic low pricing of Canadian natural gas, the region has the potential to become a global LNG powerhouse and thereby lower energy costs across the globe.
Yet just last July, Petronas (Malaysia’s largest petroleum producer) scrapped a $36 Bn LNG export facility project slated for Canada’s Western Coastline. It is a perhaps a serious indictment of the regulatory environment when seemingly viable projects like this are scrapped. Too many hands caught in the cookie jar, as some might say. Or maybe the process of transporting, liquefying, shipping and reconstituting natural gas is just too expensive. Either case casts opacity on the future competitiveness of Canada’s LNG industry.
Article Source: Claudia Cattaneo. ‘A tragedy for Canada’: Petronas cancels $36B LNG project as B.C. jacks up demands. Financial Post. 25 Jul 2017. Original content accessible: http://business.financialpost.com/commodities/energy/a-tragedy-for-canada-petronas-cancels-36b-lng-project-as-b-c-jacks-up-demands#comments-area
Updates to the Read List are meant to keep readers informed of stories and analytical highlights from third party sources that I find particularly relevant and worth sharing. Content that was recommended prior to 2017 is accessible through the Read List Archives.