Apache Corp., under investor pressure, exiting Kitimat LNG project
CALGARY - A liquefied natural gas project planned for Kitimat, B.C., faces an uncertain future after one of its U.S. partners announced plans to get out of the LNG business.
Apache Corp. said Thursday it plans to ditch the Kitimat LNG project, which it was developing alongside Chevron Corp., as well as the Wheatstone LNG project in Australia.
The Houston-based company has been under pressure from activist hedge fund Jana Partners LLC to restructure.
"I'd like to make it clear that Apache intends to completely exit the Wheatstone and Kitimat LNG project," CEO Steven Farris told analysts on a conference call.
Apache wants to make its North American onshore operations the focus of its business, and is also weighing its options when it comes to its international holdings.
Farris said Apache's exit from Kitimat LNG won't detract from its value.
"Frankly, whether we're in it or not, it is a world class project with world class reserves and frankly Chevron and Apache at this point are way ahead of anybody else in that arena."
It was largely a matter of timing, as LNG terminals take years to build, he said.
"It makes sense for someone else to own it that has a different time horizon than we do."
Apache and Chevron's Canadian divisions declined to provide further comment on the project's future.
The Kitimat LNG project is furthest along in the development process of any of the proposed natural gas export facilities planned for Canada's West Coast.
However, Chevron and Apache have not had an easy time securing buyers for the resource, said Ed Kallio, director of gas consulting at Ziff Energy, a division of Solomon Associates.
"Even though it's a shovel-ready project, they've just had that weakness on the market end," he said.
Kallio said the "A-list" Asian energy players are involved in competing LNG projects on the West Coast. Korean, Chinese and Japanese firms have signed on to the Shell-led LNG Canada proposal near Kitimat. Malaysia's Petronas is leading the Pacific Northwest LNG near Prince Rupert, B.C.
Other global LNG buyers that don't have as deep pockets are looking to get their supplies from proposed U.S. LNG players, Kallio added.
LNG is natural gas that has been chilled into a liquid state, enabling it to be shipped by tanker.
Chevron and Apache split Kitimat LNG 50-50. Under their current arrangement, Chevron would operate the facility and a connecting pipeline, while Apache would provide gas from its shale holdings in northeastern B.C.
The partners have not made a final decision to go ahead with the project, which has a permit from the National Energy Board to export 10 million tonnes of LNG per year.
On the call, Farris said its Horn River and Liard shale gas properties in northeastern B.C. are considered part of the Kitimat LNG project. But the company intends to step up its activity in the Montney and Duvernay shales in Alberta and B.C.
Follow @LaurenKrugel on Twitter
Read more Business News
- Grass fire likely human causedWest Kelowna - 4:56 pm
- Truck stealing spreeVernon / N. Okanagan - 6:00 pm
- Attacked dogs get supportKelowna - 5:03 pm
- Rock quarry deathsBC - 12:39 pm
|QHR Technologies Inc||1.37||+0.05|
|Anavex Life Sciences||0.223||-0.0031|
|Copper Mountain Mining||2.66||-0.02|
|Sunrise Resources Ltd||0.02||-0.005|
|Mission Ready Services||0.29||-0.01|
Last night I was privileged to be able to speak at the Greater Westside Board of Trade business awards dinner. Photo: ContributedI talked about Innovation and Collaboration which are two very interes...
There will be a time when you will need to decide who you should appoint as executor of your Will. As well, there may be a time when you will be asked by someone to act as the executor of his or her W...
Part 1 of 2 Photo: Thinkstock.com1. Move in with your parents or in-laws Explain that you're thinking strategically in moving back home. The quickest way to get into the housing market is to ma...