CALGARY--The Canadian subsidiary of Chinese state-owned energy
company Cnooc Ltd. (CEO, 0883.HK) has been awarded exclusive rights
to proceed with a proposed terminal to export liquefied natural gas
from Canada's Pacific coast, local government and company officials
said Tuesday.
Known as Aurora LNG, the project is one of nearly a dozen
proposals for plants to export surplus natural gas from British
Columbia, none of which have been formally approved yet by their
corporate sponsors. In addition to Calgary-based Nexen Energy ULC,
a wholly owned unit of Cnooc, the project is also backed by two
Japanese companies: oil explorer Inpex Corp. (1605.TO, IPXHY) and
construction engineering firm JGC Corp. (1963.TO).
It comes as part of a move by Canada to transform its
underdeveloped northern Pacific coast into a major hub for LNG by
using a glut of natural gas from untapped reserves inland. The
Canadian government has also been trying to shift gas exports away
from the saturated U.S. market and into LNG-hungry Asian
markets.
"This sole proponent agreement means that Nexen has exclusive
rights to move forward with planning Aurora LNG at Grassy Point,"
British Columbia Premier Christy Clark said at a press
conference.
The Cnooc-led Asian consortium edged out three other possible
suitors for the remote, government-owned site in northwestern
Canada. That included competing proposals made earlier this year by
Exxon Mobil Corp. (XOM), Australia's Woodside Petroleum Ltd.
(WOPEY, WPL.AU) and SK E&S Co. of South Korea.
A spokesman for Imperial Oil Ltd. (IMO, IMO.T), a Canadian unit
of Exxon Mobil, said that while the company had filed an expression
of interest for the site awarded to Aurora LNG, it is "continuing
to assess potential sites' in another area further south along the
B.C. coast. That area already has been selected for LNG terminal
proposals sponsored by rivals such as Chevron Corp. (CVX) and Royal
Dutch Shell PLC (RDSA, RDSB, RDSA.LN, RDSB.LN).
Grassy Point, whose closest neighbors are the Alaskan border and
a remote grizzly bear sanctuary, is attractive because of its
proximity to Asia compared to other LNG hubs such as Australia and
the Middle East. The undeveloped nub of land is one of three areas
along the coast earmarked for possible LNG export terminals with
surrounding waters deep enough to berth large ships.
"We intend to do everything we can to responsibly and
economically advance the development of a LNG facility and export
terminal at Grassy Point," Nexen Chief Executive Kevin Reinhart
said at the press conference. "This is just the first step in a
long journey," he said, adding that a final decision on whether to
build the plant is still pending.
Cnooc owns 60% of Aurora with the two Japanese partners
splitting the remaining 40%, he said.
The project made a "nonrefundable deposit" of about $12 million
to secure the agreement, British Columbia's Minister of Natural Gas
Development Rich Coleman told reporters.
This isn't the first time Grassy Point has been fingered for a
multinational LNG export project. In the early 1980s, a now-defunct
Canadian energy company and large Japanese trading company chose
exactly same spot, but the proposal never got off the ground
despite strong backing from the British Columbian government.
Write to Chester Dawson at chester.dawson@wsj.com
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