Eric Watkins
Oil Diplomacy Editor
LOS ANGELES, Jan. 15 -- Galveston LNG Inc.'s subsidiary Kitimat LNG Inc. and Mitsubishi Corp. signed a heads of agreement for the Japanese firm to acquire terminal capacity and an equity stake in Kitimat LNG's proposed LNG export terminal in British Columbia.
The nonbinding document is expected to be completed in March outlining main issues for Mitsubishi's possible purchase of 1.5 million tonnes/year of terminal capacity and acquisition of a minority equity interest in Kitimat LNG's 5 million tpy project at Bish Cove in Kitimat, BC.
Reversing its earlier decision to import LNG to North America through a regasification terminal at Bish Cove, Kitimat LNG last September announced plans to develop an LNG export terminal on the Bish Cove site.
Kitimat LNG expects to begin construction in 2009, with commercial operation scheduled to begin by yearend 2013.
The firm changed its plans after noting significant changes in market forces. In particular, it said rising natural gas demand in Asia and recent increases in supply throughout North America—including the US, Canada's traditional export market—had led to higher natural gas prices in Asia than in North America.
"The growing economies of the Pacific Rim and rapidly increasing demand for LNG make Asia a natural market for BC's plentiful and expanding supplies of natural gas," said Rosemary Boulton, Kitimat LNG president.
"Kitimat continues to be a viable and advantageous location to build a West Coast LNG terminal," said Boulton, adding that the site is close to Asian markets and that an extensive pipeline network already connects BC gas suppliers to the Kitimat area.
The terminal will take delivery of gas via a 15-km pipeline lateral from the Pacific Trail Pipelines, which will be connected to the existing Spectra Energy's Westcoast Pipeline system.
The terminal, which will have two 210,000 cu m LNG storage tanks with potential future expansion to three tanks, expects 4-5 shipments/month at the start of operations in 2013.
Contact Eric Watkins at [email protected].
