Canadian Manufacturing

India state-owned oil firm enters LNG export partnership in B.C.

Indian Oil will take a 10 per cent stake in Progress Energy's proposed Pacific NorthWest export facility

CALGARY—Progress Energy Canada Ltd. says state-owned Indian Oil Corporation Ltd. has entered an agreement to join a liquefied natural gas (LNG) export partnership in British Columbia.

According to Progress Energy, the largest oil and gas firm in India will acquire a 10 per cent interest in its B.C. natural gas reserves and its proposed Pacific NorthWest LNG export facility.

Indian Oil has also agreed to offtake 1.2 million tons of LNG a year—approximately 10 per cent of the facility’s capacity—for a minimum of 20 years.

Progress Energy, a subsidiary of Malaysia’s Petronas, wants to build the facility near Prince Rupert, B.C., to ship LNG to lucrative Asian markets.

The company said the proposed project is undergoing reviews by both the Canadian Environmental Assessment Agency (CEAA) and B.C. Environmental Assessment Office (EAO) after receiving an export licence from the National Energy Board (NEB) in December 2013.

It hopes to begin exporting gas from the facility in late 2018.

LNG would move to the Prince Report facility via TransCanada Corp.’s proposed North Montney Maineline and Prince Rupert Gas Transmission (PRGT) projects that are currently before the NEB for review.

The 305-kilometre North Montney line would run from the Fort St. John, B.C., area near the Alberta border where it would connect with the PRGT line.

That would then move LNG to the proposed export facility.

TransCanada estimates the North Montney line, an extension of its existing Groundbirch pipeline, would cost approximately $1.5-billion to build.

No cost estimates were provided for the PRGT line.

Petronas estimates the total capital cost for the project to be in the neighbourhood of $36-billion.

“Each of these major investments in British Columbia underscores the globally attractive and competitive opportunities for Canadian natural gas in the Pacific Rim,” Progress Energy president and CEO Michael Culbert said in a statement.

Japan Petroleum Exploration Co., Ltd. (JAPEX) owns a 10 per cent stake in the partnership.

—With files from The Canadian Press

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