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Aurora LNG cancels Canada project amid weak market

14 Sep 2017, 7.08 pm GMT

Aurora LNG cancels Canada project amid weak market

Houston, 14 September (Argus) — The Chinese-Japanese Aurora LNG venture has cancelled its plan to build an export terminal in western Canada, dealing another blow to Canada's ambition to become a major LNG exporter.

The proposed project on Digby Island, British Columbia (BC), previously said it would make an investment decision this year, with the goal of coming on line in 2023. Low oil prices and competition from cheaper LNG export facilities in the contiguous US have halted or stalled a number of proposed Canadian LNG export projects. Most long-term Asian LNG contracts are linked to oil prices.

"Over the past four years, Aurora LNG has been conducting a thorough feasibility study on liquefying and shipping LNG from the northwest coast of British Columbia to Asian markets," Aurora LNG said. "Through this feasibility study, Aurora LNG has determined that the current macro-economic environment does not currently support the partners' vision of developing a large LNG business at the proposed Digby Island site."

At full build-out with peak capacity of 24mn t/yr, equivalent to 3.2 Bcf/d (92mn m³/d) of gas, Aurora LNG and associated facilities had an estimated cost C$17bn-C$20bn ($12bn-$14bn).

Aurora LNG is led by Chinese state-controlled oil and gas company CNOOC, through its wholly owned subsidiary Nexen. Japanese energy firm Inpex and Japanese engineering firm JGC also are partners in the project.

The partners will continue operations in their Horn River gas assets in northeast BC and monitor the North American gas market for potential opportunities. With the inability of major Canadian LNG export projects to move forward, owners of stranded unconventional gas assets in the western Canadian sedimentary basin are increasingly exploring the US market, including helping supply US LNG export facilities. Cheniere Energy said in February that it had acquired its first gas from western Canada's Montney shale.

In July the proposed $36bn Pacific NorthWest project in BC said it would not proceed because it would not be competitive in the current market.

So far the only Canadian project to have made a positive investment decision is Woodfibre LNG near Squamish, BC. The small C$1.56bn, 2.1mn t/yr project, which would procure from the existing grid in the Vancouver area, is scheduled to come on line in 2021.

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