Apache Corp., under investor pressure, exiting Kitimat LNG project
“Consistent with the company’s ongoing repositioning for profitable and repeatable North American onshore growth, Apache intends to completely exit the Wheatstone and Kitimat LNG projects,” Apache said, adding it’s also weighing its options when it comes to some of its other international operations.
Apache and Chevron’s Canadian divisions declined to provide further comment.
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 to global markets 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.