Exxon Mobil LNG Terminal In BC Still Possible, Says Vice-President

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LIQUEFIED NATURAL GAS
This undated aerial file photo shows the Dominion Liquified Natural Gas facility in Cove Point, Md. An Exxon Mobil VP admits the company is looking into LNG exports from B.C. (Matt Houston, AP) | AP

BANFF, Alta. - The senior vice-president of Exxon Mobil is bullish about the future of the oil and gas industry but is still keeping his cards close to his chest about the possibility of building a liquefied natural gas facility on the West Coast.

"Exxon Mobil and Imperial are currently in the early stages of assessing potential LNG export options from British Columbia from our Horn River resource holdings," said Andrew Swiger during a presentation at the Global Business Forum in Banff, Alta., on Thursday.

"Markets around the world will increasingly seek this cleaner source of energy to fuel progress and prosperity."

Exxon Mobil, which is the major stakeholder in Imperial Oil, announced its interest back in May, but said at the time that plans were in the very early stages and a site had not yet been chosen for a plant to cool natural gas into a liquid state, enabling it to be transported by tanker overseas.

The acreage Imperial (TSX:IMO) has in northeastern British Columbia's Horn River Basin contains dry gas. Several companies have been ditching dry gas drilling in favour of areas that contain more lucrative liquids.

In Asia, the fuel would be worth about five times more than it currently is in North America, where burgeoning supplies from shale formations across the continent have far outpaced demand.

Swiger refused to talk to reporters after his presentation.

Other plans for an LNG facility on the West Coast are farther along.

In May, Royal Dutch Shell PLC and three Asian partners announced plans to build a liquefied natural gas export terminal in Kitimat, B.C.

The Anglo-Dutch energy giant will have a 40 per cent stake in the project, called LNG Canada. PetroChina, Mitsubishi Corp. and Korea Gas Corp. will each hold a 20 per cent interest. No price tag has been disclosed.

Encana Corp. (TSX:ECA) and U.S. partners Apache Corp. and EOG Resources plan to start up their Kitimat LNG plant in 2015, with an initial capacity of five million tonnes a year.

Another proposal called BC LNG, owned by the Haisla First Nation and Houston-based LNG Partners, expects its first shipment in 2014.

Swiger told the business conference that Exxon expects steady economic growth in the years ahead and the demand for oil and natural gas to boom.

"The reality is the world's economy will double in size between now and 2040. With this will come a strong growth and a global demand for energy," he said.

"We project the demand for global energy will be more than 30 per cent higher in the year 2040 than it is today."

He remains equally optimistic that TransCanada Corp.'s (TSX:TRP) Keystone XL system between Alberta and the Texas coast will eventually be approved in its entirety despite the regulatory headaches that it has encountered.

"We've lived through a number of them as an industry as Imperial and Exxon Mobil and we could pick any specific example and talk about the frustrations and so forth," added Swiger.

"We see there are a number of scenarios that can unfold which cause us not to be overly concerned about it. We don't like the frustration of some of the regulatory processes but I think given the prize at stake for Canada and our industry... there's going to be solutions."

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