Right now Woodfiber LNG is a huge point of contention within the town of Squamish. As with any energy venture most of the people against will argue safety (the bad kind) and the disruption of our ecosystem. the people that are in favor of the project like to argue safety (the good kind), economic growth, and local jobs. Often the “discussion” get really personal and outright rude. Its a Trolls paradise on these sites. So I thought I would talk about something not many people, on either side, talk about…. The Global demand for this energy source.
At this point, in the global market, the global LNG market has dropped the price of LNG in tandem with the drop of oil prices. Sadly once oil bounced back the LNG market didn’t. On the plus side, those LNG projects already in production have worked hard at obtaining long term export contracts at specific prices before the drop in prices in late 2014. Sadly, British Columbia has not signed long term export contracts. Now the, ” “Asian marketplace is now beginning to embrace the North American gas indices as the pricing forum,” said Tom Tatham, managing director of BC LNG.”, but he goes on to say “I think what we’re doing will have a positive effect on the gas market. But it isn’t going to make a huge difference to the producers involved in Train 1,” (1).
Experts say that there are multiple factors in the lowered LNG prices. Also, the potential bounce back, of LNG prices, is not going to come to the high that LNG was trading at in the beginning of 2014.
The economy in Asia is not growing as fast as hoped, leading to the lowered global pricing of LNG. Then there was mild winters in key import locations, followed by a surplus in stock. “Asia may average just $10.30 per million Btu (MMBtu) in 2015, a 38 percent decline from last year” (2). (Btu = British Thermal Unit, MMBtu = 1 million Btu)
Another problem is Japan’s plans to restart some of their Nuclear power plants is going to kill the demand of LNG. Since there is about to be a large amount of new LNG plants, who will flood the market, increasing the LNG supply, when there isn’t going to be enough demand. BC is still far away from going into production, let alone signing those crucial long term LNG contracts with buyers.
As for Woofiber LNG, they have gained an export license back in December 2013, But, stated above, have yet to find a long term buyer. We will be a small scale plant at 2.1 mtpa project (Million tonnes per annum. turns out one ton is approximately 2.47 cubic feet, with a export license of 0.27 bcfd (Billion cubic feet per day). so we can export, but we have no one to export to.
The news gets worse for us in BC. turns out that “Although Canada’s LNG projects would be closer to Asia than projects in the United States, they suffer from higher capital costs and follow the traditional integrated upstream model; their remote location is also adding to the investment bill.” (3)
But wait…there is more complications with Canadian LNG production. Ironically we don’t have enough natural gas to feed all the Canadian projects. “In total, these projects are seeking permission to export more than 500 Bcma of natural gas, which is
nearly three times Canada’s current gas marketed production. A forecast by the National Energy Board estimates that Canadian natural gas production could grow from 136 Bcma (13 bcfd) in 2013 to 182-238 Bcma (base and high cases), but that would be insufficient to feed all the proposed
projects” (4)(Bcma stands for Billion Cubic Meters per annum)
Will Woodfiber LNG create jobs to locals? Yes. Will there be specialized jobs that foreign worker will hired? Yes. Is it bad for the environment? Well that depends on who you talk to, and how far back in the production line they decide to take that question. Is it a good investment for Canada? Sadly it isn’t looking good for us. If we were up and running, with long term contracts locked it, back before 2014 we might have had a chance to make money off these projects, but now we might find it hard to break even on the investment. Our government is much more optimistic than the researchers on the future market for LNG, so we push on.
I lived in Squamish, back when people made a good wage, and some got “rich” off all the industries in the area. We had a booming Logging industry, a paper mill, and a railway facility. Sure Squamish smelled bad, from Woodfiber, when the wind was blowing the wrong way, but people had jobs. then the railway facility shut down leaving many people jobless and many just moving out of Squamish looking for work. Then Woodfiber shut down, and Squamish seemed to have only one thing going for it. The tourism market held the town together. As time went on, Squamish turned into a Tourist destination. Once the Winter Olympics came to Vancouver/Whistler, the road linking Squamish to Vancouver, people started moving back to Squamish, in droves. Now we had a tourist, commuter, town.
Personally the more I research the proposed LNG plant the more I fear that there will be a population boom, Local jobs, and people making good money off the construction, and production of LNG, just to have the bottom fall out.
2)http://oilprice.com/Energy/Natural-Gas/Oil-Prices-May-Recover-But-Not-LNG.html
3)http://business.financialpost.com/news/energy/could-falling-natural-gas-prices-kill-some-lng-projects
4)http://www.oxfordenergy.org/wpcms/wp-content/uploads/2015/05/NG-98.pdf
other sources used are:
http://blog.financial.thomsonreuters.com/the-global-lng-market-a-look-ahead-to-2015-and-beyond/
Ninhydren's thoughts 