A Chevron logo appears at a gas station in Miami on July 25, 2011. The Canada Energy Regulator says it has approved an application from Chevron Canada to export natural gas from the Kitimat LNG project for a term of 40 years over environmental opposition. THE CANADIAN PRESS/AP, Lynne Sladky

Chevron to stop flow of funds after failing to sell stake in Kitimat LNG project

Chevron to stop flow of funds after failing to sell stake in Kitimat LNG project

CALGARY — The decision by Chevron Canada Ltd. to stop funding its proposed Kitimat LNG project on B.C.’s north coast isn’t surprising given its failed attempt to sell its stake over the past 15 months, an analyst says.

“This is a portfolio-specific decision by Chevron to be pretty choosy about how they allocate capital,” said Matt Murphy of Tudor Pickering Holt & Co. on Friday.

“There was ample opportunity for other parties to come in and take over the project and proceed with it. I think the fact no one did is just further support for industry broadly being fairly choosy in how they’re allocating capital.”

In an update this week, the Canadian arm of California-based Chevron Corp. said it has been continuing to work on Kitimat LNG activities that add value or were required for regulatory and operational compliance since putting its 50 per cent stake on the sales block in December 2019.

“At this time, it is Chevron’s intent to cease Chevron-funded further feasibility work for the proposed Kitimat LNG project,” it said on its website. Company officials did not immediately respond to a request for more detail.

Chevron is the operator of Kitimat LNG. The other 50 per cent is owned by Australia’s Woodside Petroleum Ltd. — staff in Australia and at its Calgary office said they were unable to immediately comment on the project’s status on Friday.

In its 2020 annual report, however, Woodside says it “remains committed to working with our stakeholders to improve the cost competitiveness of the proposed (Kitimat LNG) project.”

Kitimat LNG was included as part of a Chevron asset impairment charge of US$2.2 billion in 2019. Woodside also recorded a 2019 writedown in its Kitimat LNG stake of US$720 million.

The project includes natural gas producing assets in the Liard and Horn River Basins in northeast B.C., the proposed 471-kilometre Pacific Trail Pipeline and plans for an LNG liquefaction and export terminal at Bish Cove near Kitimat, B.C.

At one time, about 20 LNG terminals were proposed for the West Coast but the $40-billion LNG Canada project headed by Shell Canada is the only one to reach the construction stage.

Canada’s lack of existing natural gas pipeline capacity from wells in northeastern B.C. to the West Coast makes it difficult for any Canadian liquefied natural gas export terminal to compete with other projects in the global LNG market, Murphy said.

“All of these companies around the world — Chevron is a great example — they’re being very selective with how they’re allocating their dollars so that’s fewer megaprojects, more selective brownfield expansions,’ he said.

“Greenfield LNG off the West Coast of Canada doesn’t fit the bill for them.”

Canada has advantages such as its proximity to Asian LNG markets but projects in Russia, Mozambique and Qatar, for example, are closer to their gas sources, Murphy said.

Canada’s LNG setbacks aren’t expected to greatly affect its natural gas producers, he added, because there is sufficient pipeline capacity and demand to continue to supply markets in Eastern Canada and the United States.

This report by The Canadian Press was first published March 19, 2021.

Dan Healing, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

.
3-hour paid leave for Albertans to get vaccinated in the works

The UCP government intends to introduce legislation that will ensure working Albertans… Continue reading

Alberta completed 18,412 COVID-19 tests, as reported on Wednesday, for a test positivity rate of 9.5 per cent. (NIAID-RML via AP)
Highest daily count of 2021 so far: Alberta reports 1,699 COVID-19 cases

Variants now make up 59 per cent of Alberta’s active cases

Several cases of COVID-19 were reported among employees of stores at Bower Place Mall. (Photo by LANA MICHELIN/Advocate staff).
COVID-19 cases reported at Bower Place mall stores

AHS said five complaints were investigated since March, and required changes made

Edmonton Eskimos' Tanner Green, right, knocks the ball from Calgary Stampeders' Romar Morris during first half CFL football action in Calgary in 2019. Green has been waiting for nearly 17 months to get back on the field with the Edmonton Football Team. THE CANADIAN PRESS/Jeff McIntosh
Lacombe’s Tanner Green happy to finally see a CFL return to play date

CFL announced Wednesday league will return on Aug. 5

Westerner Park’s Exhibition Hall was used as a vaccination clinic on Wednesday. A steady stream of people came to get their COVID-19 shots either by appointment or as walk-ins. Photo by PAUL COWLEY/Advocate staff
No long lineups at walk-in vaccination site in Red Deer

A steady stream of people walked into Westerner Park on Wednesday to… Continue reading

Former B.C. university rowing coach ‘deeply sorry’ after complaints

Former B.C. university rowing coach ‘deeply sorry’ after complaints

Canada's Brianne Jenner (19) and Russia's Anna Shibanova (70) battle for position in front of Russia goaltender Alexandrova Nadezhda (31) during third period IIHF Ice Hockey Women's World Championship preliminary round action in Plymouth, Mich., on Monday, April 3, 2017. The women's world hockey championship in Nova Scotia has been cancelled a second time because of COVID-19. THE CANADIAN PRESS/Jason Kryk
Women’s world hockey championship in Nova Scotia cancelled again

Women’s world hockey championship in Nova Scotia cancelled again

Canada's Meagan Duhamel and Eric Radford compete in the pairs figure skating free program at the Pyeonchang Winter Olympics Thursday, February 15, 2018 in Gangneung, South Korea. THE CANADIAN PRESS/Paul Chiasson
“Once in a lifetime opportunity” – Radford, James are Canada’s newest pairs team

“Once in a lifetime opportunity” - Radford, James are Canada’s newest pairs team

A school bag and a lunch bag are seen in the schoolyard at Bancroft Elementary School as students go back to school in Montreal on Monday, Aug. 31, 2020. Alberta Education Minister Adriana LaGrange says the organization representing the province's teachers is playing politics with a proposed new kindergarten to Grade 6 curriculum and isn’t sincere about a real bridge-building effort. THE CANADIAN PRESS/Paul Chiasson
Alberta teachers and education minister swap accusations of politicizing curriculum

Alberta teachers and education minister swap accusations of politicizing curriculum

Alberta Premier Jason Kenney shakes hands with Jason Nixon, minister of Environment and Parks after being sworn into office, in Edmonton on Tuesday April 30, 2019. Town council from the largest municipality in Nixon's constituency is concerned over the province's consultation plans for open-pit coal mining in the Rocky Mountains. THE CANADIAN PRESS/Jason Franson
Council in Alberta environment minister’s town wants better coal consultation

Council in Alberta environment minister’s town wants better coal consultation

In this photo released by the official website of the office of the Iranian Presidency, President Hassan Rouhani speaks in a cabinet meeting in Tehran, Iran, Wednesday, April 14, 2021. Iran's president on Wednesday called Tehran's decision to enrich uranium up to 60% after saboteurs attacked a nuclear site "an answer to your evilness," linking the incident to ongoing talks in Vienna over its tattered nuclear deal with world powers. (Iranian Presidency Office via AP)
US outlines possible sanctions relief for Iran in nuke talks

US outlines possible sanctions relief for Iran in nuke talks

Activists hope Chauvin convictions are start to real change

Activists hope Chauvin convictions are start to real change

CORRECTS THAT PHOTOGRAPHS ARE OF TRANSGENDERED WOMEN KILLED OVER THE YEARS, NOT PEOPLE WHO DIED BY POLICE VIOLENCE - A backstop at Cal Anderson Park is covered, Tuesday, April 20, 2021, in Seattle, with photographs of transgendered women who have been killed in the past years. (Dean Rutz/The Seattle Times via AP)
Grim list of deaths at police hands grows even after verdict

Grim list of deaths at police hands grows even after verdict

Most Read