The first exclusively-Canadian company has joined the expensive LNG race on B.C.’s coast, hoping their local experience will make up for their late start and lack of specific plans.
Steelhead LNG Corp. say they want to build an LNG processing facility along the B.C. coast, and plan to submit an application for an export license in the next 6-8 weeks.
“There are many hurdles to overcome, and we’re coming in a little later…but we’re looking forward to expanding into the export market,” says Steelhead CEO Nigel Kuzemko.
Steelhead has recruited former Attorney General Geoff Plant to their Board of Directors, and say it’s proof of their commitment to fully understand the B.C. market.
“Geoff recognizes the tremendous potential LNG has to create a wide range of long-term benefits for BC,” said Kuzemko. “In addition to being a respected business leader with a comprehensive understanding of economic, political and social issues in BC, he is also widely recognized as one of Canada’s leading practitioners in the area of Aboriginal law and an expert in land and resource negotiations with First Nations.”
Many of the details of Steelhead’s plan have yet to be ironed out. They aren’t sure exactly where they would build – they’re considering five to six spots along the coast – or whether they would have on or off-coast facilities.
“It’s a process that will take time,” admits Kuzemko. “We have to get an export license, we have to make sure we have a sight that works from a technical perspective, we have to get arrangements around any site associated with first nations agreements.”
“[But] we are absolutely serious about this, and so are our Canadian investors.”
Samir Kayande, a energy research analyst at ITG Investment Research, says Steelhead’s dreams are just that unless they find actual buyers – something the company doesn’t have lined up yet.
“You need to see contracts. You need to say guys that want to sell LNG having something signed on paper willing to take your gas for 20 years. Without a contract, you can’t back this,” he says.
The company’s B.C. knowledge will come in handy, believe Kayande, but shouldn’t be overestimated.
“I would think a deeper ability to finance a project is more valuable. Local knowledge does help, but ultimately you need expertise and be able to execute a project.”
Steelhead LNG’s investors are well-pocketed with billions under management, according to a press release. They include KERN Partners, a Calgary-based energy sector private equity firm funded by a group of pension funds, along with a number of university endowments, foundations, and institutions.
There are over 13 applicants for plants along B.C.’s coast, all of whom have international operations. Estimated costs in the LNG market have risen in the last two years, and Apache Corp., the first company to formally apply for a license, announced earlier this year they were looking to sell part of their interest in a potential LNG plant.
However, Kuzemko says their proposal won’t change based on global LNG trends.
“We’re not competing with those [international companies]. We have a different proposition. We want to make B.C. a success for LNG. Our sites don’t compete with these other great companies overseas,” he says.
“For us, if the project works here, we will make it happen, we won’t compare it to other places…and it’ll be done with Canadian finances, Canadian-staffed on the whole, and based in Vancouver.”
– With files from Brian Coxford