Aurora Ditches Canadian LNG Plan

Aurora LNG, a partnership of Nexen Energy and Japan's Inpex Gas British Columbia, has ended a feasibility study examining development of a 24mn mt/year LNG export terminal on Digby Island, on British Columbia’s northwest coast near Prince Rupert.

It's the second major Canadian LNG project cancellation in the last two months, following a decision by Indonesia's Petronas in late July to abandon the Pacific Northwest LNG project. Conceived at a time of relatively high LNG prices in Asia, they can no longer compete with much lower-cost export projects in the US Gulf Coast, for example.

Through the course of the study, which has been ongoing for four years, the project partners determined that “the current macro-economic environment does not currently support the partners’ vision of developing a large LNG business,” Aurora LNG said in a statement.

While Aurora has abandoned the LNG project, its partners will continue to develop their Horn River natural gas assets in northeastern BC, and will monitor the North American natural gas market to evaluate the potential for future upstream and downstream investments.

According to preliminary design parameters, Phase 1 (two trains totaling 12mn mt/year) construction would have begun in 2020, with commissioning and start-up scheduled for 2025. Development of two additional trains would have been dependent on market conditions.

However, the planned start-date coincides roughly with French consultancy Cedigaz' forecast market tightening, as field depletions at one end and demand at the other eat away at global gas supplies.

Dale Lunan