The multibillion-dollar road map to B.C.’s coming LNG boom – by Peter Tertzakian (Globe and Mail – January 21, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

In last week’s column, we looked out on the horizon of time and pointed out a wave of capital expenditures coming toward Canada’s oil and gas industry. Although we needed to squint for clarity, as there still is much uncertainty, we estimated that the spending crest could be as high as $16-billion a year within a few years.

When they arrive, most of these extraordinary dollars will be surging toward British Columbia’s fledgling liquefied natural gas (LNG) industry, a province where the status quo is only $6-billion of annual oil and gas spending.

Early hints of the wave are already being felt on the coast, especially Prince Rupert and Kitimat. Hoping for an empty airplane seat beside you? Forget it. Needing a place to stay? “No Vacancy” signs are lit up at the motels. Eating out? Steak houses have beefy waiting lists.

And the big dollars haven’t started to flow yet. That will happen when the head offices of leading multinational consortia rubber-stamp their final investment decisions (FIDs). One, possibly two of the FIDs may be forthcoming by 2015, assuming fiscal policies, environmental approvals and a myriad of other factors satisfy stakeholders on both sides of the wave.

Let’s assume the surf’s up. Here is how the swell will play out, in loose chronological order.

Competitive jockeying

Many of the 14 consortia will increase their preparatory spending over the next two years. Even in the absence of a single FID, the tally will be in the hundreds of millions of dollars. From the gas fields to the coast, there will be growing cadres of personnel – government relations, public relations, engineers and consultants of every stripe – handing out corporate swag.

All will muscle up their presence as they try to figure out the logistics of how to execute the biggest infrastructure projects in Canadian history. It’s going to get really crowded, like too many surfers on a small, rocky beach. These fierce competitors will be doing a lot of elbowing along major proposed pipeline routes from the gas fields to the coast. Each of them knows the importance of being first to market. Watch closely; too much elbowing and the locals won’t allow anyone to surf.

Increasing Upstream Activity

These LNG projects constitute new enterprises across the gas supply chain. Entire manufacturing lines (drilling), supply delivery systems (pipelines) and sales outlets (coastal terminals) must be built, reconfigured or expanded.

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