Date post: | 13-Dec-2014 |
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Economy & Finance |
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LNG—The Update
Good News and Bad News
GOOD: Still big LNG gains in Canada
BAD: Waiting for catalysts—everything in limbo now
PROFIT FROM LNG?TODAY’S TALK
The US experience LNG Economics The BC Opportunity
LNG—THE OPPORTUNITY
LNG—THE OPPORTUNITY
US LNG
SEXY, BUT EXPENSIVE!!Valuations now ultra highCash flows 2 years away4-6% yield baked in, lots of debtPositives?
-Asia desperate for supplier competition
-Panama Canal
CANADIAN LNG STOCKS—
IT’S HAPPENING NOW
CANADIAN LNG STOCKS—
IT’S HAPPENING NOW
CANADIAN LNG STOCKS—
IT’S HAPPENING NOW
LNG PRICING
Source: Kootenay Capital,Calgary AB
LNG PRICING/SUPPLY COST
LNG PRICING/SUPPLY COST
• Liquefaction Plant Capital Costs $2.00 per Mcf– Based on $1,200 mln per mtpa construction costs at 8% cost of capital
• Natural Gas $4.00 per Mcf
• Pipeline Transportation $ .75 per Mcf
• Liquefaction and Refrigeration Costs$ .80 per Mcf
• Plant Maintenance Costs $ .50 per Mcf
• Operational Costs $ .20 per Mcf
• LNG Shipping Costs $1.12 per Mcf
• Total Delivered LNG Cost to Asia from BC $9.37 per Mcf
N. AMERICA LNG BUILD OUTUSA
6 Proposals Approved to ship LNG8.5 bcf/d=13% current US production
1st export Sabine Pass late 2015
Brownfield—changing import to export—16 bcf capacity idle ($100 billion white elephant)
CANADA 14 Proposals; none approved—total 13 bcf/d 1st export Q4 15—but very small; #2 not until 2018 Greenfield—from scratch—higher risk
14
Ambitious plans – consortiums ahead
Source: Transport Canada, Kootenay
Terminal Capacity by Project (bcf/d)
Prince Rupert
Initial FullXOM 1.6 4.0BG 1.8 2.8Petronas 1.6 2.4Total 5.0 9.2
Kitimat
KLNG 1.3 1.3LNGCan 1.6 3.2DCEP 0.2 0.2Total 3.1 4.7
Total 8.1 13.9
BC LNG
Potential Multi-Year Run for service companies Huge spending to develop reserves $7.5 billion in construction per bcf export 13 bcf=$97.5 billion 13 bcf=all the natgas Canada produces today Like to see 3-5 bcf by 2020
Where’s the BIG Money Going?
New gas pipelines = $4 billion in GDP/45,000 job years
Terminal facilities (Rupert/Kitimat) 8350 job years
Production profits from upstream gas extraction=$134 billion to 2035
Where’s the BIG Money Going?
SMALL TechnologyCould Win Big in BC LNG
BC LNG Cooperative / Golar LNG New Technology—Small Scale Floating Export
Terminals by Golar--FSRU 1st to production—2015/2016 Golar—GLNG-NASD—LNG shipper—make BIG
money They capture most of the “arb”—price difference
Leading Edge Technology
2nd FSRU in the world I think BC could have multiple small scale
FSRUs $300 million capex vs. $10 billion 18 months to build vs 5 years I expect FID very quickly—big catalyst
Who Will Be First in BC?1. Petronas—Malaysia—FID late 2014
(Pacific Northwest LNG)
2. Golar/Haisla—small scale floating barge
(BC LNG)
3. Woodfibre north of Vancouver
Conclusion
Easy Money already made in US LNG Canadian LNG needs catalyst for next leg
GOLAR Makes FID should be that catalyst
But $100 billion spending will happen soonMulti year run for services stocks
Questions?