Wadey Presentation CERI 2015 Petrochemical Conference

March 28, 2018 | Author: esojzzuc | Category: Liquefied Natural Gas, Natural Gas, Pipeline Transport, Hydrocarbons, Gases


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Jordan Cove LNGLNG Development in a Low Oil Price Environment Vern Wadey Vice President, Jordan Cove LNG LLC, Veresen Inc. 2015 Petrochemical Conference June 7 – 9, 2015 except as required by law. timing of. Furthermore. The risks and uncertainties that may affect the operations. "intend". statements with respect to: the ability of Veresen to recognize synergies between Ruby and the Jordan Cove LNG project. the availability and price of energy commodities. but are not limited to. Additional information on these and other risks. the availability of construction services and materials. Forward-looking information typically contains statements with words such as "may". we can give no assurances as to future results. performance. events or developments that we expect or anticipate may or will occur in the future. the timing of decisions to proceed with construction of. NGL and power industries. whether as a result of new information. "expect". the forward-looking statements contained herein are made as of the date hereof. and the in-service date of Jordan Cove LNG and the Pacific Connector Gas Pipeline and sources of gas supply to feed Jordan Cove LNG and the Pacific Connector Gas Pipeline. Readers should not place undue reliance on the information contained in this presentation. and other laws and regulations. All information. We expressly qualify any forward-looking information contained in this presentation by this cautionary statement. future events or otherwise. credit risk and continued existence of contracted customers. the following factors: our ability to successfully implement our strategic initiatives and achieve expected benefits. "believe". the status. "estimate". We make no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. as may be updated from time to time. Although we believe the expectations conveyed by the forward-looking information are reasonable based on information available to us on the date of preparation. 2 . and our ability to successfully obtain regulatory approvals for Jordan Cove LNG and the Pacific Connector Gas Pipeline. uncertainties and factors that could affect our operations or financial results are included in our filings with the securities commissions or similar authorities in each of the provinces of Canada. "target". the availability and price of capital. "forecast" or similar words suggesting future outcomes or outlook. changes in tax. operational breakdowns. fluctuations in foreign exchange and interest rates. "project". and the prevailing economic conditions in North America. failures. "anticipate". Forward-looking statements in this presentation include. but are not limited to. our ability to successfully obtain regulatory approvals. or other disruptions. and. levels of activity and achievements. "plan". which addresses activities. as actual results achieved will vary from the information provided herein and the variations may be material. competitive factors in the pipeline.Forward-looking information advisory Certain information contained in this presentation constitutes forward-looking information under applicable Canadian securities laws. the cost estimate. development and results of our businesses include. we do not undertake any obligation to update publicly or to revise any forward-looking information. other than statements of historical fact. is forward-looking information. environmental. regulatory. levels of oil and gas exploration and development activity. consistent performance of an energy infrastructure business model Significant Development Activities: Alliance Re-contracting (50% ownership): Rich gas transportation contracts post 2015 and 2020 Ruby Pipeline (50% ownership): Located to serve California and Jordan Cove LNG Veresen Midstream (50% ownership): $1.S.: A strong and diversified portfolio of energy infrastructure assets Publically traded (TSX: VSN) company with a market cap of $7 billion and earnings and cash flow reflecting the reliable. natural gas supplies to Asia 3 . Growth prospects to $5 billion with Encana & CRP (Encana & Mitsubishi) Jordan Cove LNG and Pacific Connector: Strategic infrastructure to export Canadian and U.Veresen Inc.5 billion western Canada gas processing assets. with significant LNG experience. led by Betsy Spomer. President and CEO of Jordan Cove LNG Financing and Execution  Target appropriate capital/markets for the Project  Develop financing plan based on Project specifics  Full preparation of materials / financial modeling required Regulatory  Compliance with all relevant permits  Review of regulatory strategy to ensure no permitting delays with the development Customers/Commercial Agreements  Optimal customer credit quality and mix  Financeability of commercial agreements EPC  Appropriate risk sharing  LNG and facility technology reviewed and approved O&M  Suitable O&M plan and structure  Comprehensive O&M service agreement to the Project  LNG/Cryogenic experience and hiring plans  Training and handover procedures from the EPC contractor 4  Appropriate EPC contract form (Performance wrap LDs. etc. contractor liquidity.Creation of a world-class LNG project management team Jordan Cove LNG Project Management Team.)  Ability of EPC contractor to provide security package and deliver project . Jordan Cove LNG: project components Terminal and pipeline facilities filed for construction with FERC Terminal: Jordan Cove LNG Pipeline: Pacific Connector  6 mtpa facility (phase 1)  expandable to 9 mtpa (later date)   400+ acre site includes:  marine facility.5 mtpa liquefaction trains.  420 MW power plant. 50% Williams . and.  two 160.440 psig MAOP)  Ownership: 50% Veresen.  two gas treating facilities.5 Bcf/d (later date)  232-mile. 36-inch diameter pipeline (1.  Ownership: 100% Veresen Liquefaction 5 Power Plant Design capacity of ~1 Bcf/d for 6 mtpa LNG terminal requirements  expandable to 1.  four – 1.000 m3 LNG tanks. Rockies Horn Cordova / A L B E R T A BRITISH COLUMBIA Muskawa TransCanada BC / Alberta Montney Spectra Western Canada Basin Duverney  Flexibility in gas purchases  Use of marketing and trading companies  Contract purchase with producers  JV for gas reserves in the ground AECO HUB Fortis Alberta / Sask Bakken GTN  Sourcing gas supplies by electronic trading platforms  Change and alter gas purchases / sources at any time SASKATCHEWAN Alberta Deep Basin Jordan Cove US Rockies Powder Big Horn River Basin OREGON IDAHO Malin Hub Pacific Connector PG&E Kingsgate Border Point RUBY Pipeline OPAL Hub CALIFORNIA Source: Veresen map files MONTANA WYOMING Green Wind River River NEVADA Uinta UTAH WIC Denver / Julesburg Cheyenne Plains Piceance COLORADO Raton 6 CIG .Gas supply diversification and existing pipelines are Jordan Cove’s most unique benefits Gas supply sourcing from both Canada and the United States  Existing infrastructure accesses Western Canada Sedimentary Basin and U.S. field NGL extraction.000 bbl/d of ethane feedstock to Alberta’s petrochemical industry at Fort Saskatchewan and Joffre 7 . significant regional gas pipeline systems  Maximizes use of the NGTL west transmission system and west straddle plants  Encourages natural gas production  Gas flows through the west-leg delivery system. contributes upwards of an incremental 20. for use at Jordan Cove LNG.000-25.Jordan Cove’s benefit to Western Canada and the Alberta Petrochemical industry AEGS is a significant service provider to the Alberta petrochemical industry  Retains use of Western Canada’s significant. existing natural gas infrastructure  Promotes efficient use of gas gathering and processing. large scale capital expenditures Global shares of primary energy % 2013 Global GAS consumption LNG as a share of Global Gas (%) Approximately 323 Bcf/d 450 MTPA Projected by 2025 International trade ~ 31% 25% 10% 20% LNG 15% Gas 21% Pipeline 69% Domestic consumption 10% 5% Source: Actuals: BP Statistical Review of World Energy 2014 Outlook: Wood Mackenzie (2015) 8 2025 2020 2015 2010 2005 2000 1995 1990 1985 1980 1975 1970 0% . natural gas is becoming the dominant energy LNG is outpacing global gas industry growth and justifying new.Globally. reliable. sourced from all regions of North America 9 Source: Geological base map by PacWest Consulting . price competitive. LNG sources Plentiful amounts of natural gas.Global LNG buyers seeking new. : 39 Bcf/d SCT&E LNG Venture Global Rio Grande LNG Port Lavaca Port Arthur LNG Annova LNG Cheniere Corpus Christi Gulf Coast LNG Pangea LNG EOS / Barca LNG Annova LNG Texas LNG 10 Source: FERC website and B.Multiple facilities proposed within North America….S.7 Bcf/d Bearhead LNG Goldboro LNG WesPac LNG Woodfibre LNG Repsol LNG Downeast LNG Oregon LNG Jordan Cove Cove Point TOTAL Proposed in U.) Potential. Proposed. 2. 1.) Listed by BC Government. or Approved by FERC Pacific NW LNG Prince Rupert LNG Kitsault LNG Stewart Energy LNG Kitimat LNG Douglas Channel LNG Cedar LNG LNG Canada Discovery LNG Steelhead LNG WCC LNG Watson Island LNG Aurora LNG Grassy Point LNG New Times LNG Orca LNG TOTAL Proposed in Canada: 53.C. Government website Gasfin LNG Waller LNG G2 LNG Cameron LNG Freeport Cheniere Sabine Pass Golden Pass Next Decade LNG Main Pass LNG Torp LNG Delfin LNG Elba Island Louisiana LNG CE LNG Gulf LNG Lake Charles LNG Trunkline LNG Magnolia LNG Live Oak LNG . to reach FEIS  U. tax. and existing pipeline infrastructure are key drivers:  Community acceptance and local land use permits  FERC and DOE (and all other related permits and licenses) -.prior to 2021 Regulatory approval and construction timeline is at least 8 – 10+ years! In the United States – Regulatory approval. DOE will consider non-FTA export application  At least $70 . developers’ “at-risk dollars”.5 year process  FERC FEIS must be issued before U. 3 – 5 year construction build after 5 year regulatory process In Canada – Social License and Economic viability issues are key drivers:  Community acceptance and local land use permits (community and First Nations)  Extensive promotional and resource support by BC Government  Social license issues – First nations. environmental and political subjectivity  Facility capital costs must be in line with global competitiveness  5 year construction build after 4 – 5+ year regulatory.S.$100+ million at risk. per application.S.Timeline reality for first LNG group -. social license process 11 . pipelines.Asia Pacific Buyers are attracted to the characteristics and price of U. tolling models Tolling models provide a direct connection to North American gas prices and provide customers with both commodity control and destination flexibility  Tolling arrangements lock in the cost of infrastructure  about 60% of overall costs are locked-in. / Canadian commodity gas price.S. Opal. and cost of shipping to Asia regas facility Traditional LNG JCC or Sales & Purchase Agreement price Gas Production & Gas Sales / Marketing to liquid Hub Pipeline / Liquefaction / LNG Storage / Customer Capacity Pacific Connector Gas Pipeline 12 Jordan Cove LNG LNG Transportation / Interim LNG Storage Regasification/ Pipeline / Gas Storage Gas Marketing / Transportation and Distribution .75/MMBtu. Gulf Coast brownfield tolling models have set LNG price targets for the first wave of LNG from North America before 2021  LNG delivered to Japan. liquefaction infrastructure cost. with only gas commodity costs floating  Traditional JCC and / or LNG Sales Agreements have 100% of infrastructure and commodity costs floating with oil prices  Control over gas purchase and pipeline transportation strategies – supply diversification (Henry Hub. at approximately $10.25 – $10. AECO)  U.S. based on $4 Henry Hub Gas  LNG clearing price is based on U.S. 50 JCC LNG cost $100 15.00 $80 12. LNG delivered cost to Japan. via Jordan Cove.00 7.50 US$/MMbtu Delivered LNG into Tokyo Bay 20.50 5. ICIS. Poten & Partners Note: Japan shown as example destination 13 Future Cost of JCC oillinked LNG prices??? ? 17. based on current $2.50 Malin Hub gas cost 0.00 2011 2012 2013 2014 JCC Source: Wood Mackenzie.S.00 2.50 Asia Spot LNG $60 U. are very competitive with USGC LNG pricing alternatives 22.00 2015 Malin Hub 2016 Asia spot 2017 2018 ? Future Cost of Malin Hub Natural Gas??? .50/MMBtu gas cost at Malin Hub 10.Liquefaction tolling model infrastructure is priced independent of traditional JCC “oil-linked” LNG pricing AECO and OPAL gas prices. S. Gulf Coast TransCanada Alberta Prince Rupert / Kitimat Spectra / Fortis AECO Hub ~9 shipping days to Asia GTN Kingsgate Jordan Cove ~9 shipping days to Asia (4300 nmi) Malin Hub Pacific Connector Ruby Pipeline Opal Hub Australia LNG ~7 to 9 shipping days to Asia (3100 .4300 nmi) Source: Terminal websites.Shipping distance and logistics from the U. Japan as comparative market 14 USGC LNG ~9 shipping days to Europe USGC LNG ~22 shipping days to Asia (9200 nmi) plus Panama Canal Costs . DOE. west coast is a competitive advantage over the U.S. S.Jordan Cove’s capital cost estimates rank well with other global LNG facilities Jordan Cove’s LNG shipping advantage offsets slightly higher capital costs versus U. Gulf Coast brownfield sites Jordan Cove 15 Source: Gas Strategies . S. economic expansions of these facilities are likely (DOE study examining 12 – 20 Bcf/d export limit ) ? BC west coast LNG Developments LNG export capacity from Canada and U. DOE. Japan as comparative market Cameron .A handful of large-scale LNG export facilities will be in-service prior to 2021 Post 2021. in 2021: 11 – 13 Bcf/d Jordan Cove Cove Point Sabine Pass Freeport Corpus Christi 16 Source: Terminal websites. com .jordancovelng.com www.vereseninc.com www.Thank you! Vern Wadey Vice President. Veresen +1 403 213-3639 vwadey@vereseninc.
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