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From: isopatch9/16/2017 12:07:01 PM
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<CNOOC (CEO) Unit Ends Aurora LNG Project Feasibility Study

Zacks

September 15, 2017

Upstream oil major, CNOOC Limited's CEO Calgary-based subsidiary Nexen Energy along with its Japanese partner, INPEX Gas British Columbia Ltd. announced a strategic decision to stop the feasibility study into the proposed Aurora LNG project, which started in 2013.

Background

For the last four years, the Aurora LNG was conducting an out-and-out feasibility study on liquefying and shipping natural gas ("LNG") to the Asian markets from the northwest coast of British Columbia, Canada. The project that included a natural gas export terminal along with a 900 kilometer pipeline was supposed to commence on the proposed site on Digby Island.

Construction of phase 1 was likely to start in 2020 and shipping was expected to start by 2025.

What Led to the Termination of the Project?

Per the partners, Nexen and INPEX, the Aurora LNG project was based wholly on low commodity prices and global market conditions. The feasibility study helped the companies to conclude that the present macroeconomic oil environment is not suitable for developing a large LNG business at a construction cost of $28 billion.

In this context, we would like to remind investors that British Columbia's LNG export industry suffered another setback in July 2017, when Malaysian state-owned energy company, Petronas cancelled a $36 billion Pacific Northwest LNG project near Port Edward due to similar reasons. Per National Energy Board, the next seven years will be critical for Canada’s LNG industry as it is a late entrant in the space.

What Next?

The partners have said that they will keep moving forward with their upstream operations at their Horn River natural gas assets, located in northeast British Columbia. The two companies also plan to monitor the gas market in North America looking for future investment potential in the upstream and downstream sectors.

As far as the Canadian LNG industry is concerned, with two big LNG projects shutting down, all eyes are on the Woodfibre LNG proposal near Squamish and the WesPac marine terminal on Tilbury Island in Delta.

About CNOOC

CNOOC Limited engages primarily in the exploration, development and production of crude oil and natural gas offshore China. It is the dominant producer of crude oil and natural gas and the only company permitted to conduct exploration and production activities with international oil and gas companies, offshore China.

Price Performance

CNOOC has lost 3.6% of its value year to date against 4.4% growth of its industry.>

finance.yahoo.com


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