CALGARY – A northwestern Alberta natural gas producer dismayed by Canada’s “grossly oversupplied” gas market is investing in a company that has vowed to build a liquefied natural gas export terminal on Vancouver Island.
Calgary-based Seven Generations Energy (TSX:VII) says it will take a minority stake in Vancouver-based Steelhead LNG, adding the two have agreed to explore pipeline development and open new overseas markets for natural gas.
Analysts estimated the investment at less than $55 million, but the exact size and cost of the equity position were not disclosed. Seven Generations said the cost was less than five per cent of its 2016 capital budget.
Steelhead has proposed two LNG export projects, Malahat LNG and Sarita LNG, that would use floating production and storage units moored to marine jetties. It has five 25-year National Energy Board licences to export up to a combined total of 30 million tonnes of LNG per year and is partnered with the Malahat First Nation.
B.C.’s hope of a thriving LNG export market has faded. The Pacific Northwest LNG project, led by Malaysian energy giant Petronas, remains the biggest and most high-profile project. It is awaiting a report due soon from the Canadian Environmental Review Agency.