Warren Buffett’s exit from $9-billion Quebec LNG project after rail blockades ‘a signal’ to investors

‘We’re not going to find $4 billion tomorrow morning, and we sure aren’t going to find it in the region,’ says Saguenay deputy mayor

Warren Buffett, one of the world’s most influential investors, has pulled out of a proposed $9 billion liquefied natural gas project in Quebec over concerns about railway blockades and infrastructure challenges.

The domestic oil and gas sector was already reeling after Teck Resources cancelled its $20.6 billion Frontier oilsands project in Alberta last month, partly over fears about rail blockades, and as other strategic investors have avoided the industry.

“Over the last month, a clear signal has been sent to businesses across Canada that the rule of law will not be upheld and that major projects cannot get built,” Conservative MP for Chicoutimi-Le Fjord Richard Martel said in an email, adding that Quebecers “risk losing out” on a multi-billion project.

GNL Quebec confirmed Thursday it had lost a major potential investor as it seeks to build the $9 billion Énergie Saguenay project to export Western Canadian natural gas from a proposed facility in Quebec.

“This was a major private investor who left at the last minute,” GNL Quebec spokesperson Stephanie Fortin said in an interview.

“The reason is the recent challenge in the Canadian political context.”

She declined to provide the name of the investor or confirm the identity, but Montreal-based La Presse cited unnamed sources when it reported Thursday the investor was Omaha, Neb.-based conglomerate Berkshire Hathaway Inc., which is controlled by Buffett.

The identity was confirmed by Saguenay deputy mayor Michel Potvin to the Montreal Gazette.

Potvin, who heads the local investment agency known as Promotion Saguenay, said Berkshire would have invested about $4 billion.

“We did not need this, especially at this stage of the project,” Potvin said. “We’re not going to find $4 billion tomorrow morning, and we sure aren’t going to find it in the region. So we have to roll up our sleeves.”

In recent weeks, rail blockades and protests have also snarled major infrastructure in Canada, disrupting port shipments and stalling the delivery of grains and other commodities across the country.

“Add it to the list,” Raymond James analyst Jeremy McCrea said of Berkshire Hathaway’s decision to pull out of the LNG project in Quebec.

Major resource companies such as ConocoPhillips Co., Total SA and Devon Energy Corp. have sold billions of dollars in assets in Canada in recent years as an exodus of investors have caused activity in the energy sector to plummet.

“Reported news of a large investor pulling out of a major LNG project echoes what we have been independently hearing from other investors,” Alberta Associate Minister of Natural Gas Dale Nally said in an email to the Financial Post. “It’s undeniable that weeks of railways and ports being blockaded would deter international investors from doing business in Canada.”

Quebec Premier François Legault has frequently called for action to end the rail blockades in recent weeks as they hurt his province and much of Eastern Canada. His office declined a request for comment Thursday about how the blockades affected investment in the LNG project proposed for Saguenay.

Berkshire Hathaway did not respond to a request for comment.

Financial analysts, investors and energy executives say losing funding from Buffett is a major blow to the industry, which has already seen other investors quit, because other fund managers take cues from the so-called Oracle of Omaha’s investment strategy.

Buffett is the fourth-richest man in the world with an estimated net worth of US$81.2 billion and he built Berkshire Hathaway into a $508-billion conglomerate over the past few decades.

Berkshire Hathaway continues to own shares in Calgary-based oilsands producer Suncor Energy as well as U.S. energy companies Occidental Petroleum and Phillips66.

But the company’s decision not to invest in Énergie Saguenay “sends a signal that all governments and particularly the federal government should pay attention to,” said Tristan Goodman, president of the Explorers and Producers Association of Canada, which represents mid-sized oil and gas companies.

“We have to have foreign investment,” Goodman said. “We do need to ensure that major infrastructure projects can be built across the country.”

In addition, Berkshire Hathaway’s reported decision not to invest in a Canadian infrastructure project – even when other firms like Teck have pulled out of major projects – is particularly troubling because the company has a history of spending money when other investors are fearful.

“He’s a contrarian, which makes it even more of a message,” said Martin Pelletier, chief investment officer with TriVest Wealth Counsel Ltd. in Calgary.

GNL Quebec’s Fortin said the company is looking for additional investors for the project, which is expected to create 6,000 direct and indirect jobs across in Quebec during construction.

“I cannot say where our new investor will come from,” Fortin said, noting that publicly losing a strategic institutional investor “will make it harder” to find more investors.

She said the company still has 15 other unnamed investors in the project but will continue looking for more investors.

Still, she said, the company’s timeline for Énergie Saguenay has not been compromised. GNL Quebec is planning to make a final investment decision on the project at the end of 2021.

By Geoffrey Morgan, the Financial Post, March 5, 2020.

[SOURCE]

Photo credit: Ryan Remiorz/The Canadian Press

LNG Line Eyes New Route Over Aboriginal Concerns

A model at the LNG Canada offices in Kitimat shows the proposed liquified natural gas liquification plant and marine terminal that would be fed by the proposed Coastal GasLink line. Photograph by: Robin Rowland , THE CANADIAN PRESS

By Gordon Hoekstra | Vancouver Sun, Oct 25, 2015

Change in northwest B.C. is in area where Unist’ot’en are blocking LNG developers

TransCanada is making pipeline route changes to lock up First Nation support for a leading proposed liquefied natural gas mega-project on the northwest coast of B.C.

The Calgary-based company has announced it will apply in November for an alternative route along a stretch of the pipeline on its $4.7-billion Coastal GasLink project that will supply the Shell-led LNG Canada export terminal with a price tag of $40 billion.

TransCanada said it did so after “extensive” consultations with aboriginal groups in the area of the alternative route.

The company already has approval from the B.C. government following an environmental assessment for its 650-kilometre pipeline from northeast B.C. to Kitimat. The 56-kilometre alternative — about nine per cent of the pipeline distance — would be subject to a review by the province, which would not be complete until next year.

But TransCanada says it wants to have the option to construct the section about five kilometres north of the approved route to address concerns of aboriginal groups about the potential effect of pipeline construction and operations on groundwater flows into the Morice River, an important salmon-bearing river.

The Kitimat terminal and pipeline enjoys support from at least nine First Nations, but the Unist’ot’en, a clan of the Wet’suwe’ten people, have set up a camp and blocked entry at a bridge over the Morice River to energy pipeline companies, including TransCanada’s Coastal GasLink.

The company said the alternative route does not cross through the camp, but neither did the first route.

“We are confident both routes could be built, and both options reflect TransCanada’s high standards and commitment to safety and environmental protection,” TransCanada spokesman Mark Cooper said in an email on Sunday.

“We’ll decide on the route once we have all of our regulatory approvals, and when we’ve had the opportunity to fully assess both options,” he said.

The Unist’ot’en could not be reached for comment on Sunday.

Shell and other leading LNG proponents like Chevron and Petronas have yet to make final investment decisions and face headwinds from reduced available capital from low oil prices, increased global LNG supply coming on stream and lower natural gas prices in a jittery global economy. In the past, TransCanada officials have said a decision could come in 2016.

It’s unclear how the alternative route proposal could affect that timing.

TransCanada, like many companies, are seeking to reach agreements with First Nations in B.C., as successive court victories provide increasing clout to aboriginals over land and natural resources.

While the Unist’ot’en have been adamant in their opposition to pipeline projects, some First Nations have distanced themselves from the group, issuing a statement this summer saying the clan does not speak for them.

Those include the Wet’suwet’en First Nation, Nee Tahi Buhn, Burns Lake Band and Skin Tyee Nation in north-central B.C.

The four First Nations formed the First Nations LNG Alliance, a group that supports LNG development in the province.

In an interview on Sunday, Wet’suwet’en First Nation chief Karen Ogen said they were aware of TransCanada’s plans for an alternative route and have no issue with it.

Ogen said the No. 1 priority in LNG development is the protection of the environment. She noted an existing natural gas pipeline in place in northern B.C. since 1968 has not caused harm to First Nation traditional territory.

Ogen said LNG development also brings potential economic benefit, employment and training for her community.

The four First Nations and others have signed project agreements with Coastal GasLink and benefit agreements with the province worth millions of dollars.

TransCanada does not yet have a cost estimate for the alternative section.

http://www.vancouversun.com/line+eyes+route+over+aboriginal+concerns/11467142/story.html

First Nation To Claim Land Title To Block Pacific NorthWest LNG Terminal

Pacific NorthWest LNG’s marine terminal (Credit: Pacific Northwest LNG via Facebook)

The Canadian Press

LELU ISLAND, B.C. — A northern British Columbia First Nation says it is seeking aboriginal title to the land where a Malaysia-led consortium hopes to build a $36-billion liquefied natural gas terminal.

The Lax Kw’alaams First Nation says it will launch an action claiming title to Lelu Island and Flora Bank, where the Pacific NorthWest LNG project would be built.

The nation says if it successfully establishes title, the province would have to seek its consent for massive projects like the one spearheaded by Malaysia’s state-owned Petronas.

Mayor Garry Reece says the Lax Kw’alaams are open to development including the Pacific NorthWest project, but only if an alternate site is found to avoid Flora Bank.

The nation says the area is a critical fisheries habitat located in the estuary of the Skeena River and it is concerned that construction would irreparably harm salmon stocks.

Earlier this spring, Lax Kw’alaams members overwhelmingly rejected a $1.15-billion package from the company and province.

Source: The Vancouver Observer

Native Band In Canada Rejects $1.15 Billion Inducement From Gas Pipeline Builder

Part of the large Alcan aluminum smelting facility in Kitimat, British Columbia, Canada.

By Joel Connelly | seattlepi.com

A native band in northern British Columbia has voted to reject a $1.15 billion (Canadian), 40-year payout from a consortium of Asian and North American energy companies that want to cross its land with a pipeline and build a liquefied natural gas terminal.

The action by the Lax Kw’alaams came after meetings in their village, Price Rupert and Vancouver saw near-unanimous opposition from the 3,600-member Aboriginal First Nation band.

“Not every election has a price tag,” Tamo Campos, a young environmentalist from the B.C. north, wrote on his Facebook page.

Garry Reece, mayor of the band’s village, said in a statement:  “Hopefully the public will recognize that unanimous consensus in communities (and where unanimity is the exception) against a project where those communities are offered in excess of a billion dollars, sends an unequivocal message this is not a money issue:  This is environmental and cultural.”

The group Pacific NorthWest LNG has proposed a $36 billion (Canadian) project that would include a pipeline terminus and liquified natural gas shipment terminal near the Lax Kw’alaams’ remote village.

The company is headed by Malaysia’s state-owned Petronas with other investors that include Shell Oil, Chevron, China Petrochemical Corp, Japan Petroleum Exploration Co. and the Indian Oil Corp.

The British Columbia government has promised and promoted LNG exports as an economic panacea, with 19 proposed projects up and down the B.C. Coast.  Two huge proposed oil export terminals — at Kitimat in northern B.C., and Burnaby, next door to Vancouver — are also under evaluation.

The Pacific NorthWest LNG project has been described as “a significant deal, a serious deal” by John Rustad, B.C.’s aboriginal affairs minister.

B.C. Premier Christy Clark predicted Monday that an agreement between Pacific NorthWest LNG and the Lax Kw’alaams will eventually be worked out.  The Indian band is no stranger to trans-Pacific commerce.  It makes money exporting raw logs to Asia.

But the energy industry’s heavy hand is generating significant backlash in British Columbia.

The natural gas premier: British Columbia Premier Christy Clark has touted LNG (liquified natural gas) exports as an economic panacea for Canada’s province on the Pacific.

A proposed natural gas pipeline would go directly under the Nisga’a Memorial Lava Bed Park, beneath which 2,000 Nisga’a Band members were entombed by a volcanic eruption more than 250 years ago.

The LNG terminal would be adjacent to the estuaries of the Skeena and Nass rivers, famous salmon streams.  The Nass is a rare example in Canada where the federal government and Aboriginal First Nations have cooperated to rebuild a flourishing fishery.

In southern British Columbia, the proposed expansion of the TransMountain Pipeline, an oil pipeline project proposed by Houston-based Kinder Morgan, could bore through four provincial parks and go under popular Burnaby Mountain Park.

Hundreds of demonstrators were arrested, and then released, in protests last November against Kinder Morgan’s exploratory drilling.

The Lax Kw’alaams have objected to disruption of Flora Bank, an estuary of eel grass vital to the maturation of young salmon before they go out into the ocean.

Pacific NorthWest LNG has offered to build a suspension bridge over the eel grass, and has plied the native band with offers of economic development and jobs.

The Supreme Court of Canada has recently granted Aboriginal First Nations expanded powers over their ancestral hunting, fishing and gathering grounds.

At the same time, however, the Canadian federal government has severely scaled back the environmental review of major energy projects.  Provinces can, according to the high court ruling, exercise power to override native groups’ opposition when vital interests are deemed at stake.

The rejection of the $1.15 billion deal is still a landmark in the Great White North.

“The stern resolve of the people of Lax Kw’alaams is of a piece with their ancients’ history, and in standing up for their rights, they’re making modern history, too,” journalist Ian Gill wrote in The Tyee, a Vancouver-based news web site.

http://blog.seattlepi.com/seattlepolitics/2015/05/13/native-band-in-canada-rejects-1-15-billion-inducement-from-gas-pipeline-buildernatural/