Tag Archives: LNG project

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.


Photo credit: Ryan Remiorz/The Canadian Press

For The Lax Kw’alaams, Cultural Identity Is Priceless Compared To LNG

Aboriginal artist Lianna Spence poses with her 12-year-old daughter Kiera on Finlayson Island, near Lax Kw’alaams. (Brent Jang for The Globe and Mail)

Aboriginal artist Lianna Spence poses with her 12-year-old daughter Kiera on Finlayson Island, near Lax Kw’alaams. (Brent Jang for The Globe and Mail)

The Globe and Mail

Aboriginal artist Lianna Spence will treasure this feast long after the 100 friends and relatives finish their plates filled with B.C. seafood.

It is a special occasion for this late-afternoon potluck lunch at the elders’ lodge in Lax Kw’alaams. On a long table are an array of delicacies, including dried salmon and halibut, smoked black cod, boiled Dungeness crab and fried eulachon – small fish that many natives enjoy eating whole, from head to tail.

It is a day to laugh and cry as residents share memories to celebrate the life of Ms. Spence’s great-grandmother, Vera, who raised her in Lax Kw’alaams, a remote B.C. community accessible by boat or float plane. Ms. Spence, 32, spent months carving and painting an elaborate totem pole in honour of Vera, who died in 2006 at the age of 87.

During this long day full of emotion, Ms. Spence takes time to talk about a subject that has dominated the Lax Kw’alaams people’s thoughts over the past couple of weeks – Pacific NorthWest LNG’s $1-billion cash offer to the 3,600-member band, or the equivalent of almost $320,000 a person.

The fear among the Lax Kw’alaams is that construction of the massive LNG project will harm juvenile salmon habitat in Flora Bank, a sandy reef-like area next to Lelu Island in the estuary of the Skeena River. Flora Bank, which is part of the traditional territory of the Lax Kw’alaams, has become intertwined with the people’s cultural and economic identity. For a great many of the band members, the risks to juvenile salmon far outweigh the potential benefits from building an LNG export terminal on Lelu Island, located 50 kilometres south of Lax Kw’alaams.

“They’re offering us benefits if we vote Yes. But we already have a lot of benefits around us – we have coho, spring and sockeye salmon. We have halibut, crab and eulachon. Those are our benefits,” says Ms. Spence, who was one of hundreds of eligible Lax Kw’alaams voters who recently spurned the LNG joint venture led by Malaysia’s state-owned Petronas.

“Lax Kw’alaams people depend on the seafood that they get for free,” says Ms. Spence, who lives in nearby Prince Rupert with her 12-year-old daughter Kiera. “I eat mostly seafood. I have two deep freezers and they’re loaded with seafood.”

After a morning boat ride over to the nearby Finlayson Island gravesite, Lax Kw’alaams members carefully lifted the totem pole. Four non-natives were honoured guests to bear witness to the ceremony. A high school art teacher from Prince Rupert, Tasha Parker, brought along her husband, longshoreman Ian Dobson. Ms. Parker and 14-year-old twin sons Ivan and Liam helped carve the totem pole. Mr. Dobson sympathizes with the Lax Kw’alaams and their worries about potential harm to salmon habitat. “Flora Bank is the nursery of life for the Skeena River,” he says.

The third and final round of voting wrapped up on Tuesday in Vancouver. In each instance in Lax Kw’alaams, Prince Rupert and Vancouver, eligible voters rose from their chairs to overwhelmingly reject the offer from the Petronas-led LNG group.

Pacific NorthWest LNG’s benefits package includes the $1-billion spread over 40 years. There are also provincial land transfers valued at $108-million. The catch is that the Lax Kw’alaams band council, after canvassing members, must provide aboriginal consent to plans to build an LNG export terminal on Lelu Island.

Pacific NorthWest LNG’s proposed suspension bridge over Flora Bank would carry a pipeline that extends southwest for 1.6 kilometres away from Lelu Island. That span would connect with a 1.1-kilometre-long trestle to a deep-berth location for tankers filling up with LNG in Chatham Sound. A report commissioned by the Lax Kw’alaams warns that the trestle would threaten to disrupt a complex system that effectively holds Flora Bank in place. A study commissioned by Pacific NorthWest LNG, however, reaches a vastly different conclusion, submitting that the LNG project would have little to no impact on Flora Bank.

“The bottom line is we’ve demonstrated that we’re open and through constructive consultation have adapted things to the environment,” Pacific NorthWest LNG president Michael Culbert said during a phone interview.

The Lax Kw’alaams are one of five Tsimshian First Nations consulted by Pacific NorthWest LNG as part of the environmental review process for the energy-export proposal. Two groups, the Metlakatla and the Kitselas, signed impact-benefit agreements with the joint venture in December. Two others, the Kitsumkalum and Gitxaala, have not yet announced their decisions.

Donnie Wesley of the Gitwilgyoots, one of nine allied tribes of the Lax Kw’alaams, says jobs are hard to come by, but the local fish-processing plant and logging operation are important employers. “Our logging company even has an office over in Beijing for marketing. And we have about 60 boats in our fishing fleet,” Mr. Wesley says as he walks down a gravel road in Lax Kw’alaams to the beat of drums and spiritual songs.

An estimated 800 people live in the community of Lax Kw’alaams, or roughly one-fifth of the total number of band members. Roughly 1,800 are based in Prince Rupert and another 1,000 in Vancouver and elsewhere.

“Our people are not against LNG for the most part. Based on my conversations with some members, they want LNG development. They want to see jobs, opportunity and economic benefits, but there are better bets than Flora Bank,” say Chris Sankey, an elected councillor with the Lax Kw’alaams band, formerly known as the Port Simpson band. He says Lax Kw’alaams Mayor Garry Reece and the 12 elected councillors will take a look at any tweaks that Pacific NorthWest LNG might make. “We’re going to be here for the next 10,000 years and that LNG project won’t be,” Mr. Sankey says.

During this sunny day in Lax Kw’alaams, two young boys play street hockey outside their parents’ home in a typical Canadian scene, except this house also sells some treats and groceries. Howard Green and his wife, Traci Reece, operate the modest store out of their home. They are in a good mood because a group of boys and girls visiting from Prince Rupert made the trip over to play basketball against Lax Kw’alaams youth. The visitors boosted sales of candy and ice cream, valuable commodities in Lax Kw’alaams, where residents need to plan carefully to supplement their seafood diets because the major grocery stores are in Prince Rupert. A ferry service operated by the band runs five days a week for the 45-minute journey between Prince Rupert and Lax Kw’alaams, but the sailings are limited to a maximum of two trips in each direction daily.

Mr. Green says his people’s connection with Skeena River and other seafood-rich waters remains strong, and he won’t be swayed by the promise of LNG riches. “There’s too much at stake. The people who live here are worried about the effects of LNG on our food,” he says.

Mr. Green and Ms. Reece are looking forward to this fall, when their sons Dennis and Jaycee, ages 8 and 4 respectively, will attend a new school being built with the help of $19.7-million in federal funding. Ms. Reece says she was thinking of her children’s future when she voted against Pacific NorthWest LNG’s offer during a meeting in Lax Kw’alaams. “If people knew the food that we eat, they would have a greater appreciation of our way of life,” she says.

 Source: http://fw.to/Wz2Pq0E