Korea's state-owned natural gas company may be interested in snapping up Royal Dutch Shell PLC's stake in the Mackenzie Valley pipeline, an energy consultant said Monday.
"We know that Korea Gas has been interested in looking around up there. They've had several discussions with the Inuvialuit about Inuvialuit-owned lands. They have been around the neighbourhood," said Doug Matthews.
A spokesman for Shell's Canadian division said on Friday it is selling its interest in the long-stalled Mackenzie pipeline, which would ship gas from near the coast of the Beaufort Sea in the Northwest Territories to Alberta.
Following a review it has decided to "focus its resources on other options," said Stephen Doolan. Shell is a big player in shale gas in northeastern B.C. and in the United States. New technologies have made that type of gas easier and cheaper to exploit, and it has the benefit of being much closer to market.
"In terms of the future of the project, Shell believes the project is important for Canada," said Doolan.
Korea Gas Corp., or Kogas, is the world's largest importer of liquefied natural gas, or LNG. It has shown an interest in the development of terminals on Canada's West Coast, where gas from British Columbia's prolific shale fields would be liquefied and exported abroad by tanker.
"In other words, they may not necessarily be part of the pipeline" if they get in on Arctic gas, said Matthews.
"They may want to send the gas the other way."
Private sector decision
Matthews expects the other partners in Mackenzie — the lead, Imperial Oil Ltd. (TSX:IMO), its parent company, ExxonMobil Corp. (NYSE:XOM), ConocoPhillips and the Aboriginal Pipeline Group — would have had the right of first refusal when Shell decided to sell its stake.
"For reasons that we don't know, they chose not to exercise that option, so that's clearly their own decision. That seems the most odd issue off the bat to me," Matthews said.
Some observers have suggested that the fate of the proposed Mackenzie pipeline is anything but certain, given the changing economics caused by low natural gas prices due to increased supply from shale formations.
Federal Energy Minister Joe Oliver said the choice of whether the Mackenzie project is built is "a private sector decision and they'll make that decision."
Oliver made the comments at a small airport outside Calgary on his way to a meeting of Canada's energy ministers.
"One of the subjects we'll want to discuss over the next couple of days is improving the regulatory system so it's less duplicative, so it's more fair, transparent, and independent, but take into account the need for expeditious review, because if [the] approvals drag on, they're clearly going to undermine the economics of the project, and no one ends up benefiting," he said.
A formal regulatory process finally wrapped in March after several years of delay.
The partners still need to secure some 6,000 other permits from local boards and agencies before construction can begin. Imperial has said the soonest gas could start flowing through pipeline would be 2018.