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Andrew: Our guest thinks Canada is in a good position to begin liquefied natural gas exports
from the west coast despite the massive expenditure involved and competition from other gas producers
around the world, he has some ideas on how investors can cash in on the LNG boom that’s
taking place in Kitimat BC right now they're working on or planning massive export facilities,
we’re joined by Keith Schaefer editor and publisher of the Oil & Gas Investments Bulletin,
great to see you.
Keith Schaefer: Thanks for having me Andrew.
Andrew: We've heard from Teri Viswanath of BNP Paribas, other sources that Canada is
going to have a tough time competing because we need all kinds of pipeline infrastructure;
it's so expensive to build at BC.
Keith Schaefer: There is a lot of work to be done for sure, but one thing that really
encourages me about Canada’s position is that we are kind of at the vanguard of a lot
of the small scale LNG development that’s going on in the world, the first project that’s
going to work of shore for us is being doing by the Haisla First Nation and a London company
called Golar and they're going to have one of the first really small scale LNG facilities
and West Coast of Canada will be where it really makes its debut.
Andrew: Where and what's the name of that one?
Keith Schaefer: Yeah that’s the BCLNG or the Douglas Channel Project.
Andrew: Right and give us some idea of the scale, it's not nearly as big as the big one
Shell is talking about.
Keith Schaefer: Right most of these groups are talking anywhere between 2 ½ to 5 BCF
a day, billion cubic feet, this is 1/10th to 1/20th that size at .2 BCF a day, so really
what that means is not only is it going to be lower cost overall, but lower cost per
billion cubic feet, so they're talking about a CAPEX that’s going to be about half what
is for the big project and that I really think is going to make a big difference for us getting
our gas of shore quicker.
Andrew: So we’re looking at some of the gigantic projects there and of course the
BCLNG and of course we haven’t even heard about Exxon they kind of muttered darkly about
building a gigantic facility, we won’t give any details at this stage.
Keith Schaefer: No I think what you're saying is all the majors are lining up right now
putting their hat in the ring and then as the tax laws become more clear the macro situation
on LNG becomes a bit more clear you’re going to start to see them dive in a bit more.
Andrew: Yeah kind of a standoff between the energy companies and BC right now over the…
Keith Schaefer: Between the buyers and the sellers.
Andrew: Yeah and also the government thought they’ll tax thing as well.
Keith Schaefer: That’s right.
Andrew: Yeah. Let’s get it to an idea, Golar it trades on the New York stock exchange and
they are involved in this Haisla backed approach act.
Keith Schaefer: Right so they're GLNG on the NASDAQ and they're 25% owner of this project
and they're bringing the technology in that will make small scale LNG work, so they’ve
done it on the regasification side where they're tuning the liquid back in a gas and this will
be the first project of the small scale where they’re putting the gas into a liquid so
we’re going to be the leaders in that and that is scheduled to be in production late
2015.
Andrew: And Golar, what are they going to do; they're going to own the gas right all
the way through or how does that work?
Keith Schaefer: What they're proposing right now is that they will buy the gas and take
all the price risk, so that’s where they're really got a chance to make a lot of money
because they should be the ones that captures most of the arbitrage between the low Canadian
gas price and the high Asian gas price.
Andrew: And will, I mean that’s amazing, we can talk about Golar all day but you have
another couple of ideas they're going to need to be doing also of fracking in BC to produce
all this gas, Canyon Services are experts in that area, what do you like that start?
Keith Schaefer: Well I like it because it's an all Canadian play and the Canadian frackers
get higher profit margins than the Americans and so now with LNG becoming a reality you’ve
got a10 year visibility of growth here in fracking in Western Canada…
Andrew: The need to invest billions.
Keith Schaefer: So anyone like a Halliburton or Noble in the States or Schlumberger from
Europe who want to get a bigger piece of this industry, Canyon is a perfect take out target
for them.
Andrew: What's the stock symbol on them?
Keith Schaefer: FRC.
Andrew: FRC, okay. And then Precision Western Energy they're also going to be players here
obviously.
Keith Schaefer: Sure and those are the safe plays, those are the larger cap plays that
are going to get the big business first, Precision Drilling is the largest drilling company in
Canada, western energy resources they’ve got a really good fleet of deep drill rigs
so they're going to benefit too.
Andrew: We have less than 60 seconds, the environmentalists say this fracking uses enormous
amounts of electricity, enormous amounts of water, it's going to be, will a lot of environmental
damage be done potentially?
Keith Schaefer: Not with fracking, you know you're seeing fracking move towards A, using
a lot less water and B, you're seeing much more environmentally friendly fluids come
out there, there's a real competition in the industry to make that a lot more green and
the science is showing very clearly it really doesn’t affect ground water so I don’t
see that as an issue.
Andrew: Amazing story on an amazing scale, thank you so much Keith.
Keith Schaefer: Thanks Andrew.
Andrew: Keith Schaefer is editor and publisher of the Oil & Gas Investments Bulletin. Well
thanks very much for watching our show I think we had 3 amazing guests today, remember you
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