The conditions required to establish natural gas infrastructures
Presentation by Mr. Robert Tessier, President and Chief Executive Officer
CAMPUT 2005
May 2, 2005
2
A tensely-balanced North American gas market
SUPPLY - CANADA
SUPPLY - U.S.
0
5
10
15
20
25
30
1985 1990 1995 2000
TCF
PRICE OF GAS, $/MMBTU
8
6
4
2
0
TOTAL DEMANDU.S. & CANADA
Past forecasts
$ U.S.
3
Liquefied natural gas: a diversification opportunity for the Northeast
Proposed terminals
Existing terminals
4
Two key development factors
Time Development periods of 5 to 7 years are necessary A sector where just in time is impracticable Better be too soon than too late
Capital New infrastructure requires major capital The number of players is limited An investment environment with the least uncertainty is
favoured
5
Leveraging our geographic advantage
Proposed terminals
Existing terminals
Near the coastNear the markets
6
Three issues at stake
Location of infrastructure
Regulatory framework
Long-term commitments
7
The location: concept phase
Harbor-indutrial zone
LévisLévis BeaumontBeaumont
OPTION 1
OPTION 2OPTION 3
OPTION 4
Options
8
Challenges of the preliminary consultation
The promoter must consult the public very early in the formulation of the project
The site studies are still in their infancy The information on the project is general The community’s questions quickly become specific The promoter can’t have the answers The public is unhappy and suspicious An environment conducive to disinformation The dangers of slip-ups are great
9
Location: when we have a chance to work
10
Two main conclusions
Governments and industry must raise public awareness about the crucial importance of energy infrastructure
A long-term effort The regulatory agencies must be involved from the very
beginning in the consultation process Objective third party to explain the entire regulatory review process
(environment, safety, etc.) Meetings with the public and the key entities
(e.g.: city council)
11
Regulatory framework
The inherent project development risks are known and accepted by the promoters
The multiplicity of overlapping government regulations generates additional uncertainty
Development harmonization solutions: Structuring of the regulatory procedures Smart regulation
Still to be done : simplify the regulatory framework Precise rules, known from the outset
12
Long-term commitments
Infrastructure = $$$ = Long-term horizon
The past 20 years: An increasingly efficient, open and deregulated industry Proliferation of players, reign of the spot market Increasingly complex financial market
Recent developments Collapse of Enron et al Limited number of players with acceptable credit ratings Entry of the banks: financial and physical markets
13
GNL: Long term integreted players
0,25 $ - 1,00 $0,50 $ - 1,00 $
0,25 $ - 0,50 $
Natural gas production
Liquefaction
Import Terminal
Shipping
Other LDCs and market players
14
Conclusion
Long term commitments from every players of the LNG chain, including LDCs, are a must.
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