Alberta and BC firms have different strengths; each will figure prominently in the new industry
By Brian Burton
PROPONENTS of multi-billion-dollar liquefied natural gas (LNG) projects need to know that British Columbia is “different than the rest of Canada,” says Vancouver energy lawyer David Bursey. Beyond the elevated environmental and social consciousness, Bursey says that “coastal protection has a heightened sensitivity” in BC. Local issues such as these, he says, argue strongly in favour of LNG developers securing BC counsel for part of their legal teams.
Bursey, with Vancouver-based Bull Housser & Tupper LLP, says the biggest challenges facing LNG projects revolve around “social licence” and require local expertise. They include environmental protection at natural gas fields, along pipeline routes, at liquefaction plants and on the coastal shipping routes that LNG tankers will travel. There are also negotiations with First Nations and with labour unions that will have something to say about the need to bring in foreign workers for some of the anticipated 39,000 construction jobs.
Meanwhile, law firms in Alberta are pressing their advantage as longtime advisors in the oil patch to claim a stake on the burgeoning LNG market. Tom Valentine, in the Calgary office of Norton Rose Fulbright Canada LLP, says the “lion's share” of the LNG work is already going to Calgary firms with big energy practices, while firms in BC are developing niches, such as Aboriginal affairs, and LNG sales contracts are typically handled by foreign firms.
For now, there's plenty of work to go around. Coastal liquefaction plants alone are generally listed at about $10 billion — and associated facilities can easily double the total tab. These include major shale gas developments in the BC interior, gas processing facilities, and large pipelines to carry gas to liquefaction units. Despite the costs, gas liquefaction is attractive because it packs 600 times more gas onto a tanker ship that will carry it to Asian markets, where spot prices are four to five times current North American rates.
Gas prices in Canada and the US have been sharply depressed for about six years, since the advent of drilling technologies that have cracked vast shale gas formations in both countries. The US is looking at becoming a substantial gas exporter, and Canada is facing the loss of its only export market. Canadian gas export revenues were cut from $33 billion in 2008 to $15 billion in 2010, and the expected growth in US gas production is only beginning.
Experts say it's small wonder Canadian gas interests have proposed 15 LNG projects to connect with offshore markets. Valentine and Jeff Scobie at Bennett Jones LLP in Calgary have both worked in-house for Qatar Petroleum, the world's largest LNG exporter, and both represent multiple LNG proponents in Canada, as well as advising LNG interests worldwide.
“I think [LNG development] is critically important,” Scobie says. “We're losing our prime customer.” Valentine agrees that Canada needs new customers for its gas: “We see the LNG space as the future of the [gas-based] energy industry in Canada.”
Scobie says LNG development began to ramp up in 2012 and will likely continue for a decade. “It's a massive amount of work for Canadian law firms.” Valentine says each project leader will need a legal team with specialists in energy, regulatory, finance, taxation, Aboriginal, labour, commercial, intellectual property, international trade and other areas of the law. And each of several partners in many of the larger projects will need its own legal team. Without being specific, both men say their firms are representing several LNG interests, while managing to avoid conflicts of interest.
Everyone agrees that only a few of the 15 proponents will proceed to development, with advantage going to those with LNG expertise, connections in the Asian market, and the support of local stakeholders. That being said, the International Energy Agency sees global energy demand growing some 40 per cent by 2035, despite the glut of oil and gas in North America. If some in the first wave of plants are successful, new proposals will likely come forward.
By Brian Burton
PROPONENTS of multi-billion-dollar liquefied natural gas (LNG) projects need to know that British Columbia is “different than the rest of Canada,” says Vancouver energy lawyer David Bursey. Beyond the elevated environmental and social consciousness, Bursey says that “coastal protection has a heightened sensitivity” in BC. Local issues such as these, he says, argue strongly in favour of LNG developers securing BC counsel for part of their legal teams.
Bursey, with Vancouver-based Bull Housser & Tupper LLP, says the biggest challenges facing LNG projects revolve around “social licence” and require local expertise. They include environmental protection at natural gas fields, along pipeline routes, at liquefaction plants and on the coastal shipping routes that LNG tankers will travel. There are also negotiations with First Nations and with labour unions that will have something to say about the need to bring in foreign workers for some of the anticipated 39,000 construction jobs.
Meanwhile, law firms in Alberta are pressing their advantage as longtime advisors in the oil patch to claim a stake on the burgeoning LNG market. Tom Valentine, in the Calgary office of Norton Rose Fulbright Canada LLP, says the “lion's share” of the LNG work is already going to Calgary firms with big energy practices, while firms in BC are developing niches, such as Aboriginal affairs, and LNG sales contracts are typically handled by foreign firms.
For now, there's plenty of work to go around. Coastal liquefaction plants alone are generally listed at about $10 billion — and associated facilities can easily double the total tab. These include major shale gas developments in the BC interior, gas processing facilities, and large pipelines to carry gas to liquefaction units. Despite the costs, gas liquefaction is attractive because it packs 600 times more gas onto a tanker ship that will carry it to Asian markets, where spot prices are four to five times current North American rates.
Gas prices in Canada and the US have been sharply depressed for about six years, since the advent of drilling technologies that have cracked vast shale gas formations in both countries. The US is looking at becoming a substantial gas exporter, and Canada is facing the loss of its only export market. Canadian gas export revenues were cut from $33 billion in 2008 to $15 billion in 2010, and the expected growth in US gas production is only beginning.
Experts say it's small wonder Canadian gas interests have proposed 15 LNG projects to connect with offshore markets. Valentine and Jeff Scobie at Bennett Jones LLP in Calgary have both worked in-house for Qatar Petroleum, the world's largest LNG exporter, and both represent multiple LNG proponents in Canada, as well as advising LNG interests worldwide.
“I think [LNG development] is critically important,” Scobie says. “We're losing our prime customer.” Valentine agrees that Canada needs new customers for its gas: “We see the LNG space as the future of the [gas-based] energy industry in Canada.”
Scobie says LNG development began to ramp up in 2012 and will likely continue for a decade. “It's a massive amount of work for Canadian law firms.” Valentine says each project leader will need a legal team with specialists in energy, regulatory, finance, taxation, Aboriginal, labour, commercial, intellectual property, international trade and other areas of the law. And each of several partners in many of the larger projects will need its own legal team. Without being specific, both men say their firms are representing several LNG interests, while managing to avoid conflicts of interest.
Everyone agrees that only a few of the 15 proponents will proceed to development, with advantage going to those with LNG expertise, connections in the Asian market, and the support of local stakeholders. That being said, the International Energy Agency sees global energy demand growing some 40 per cent by 2035, despite the glut of oil and gas in North America. If some in the first wave of plants are successful, new proposals will likely come forward.
