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Chevron recently started soliciting expressions of interest for its share in Kitimat LNG and Pacific Trail Pipeline. Australia’s Woodside Petroleum Ltd. is the co-owner.Amber Bracken/The Globe and Mail

Chevron Corp. has taken a US$1.6-billion writedown on its 50-per-cent interest in Kitimat LNG, a proposed liquefied natural gas project in British Columbia that has stalled as Chevron looks for a buyer for its stake.

In December, Chevron announced that would be booking a hefty writedown, but didn’t disclose the size of the reduced value for Kitimat LNG on its balance sheet.

On Friday, the California-based company revealed that Kitimat LNG’s non-cash, after-tax impairment charge accounts for US$1.6-billion out of writedowns totalling US$10.4-billion in the fourth quarter, as producers struggle to cope with low oil and gas prices.

More 62 per cent of Chevron’s total asset devaluations stem from its US$6.5-billion impairment charge for Appalachia shale gas operations in the United States. Other parts of the quarterly writedowns include decreasing the value for the Chevron-operated Big Foot oil platform in the Gulf of Mexico by US$1.5-billion.

Chevron chief executive Michael Wirth said the company made the “hard decision” to divest Kitimat LNG.

“Our assessment on the Kitimat project is, given all the other developments out there in the world, that one was going to be tough to compete versus our alternatives,” Mr. Wirth said during a conference call with industry analysts on Friday. “As an investment proposition, we just want to find the very best projects.”

Chevron recently started soliciting expressions of interest for its share in Kitimat LNG and Pacific Trail Pipeline. Australia’s Woodside Petroleum Ltd. is the co-owner.

Chevron bought its stake in early 2013 from Encana Corp. and EOG Resources Inc. while Woodside acquired its interest in the spring of 2015 from Apache Corp.

Mr. Wirth noted that one of the challenges in Canada is the long distances to transport natural gas from northeastern B.C. to the West Coast.

Pacific Trail Pipeline proposes to follow a 480-kilometre route from Summit Lake near Prince George in the B.C. Interior to Kitimat LNG’s terminal site at Bish Cove. The idea is to connect with a planned 260-kilometre pipeline from northeastern B.C. to Prince George. “Canadian gas – that is quite a ways away from the Kitimat site,” Mr. Wirth said.

He made the comments after Chevron reported a fourth-quarter loss of US$6.6-billion, compared with a US$3.7-billion profit in the same period of 2018.

Any prospective buyer of Chevron’s 50-per-cent stake in the pipeline proposal in British Columbia will need to contend with unresolved issues related to a large segment of the route crossing into the Wet’suwet’en Nation’s unceded territory. A group led by eight Wet’suwet’en hereditary house chiefs oppose pipeline projects.

In mid-2019, Chevron submitted a revised plan to B.C. and federal regulators, aiming to start terminal construction by 2023. The plan called for electric-motor-driven technology to supercool natural gas into liquid form, relying on hydroelectricity from BC Hydro instead of using natural gas-powered turbines.

In early December, the Canada Energy Regulator approved Kitimat LNG’s 40-year export licence, but within one week, Chevron decided to place its stake in the project up for sale.

Bish Cove is located on Haisla Nation reserve land near Kitimat. The elected Haisla band council supports Kitimat LNG and Pacific Trail Pipeline, and also backs Coastal GasLink, a pipeline project that is scheduled to be under construction between 2020 and 2023. Coastal GasLink would transport natural gas from northeastern B.C. to an export terminal operated by LNG Canada, which is being built on industrial land in Kitimat on the Haisla’s traditional territory.

On the upstream side, Chevron and Woodside co-own properties for natural gas drilling in northeast B.C. shale plays in the Liard and Horn River basins, though development plans for those assets are on hold.

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