Chevron chief executive John Watson answers questions during a news conference in Calgary on Sept. 12, 2014.Todd Korol/The Globe and Mail
Apache Corp.'s decision to jettison its interest in a proposed multibillion-dollar liquefied natural gas project on Canada's West Coast only adds to a number of risks that face the development as competition from other countries heats up, the chief executive of Chevron Corp. says.
Chevron, one of the world's largest oil majors, is still working to advance the Kitimat LNG project in British Columbia, but there is a laundry list of unknowns that must be sorted out before the company is ready to make a final investment decision, CEO John Watson said.
They include a set of fiscal terms from the B.C. government, agreements with First Nations along the proposed pipeline route, a final estimate of costs and the signing of supply contracts with Asian buyers. Mr. Watson said Chevron has not set a deadline to move forward.
Last month, Houston-based Apache, under pressure from an activist investor, said it would pull out of the Kitimat LNG project, leaving Chevron to wait until a buyer for the stake surfaces.
"We continue to make progress at the site, on the pipeline, with First Nations peoples and with the government. So we're continuing to prosecute the work, and have had reasonable alignment with the partner in doing that," Mr. Watson told reporters before speaking to an audience of executives at the Spruce Meadows equestrian facility on Calgary's outskirts.
"Obviously we need to get the ownership sorted out before we can move the project forward in a significant way," he said.
There are 17 separate proposals to build LNG facilities on the West Coast, and none has made a decision to begin building. One major sticking point has been the inability between buyers and sellers on establishing contract pricing for the LNG.
Mr. Watson said Canada has advantages as it seeks to become an important player in LNG, including relatively close proximity to Asian markets and massive natural gas reserves in B.C. However, it faces competition for other countries that are further ahead with projects, including the United States and Australia. The proposed locations of the Canadian plants are considered remote, creating challenges for labour and materials transport.
"There's a great deal of effort that's required and you have to have good alignment amongst partners as well," he said. "And we'll move the project forward when we have those things in place. There will be demand for the product."
Jeffrey Jones