Bear Head LNG still on track despite management departures, CEO says

Yesterday I speculated the announcement that two senior managers of Bear Head LNG were leaving the company didn’t bode well for the future of this proposed liquefied natural gas export terminal project.

But Maurice Brand, CEO of Bear Head LNG’s parent company, Australian-based Liquefied Natural Gas Limited, says that isn’t the case.

“I’m not concerned about our state,” Brand said during an interview this morning while addressing the departures of John Godbold and Ian Salmon. “We’re absolutely not losing any momentum on the project because of this. It’s very rare somebody sees [a project] through from an idea to the operational side.”

Until yesterday’s announcement, Godbold was Bear Head LNG’s COO and project director and Salmon was its chief financial officer.

Brand says the company always knew Godbold and Salmon would be leaving the company at some point, and February 29, 2016 turned out to be that day.

John Baguley, LNGL’s chief technical officer, will take over Godbold’s responsibilities.

Brand said Godbold and Salmon did a “great job” getting the project to where it’s at now, and both men are still “committed” to it even if they aren’t part of the management team anymore.

Now it’s Baguley’s job, as well as the rest of current management, to advance the project over the next 18 months.

Much of that work will involve completing technical work to cement the project’s size, and finalizing what Brand calls the “gas path” for Bear Head LNG.

Bear Head LNG, which would be located on a 255-acre site in Point Tupper, Nova Scotia, would ship eight million tonnes of the chilled fossil fuel to global markets annually.

While it has received a 25-year licence from the National Energy Board to export natural gas as LNG, the project has an estimated price tag of US$4 billion.

In order to get that financing, Brand says it will have to secure some “off-take” contracts – basically getting customers to sign up to buy the LNG Bear Head produces.

And for that to happen, the company must figure out where it’s going to get the gas to supply the facility and how that gas will get there. This is the “gas path” Brand mentions above.

There is plenty of natural gas to be had, particularly in Western Canada and U.S. tight gas basins like the Marcellus and Utica. There are also plenty of pipelines, although none of them are connected to Bear Head’s site.

Locking up enough natural gas to supply Bear Head LNG for 25 years, as well as finding the capacity on existing or future pipelines to get it to the facility, is taking some time.

That’s a big reason why Brand says the company expects to make a final investment decision on the project in 2017 instead of 2016 as it originally planned.

If the company decides to build the project and it gets the money to do so, Brand says it will take approximately four years for Bear Head LNG to be built and operating.

And even though there may be plenty of skeptics out there (like me), Brand says the sky is hardly falling regarding the Bear Head LNG project despite yesterday’s management changes.

“We’re still spending money, mate,” Brand said. “We get the gas path sorted and we’re away. My worry list right now is timing and gas path.”

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