TOKYO, Nov 7 (Reuters) - Canadian pipeline company Veresen Inc is talking to Japanese buyers for offtake from its Jordan Cove liquefied natural gas (LNG) facility in Oregon and expects to make a final investment decision for the project by the middle of next year.
The project is one of a number of planned LNG terminals being built to ship surging production from shale formations to Asia’s energy hungry markets.
Veresen expects to be able to ship LNG from the U.S. West Coast to Tokyo Bay for $11 per million British thermal units, Chief Executive Officer Don Althoff told Reuters in an interview at an LNG conference in the Japanese capital on Thursday.
Initial capacity is slated to be six million tonnes of LNG, with shipments expected to start by 2019.
That price would make the gas almost 30 percent cheaper than the average price of LNG imports to Japan in September, at $15.54 per mmBtu. A shipment of gas from Alaska to Japan in September cost $16.00 per mmBtu on a customs-cleared basis.
”We are focused on one country at the moment more than any others,“ Althoff said. ”I‘m not actually talking to anybody in India. I‘m not actually talking to anybody in Indonesia... I‘m in Japan.
“We have signed six heads of agreement ... for about three times the volume of the plant’s capacity,” he added. “We have been at it now with this set of buyers for about 12 months.”
Heads of agreements are preliminary contracts that can be confirmed when full approvals are received and final investment decisions made on a project.
Gas for the plant will come mainly from Canada through a cross border pipeline and Althoff received export approval this year.
The company has a reciprocal import license to bring the gas to the United States and Department of Energy approval to export gas. It expects to soon receive the green light for construction from the Federal Energy Regulatory Commission, along with other permits.
Veresen may also supply the terminal with gas from the United States through its $1.425-billion acquisition of a 50-percent stake in the Ruby pipeline, which was completed on Thursday.
The Ruby line carries as much as 1.5 billion cubic feet per day of natural gas 680 miles (1,100 km) from the Opal, Wyoming hub to the Malin hub in southern Oregon.
Veresen is a building a new pipeline to connect to the Malin hub and Jordan Cove. (Reporting by Aaron Sheldrick; Editing by Clarence Fernandez)