Tourmaline Oil has joined Rockies LNG Partners, a partnership of Canadian natural gas producers, in a bid to continue to expand its liquefied natural gas (LNG) business.
Tourmaline in its earnings release Wednesday said it is “excited to assist in moving the Ksi Lisims LNG project forward”.
Rockies LNG is a partnership of Canadian natural gas producers working together to advance West Coast LNG opportunities. Together, the partners produce one-third of the natural gas extracted from the Western Canadian Sedimentary Basin, primarily from the Montney and Duvernay formations, and “hold reserves to supply large-scale LNG exports for decades to come”, according to the group’s website.
Collectively, Rockies LNG represents 5.6 billion cubic feet per day of natural gas production and 45 trillion cubic feet of natural gas. The natural gas produced also has 70 percent lower average upstream emissions intensity compared to USA gas producers, the website says.
The companies making up Rockies LNG include Advantage Energy, Birchcliff Energy, Bonavista Energy, Crescent Point Energy, NuVista Energy, Ovintiv Inc., Paramount Resources, and Peyto Exploration & Development Corp.
Ksi Lisims LNG is a proposed project targeted to produce 12 million metric tons per year of LNG at Wil Milit, north of Prince Rupert, British Columbia. The project is a collaboration between Rockies LNG, Western LNG, and the Nisga’a Nation, a modern treaty nation in British Columbia.
According to the project’s website, Ksi Lisims LNG “plans to achieve net zero greenhouse gas emissions associated with the LNG facility within 3 years of start-up and will provide energy markets in Asia with low carbon, reliable energy that helps meet growing energy needs and supports continued growth in intermittent renewables such as wind and solar”.
Tourmaline started shipping LNG off the US Gulf Coast this year, according to an earlier Bloomberg report. Tourmaline CEO Michael Rose said in an interview that LNG volumes exported could increase to 10 percent to 15 percent in the next two or three years from the current figure of six percent.
Lower Earnings and Production
Meanwhile, Tourmaline reported a net income of $382.6 million (CAD 510.7 million) for the second quarter, a decrease of 71 percent from $1.28 billion (CAD 1.71 billion) in the same period in 2022. The company’s cash flow for the quarter was $587.7 million (CAD 784 million), down 42 percent from $1 billion (CAD 1.35 billion) in the second quarter of 2022.
Tourmaline’s second-quarter production averaged 495,918 barrels of oil equivalent per day (boepd), impacted by wildfires in the Alberta Deep Basin and in the NEBC Montney gas complex. The total Q2 fire-related production impact was 17,000 boepd or approximately three percent. Second-quarter production was also reduced by 6,213 boepd due to seasonal storage injections at Dawn and in California, the company said.
All Tourmaline-operated production facilities in both complexes were returned to normal operations in the second half of June 2023. A portion of the company production accessing third-party facilities in the North Montney, adjacent to the Donnie Creek fire area, remains slightly below expected levels, with a reduction of 2,000 to 3,000 boepd in July, according to the release.
The multiple wildfire outbreaks in both gas complexes delayed the startup of post-spring breakup drilling and completion activities and will reduce third-quarter production volumes, Tourmaline said, adding that it is expecting an average output of 495,000 to 505,000 boepd for the third quarter. Tourmaline said it continues to expect 2023 exit production levels in excess of 550,000 boepd and the 2024 average production guidance of 550,000 boepd remains unchanged.
Tourmaline said it is operating a full 13-rig drilling fleet but “does not believe it to be prudent to add additional rigs and capital to the second half 2023 program in order to offset the fire-related activity and production deferral”.
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