Quicksilver bankruptcy deals blow to LNG terminal

Canadian operations not affected by filing, but short-term outlook dim for Campbell River facility

A proposed LNG production and shipping terminal at the former Elk Falls Mill site suffered a setback this week when Quicksilver Resources Inc. filed for Chapter 11 bankruptcy protection in U.S. court.

Tuesday’s filing in a Delaware court does not include the Texas company’s Canadian operations through its Alberta-based subsidiary, Quicksilver Resources Canada, Inc. Its Canadian assets include natural gas-rich deposits in the Horn River Basin in northeast B.C., and in 2013 it purchased the shuttered Elk Falls Paper Mill for $8.6 million and announced plans to explore creation of the Discovery LNG terminal on the site.

In July of 2014, Quicksilver applied for a license to ship LNG from the facility, which would also convert natural gas piped from Horn River Basin into liquid form and provide storage.

“Any plan to develop that area as an LNG facility was always contingent upon Quicksilver Resources Canada being able to secure a partner for our Horn River Basin Integrated Project,” said David Erdman, Quicksilver’s Director of Investment Relations. “We continue to seek a partner for that asset, but with the filings and the announcement (Tuesday), our efforts have not produced … a viable solution for Quicksilver. That’s the reason we did the Chapter 11 filing.”

At the time of its license filing last summer, Quicksilver estimated regulatory approvals and permits were expected to take two years to complete, with another four years for construction on the first phase of the proposed project.

But that license request was submitted just as the price of oil and gas began a decline that has since seen it plummet from nearly $120 a barrel to just under $50 a barrel last month. The resulting cash flow and debt crunch has driven three oil and gas companies to bankruptcy this month alone, with Quicksilver following Texas-based BPZ Resources and Houston’s Cal Dive International.

In the run-up to last year’s provincial election, Premier Christy Clark touted the potential of LNG to B.C.’s bottom line. But those pronouncements were based on a much higher price.

“Canada has been a tough place to create value lately,” Steve Pruett, president and CEO of Elevation Resources, told the Fort Worth Star Telegram in an interview this week. “The resource is there, but the price isn’t there at the well head to recover the capital investment.”

Meanwhile, Quicksilver Resources Canada will continue to lay the foundation for the Discovery LNG terminal in Campbell River. But, barring a turnaround in the price of gas, an operating plant remains over the horizon.

“Don’t expect there to be, at least in the near-term, any announcements on LNG,” Quicksilver’s Erdman said. “But certainly the company continues to own the Discovery site and will continue to operate it as we have historically.”

Just Posted

Henderson Avenue fire second in two days under investigation for suspicious circumstances

Unrelated fire on 8th Avenue Monday also under investigation

Fire in abandoned house deemed suspicious, RCMP say

Recent reports of squatters coming and going from the home

Campbell River man in medically-induced coma after serious dirt bike incident

GoFundMe campaign raised more than $3,000 by Monday afternoon

Campbell River firefighters respond to four structure fires in a week

North Campbell River fire deemed ‘suspicious’

VIDEO: Tributes flow on 10th anniversary of Michael Jackson’s death

Jackson received a fatal dose of the anesthetic propofol on June 25, 2009. He died at age 50

Vancouver Island woman assaulted after confronting thief

RCMP warn residents to call for police assistance

Island Health issues safer drug-use tips ahead of music festival season

Health authority aims to reduce overdose risks at festivals

VIDEO: Killer whale steals fisherman’s catch off North Coast

Fishing duel results in eager orca snagging salmon in Prince Rupert

40 cats surrendered in apparent hoarding at B.C. home

Officers found the cats living among piles of garbage and feces, suffering from fleas

Campers hailed heroes in rock face rescue at Vancouver Island provincial park

The campers quickly noticed the man in distress and jumped into the river to swim across.

Tsilhqot’in Nation urges Taseko Mines to stop drilling plans before conflict grows

Nation said Teztan Biny area is of ‘profound cultural and spiritual importance’

Vancouver Aquarium drops cetacean ban lawsuit in new lease agreement

Ocean Wise CEO Lasse Gustavsson called the updated lease an exciting new chapter for the aquarium

Pedestrian struck by vehicle in Stz’uminus dies from injuries

A male pedestrian was struck in the early morning of June 25

Most Read