Calgary LNG Developer Plots Bank Financing For $500M LNG

Calgary-basedKitimat LNGwill be hitting the bank markets later this year or early next to secure project financing for a 6.5 billion cubic feet terminal liquefied natural gas terminal costing $500 million.Rosemary Boulton, president of privately-held Kitimat, says the developer is already working with a couple of banks on the financing, but declined to name names.

Boulton explains Kitimat will rely on its core institutional investors to fund much of the equity needed for the deal and hopes to maintain an 80:20 debt to equity ratio for the project, which will interconnect with the Pacific Northern Gas pipeline. "We just need to get a few more of our fundamental contracts in place and then we'll go out and do the final [fund] raise," she says. Construction is scheduled to begin this fall, with the heavy lifting starting in spring of 2007.

The project, sited 350 miles north of Vancouver, has obtained early regulatory approvals and is awaiting others. Boulton says Kitimat expects the next phase of approvals from the federal government to come through in the next few weeks. "Now that we've got that, we've got a strong sort of first mover's position...we will be able to go out into the supply side of the Pacific Basin and really be able to line up some contracts for gas supply," she says, adding that conversations with suppliers and offtaker and are also being had but would not identify the parties.