AltaGas Ltd has put its investment plan of C$600 million ($464mn) on hold over an ongoing dispute over the tax on imported equipment. AltaGas has drawn a plan to export Liquefied Natural gas (LNG), but couldn't take it forward as it's involved over a tax dispute with the government. AltaGas is optimistic that the dispute will be resolved shortly and expected to take the project off in November.
Headquartered in Calgary, Canada, AltaGas Ltd is disagreeing on a 25 percent customs duty on a C$300-mn floating LNG facility. AltaGs would like to import this floating LNG facility equipment from China.
John Lowe, Executive Vice-President (Corporate Development), AltaGas, said: "The company is optimistic that a federal decision on its appeal expected in November will mean the project wouldn't have to pay any tax."
AltaGas is in the process of developing LNG export terminal, first one in the country, which is expected to be completed by 2018. However, an international report expressed its doubt that building such export terminal may not be possible even by 2020. But, AltaGas shrugged it off saying it would prove them wrong.
AltaGas is also working on Douglas Channel LNG terminal in British Columbia (BC), which has been acquired by AltaGas early this year. The first phase of the project targets the shipment of 550,000 tons of LNG annually. Douglas Channel project is smaller than other projects being proposed on British Columbia.
Douglas Channel terminal is a floating barge so it will use an existing gas pipeline that goes up to Kitimat, a district in the North Coast region of British Columbia. AltaGas hopes that smaller LNG terminals are better environmentally. Floating technology will reduce the impact on land and this will result in more cost savings.
The gross margins of AltaGas widened to 38.51 percent during the quarter ending June 2015 from 35.68 percent in the previous corresponding period. The pressure on operating margins resulted in a decline of earnings.
Revenues were down 16.81 percent to $359.45mn from $43206mn in same quarter in 2014. Earnings per share (EPS) were $0.13 from 0.21. Earnings eased 9.68 percent to $9.68mn during the quarter from $33.27mn in the previous corresponding quarter.
AltaGas and other owners of Douglas Channel LNG project will decide on the LNG export project. Based on their decision, the LNG export project's schedule whether this year or next year will be decided. Idemitsu Kosan Co., Exmar NV and Electricite de France SA (EDF) are supporting the project. AltaGas export project proposal is one among the 20 LNG export proposals along Pacific Coast of Canada.
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