Houston (Platts)--2Aug2012/101 pm EDT/1701 GMT

Spectra Energy is considering enhancing its pipeline grid in British Columbia to support liquefied natural exports out of Prince Rupert and is already in "advanced negotiations," CEO Greg Ebel said Thursday.

Two of the five LNG export proposals out of British Columbia, from the UK's BG Group and Malaysian state-owned Petronas, are for sites in Prince Rupert. The other three are in Kitimat, south of Prince Rupert.

"Our view is that Kitimat is a great location, but it's not the only location," Ebel said during the company's second-quarter earnings call. "We think Prince Rupert is a great location. In my view, we don't see four or five of those projects getting built, we see between one to three."

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Spectra's 3,540-mile gas pipeline system in British Columbia is connected to both Kitimat and Prince Rupert by existing laterals, although these are smaller-diameter lines, with a maximum capacity of some 150,000 Mcf/d, far less than the capacities announced by all of the Western Canadian export projects.

Spectra would commit $4 billion-$6 billion to Western Canadian infrastructure projects to support LNG exports, enhanced gathering from the Horn River and Montney shales and processing facilities, Ebel said. The last of these projects will go into service next year, he added.

BG Group in February signed a deal with the Prince Rupert Port Authority to conduct a feasibility study for its LNG export terminal. A spokesman with the Prince Rupert agency said at the time that BG was looking at the Ridley Island industrial site, adjacent to the city of Prince Rupert.

BG Group has yet to announce a proposed in-service date or capacity for its project.

Petronas in June, meanwhile, agreed to conduct a feasibility study with the port authority, for a site on Lelu Island. Its project is slated to come online by late 2017 or early 2018 with a capacity of 940,000 Mcf/d.

Rival Canadian pipeline company TransCanada appeared to have the edge in the infrastructural race when in June it was selected to build, own and operate the 420-mile Coastal GasLink pipeline from Dawson Creek to Shell Canada's planned LNG export terminal in Kitimat.

Backers of the Kitimat LNG terminal -- Apache, Encana and EOG -- got the provincial green light in April to expand their proposed Pacific Trails Pipeline, which would run from Spectra's gas processing complex in Summit Lake to Kitimat.

Houston-based Spectra saw its second-quarter earnings fall some 24% to $215 million from $284 million during the same time a year ago.

The biggest drag on earnings proved to be its field services unit, which includes its stake in DCP Midstream. The unit saw earnings fall to $104 million for the second quarter, compared to its year-ago level of $217 million. Spectra executives on Thursday attributed the drop-off to lower natural gas liquids and gas prices.

Spectra's stock price was down $1.10, of 3.6%, to $29.45/share as of 11:45 a.m. CDT (1645 GMT) amid light trading.

--Samantha Santa Maria, samantha_santa_maria@platts.com
--Edited by Richard Rubin, richard_rubin@platts.com

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