Thursday, 18 October, 2018

Petronas confirms FID on Shell-led LNG Canada project

Rendering of the northwest side of the LNG Canada Rendering of the northwest side of the LNG Canada
Theresa Hayes | 03 October, 2018, 18:58

The final investment decision on the project was supposed to be made in 2016, but it was delayed for two years due to unappealing LNG prices amid growing capacity coming on stream, notably in Australia, but also in Russian Federation. The line will range 676 kilometres to carry gas from BC to LNG Canada for export.

TransCanada Corporation will build, own and operate the 670 km Coastal GasLink (CGL) pipeline that will connect natural gas from northeastern British Columbia to the export plant in Kitimat.

Canada is committing C$275 million to infrastructure and environmental performance measures related to LNG Canada, which will have the lowest carbon intensity of any large LNG facility in the world, Trudeau said.

Global LNG imports will set a new record this year of 308 million metric tons thanks to growth from Asia, Bloomberg NEF forecast September 12.

Forecasts vary, but LNG demand is expected to jump to about 360 million tonnes by 2023, the International Energy Agency has said, while consultancy Wood Mackenzie expects 450 tonnes a year.

LNG from the project will reach Asia in about half the time it takes from the US Gulf Coast, LNG Canada said.

China is the fastest-growing major buyer of LNG and in 2017 overtook South Korea to become the world's No. 2 importer, behind Japan. The project may add two more trains totaling 14 million tpa, Mitsubishi said.

But First Nations along the pipeline route and at the site of the liquefaction facility sharply rebuffed the criticism, and said the project would eliminate their dependence on the government. Liquefied natural gas is gas that has been compressed to be transported.

The officials, speaking on a not-for-attribution basis, said no LNG legislation is coming this fall and a repeal of the former Liberal government's LNG income tax will not be tabled until the LNG Canada project is about to go into production by 2024.

FILE PHOTO: A logo for Royal Dutch Shell Shell is seen on a garage forecourt, March 6, 2014.

With prices nearly tripling from 2016 lows to over $11 per million British thermal units (mmBtu) as demand gathers steam, the industry has regained confidence and is preparing to invest in new projects again.

The project will boost Canada's oilpatch, which has struggled to attract investment due to the government's stumbles in winning regulatory approval to expand the Trans Mountain oil pipeline. Smaller pipeline companies including Pembina Pipeline Corp will also benefit, said RBC analyst Robert Kwan.

A major liquefied natural gas (LNG) project in Canada has received the go-ahead with a C$40bn ($31.9bn; £24.6bn) investment.

"LNG Canada's FID. (signals) the appetite to invest in LNG is back", said Saul Kavonic, an energy researcher at Credit Suisse.

The project owners will provide their own natural gas supply and will individually market their share of LNG.

The construction decision comes amid a Sino-U.S. trade dispute that has led to tariffs being imposed by China on LNG shipments from the United States, threatening U.S. President Donald Trump's energy dominance plan.

"It's like reliving our history", said Kitimat Mayor Phil Germuth, remembering the Aluminum Company of Canada's decision to build an aluminum smelter in that north coast city in the 1950s, making what was then the single largest private-sector investment in Canada's history.