Global energy firms announce LNG Canada

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Shell Canada Limited, Korea GasCorporation (KOGAS), Mitsubishi Corporation, and PetroChina Company Limited announced today that they are jointly developing a proposed liquefied natural gas (LNG) export facility near Kitimat, British Columbia.

The LNG Canada project brings together the four companies' extensive development experience, technical depth, financial strength and access to markets required to be the leading LNG developer in Canada.

This is the latest in a string of proposals seeking to offload surplus North American shale gas to energy-hungry Asian markets.

Regulators approved the country's first liquefied gas export licence last year to Kitimat LNG, owned by Apache Canada, EOG Resources and Encana Corp. The $5-billion project could be shipping fuel by 2016. That approval has since been amended to increase the size of the pipeline to106 centimetres (42 inches) in diameter instead of 91 cm (36 in.).

In February BC LNG export Co-operative was granted an export licence for its floating production project off Kitimat, which could be online by 2014.

Talisman Energy Inc., Nexen Inc. and Imperial Oil Ltd. have also been investigating potential projects of their own.

Kitimat is also the western terminus of Enbridge's planned $5.5-billion Northern Gateway Pipeline designed to carry oil sands crude from Northern Alberta. This is being challenged by many residents of BC, environmentalists and First Nations groups in ongoing public hearings.

Shell holds a 40-percent working interest, with KOGAS, Mitsubishi and PetroChina each holding a 20-percent working interest. Korea Gas said the partners would use Western Canadian natural gas, including Horn River and Montney shale in the operation, estimated to cost $12 billion.

Shell says that the plant and terminal could be on line by 2020, pending regulatory and corporate approvals.

'Our combined expertise, and our focus on technological innovation in delivering safe and environmentally sound LNG projects around the globe, ensures that our LNG Canada project would be well-suited to deliver long-term value for British Columbia and increase access to new export markets for Canada,' says Jose-Alberto Lima, Shell's Vice President LNG Americas.

The proposed LNG Canada project would include the design, construction and operation of a gas liquefaction plant, and facilities for the storage and export of (LNG), including marine off-loading facilities and shipping.

LNG Canada would create significant economic benefit for the province, First Nations, local communities and the region said the company in its press release.  Such a project can create thousands of jobs during construction and hundreds of full-time, permanent jobs during operations.

However, the decision to move this project into development would be taken only after conducting necessary engineering, environmental and stakeholder engagement work.

'As the world's largest operator of LNG import terminals, we recognize the potential value of the LNG Canada project for our company and for British Columbia, and look forward to conducting business in B.C. with respect for all local residents and their traditions,' said Mr. Young Sik Kwon, Vice President of Korea Gas Corporation.

LNG Canada will initially consist of two LNG processing units referred to as 'trains', each with the capacity to produce six million tonnes of LNG annually, with an option to expand the project in the future.

'We have a history of working with our joint-venture partners, as well as conducting business in Canada,' said Junichi Iseda, Senior Vice President, Mitsubishi Corporation. 'We look forward to continuing to invest in Canada through this project, creating economic growth and new, important trade links between our two nations.'

'This project will contribute to a further strengthening of trade relationships between China and Canada and will help China use clean burning natural gas to fuel its economic growth,' said Bo Qiliang, Vice President, PetroChina Company Limited.

The demand for natural gas remains high in Asia and other markets, but the highly competitive global LNG market is not without its risks. See GLOBE-Net article ' Boom or Bust: Assessing Canada's LNG Future.'

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