Shell and partners announce LNG Canada investment

2 October 2018

LNG Canada announced that its joint venture participants—Shell, Mitsubishi, Malaysia’s Petroliam Nasional (PETRONAS), PetroChina, and Korea Gas Corp (KOGAS)—have taken a final investment decision (FID) to build the LNG Canada export facility in Kitimat, British Columbia. At C$40 billion (31 billion USD), LNG Canada is the nation’s largest infrastructure project ever, and a milestone for both Canadian and global natural gas industry.

Each joint venture participant will be responsible to provide its own natural gas supply and will individually offtake and market its share of LNG. The approval is for two processing units or “trains”, with a total capacity of 14 million tonnes a year (MTPA). First LNG shipments are expected by 2025. LNG Canada intends to eventually export as much as 26 million tonnes a year.

LNG Canada has access to vast natural gas reserves from British Columbia, which are currently sold at a discount due to US competition and Canadian pipeline capacity shortfalls. The business case for the project rests in part on the assumption that China will be increasing LNG imports to replace coal energy with natural gas.

The LNG would be exported primarily to Asian countries, taking advantage of the relatively short shipping distance to North Asia, which is about 50% shorter than from the US Gulf of Mexico and avoids the Panama Canal. LNG Canada will be able to send cargoes to Tokyo in about eight days, compared to 20 days for shipments from the Gulf of Mexico.

The LNG Plant will be constructed on a large, partially-developed industrial site with existing deep-water port, roads, rail and power supplies. The project has been in the making for seven years, and was postponed two times in 2016 due to the gas market downturn. Shell holds 40% of LNG Canada, with Petronas at 25%, PetroChina and Mitsubishi at 15% each, and Kogas at 5%.

Source: LNG Canada