Published: Thu, October 04, 2018
Science | By

Shell says it has approved huge gas project in Canada

Shell says it has approved huge gas project in Canada

Shell and its four Asian partners signed off Tuesday on LNG Canada, a record $40 billion (US$31 billion) liquefied natural gas project that the fiery B.C. premier has been touting while simultaneously battling Trudeau's government to thwart Trans Mountain which is critical to getting Canada's landlocked bitumen in Alberta to B.C.'s coast for export.

Notwithstanding, LNG Canada has a significant advantage over any USA based LNG project based either on the east or Gulf coast. "It seems that megaprojects are back".

On Sunday, Kitimat Mayor Philip Germuth said he was pleased by the report that the LNG Canada project had been approved. LNG evaporates in a spill while diluted bitumen is messier and less predictable.

Each project partner will supply its own gas for the project, with the first LNG expected to before the middle of the next decade, according to the release. A clutch of projects are vying for FID, including four mega trains in Qatar, Arctic LNG-2 in Russian Federation, at least one development in Mozambique and several USA projects.

Canada may need to take a different public policy approach to bitumen compared with LNG, said James Moore, a former industry minister and now a senior adviser at law firm Dentons Canada LLP. Selling LNG to buyers in Asia promises higher prices for the country's gas compared to what it gets selling it nearly exclusively to the USA via pipeline.

Construction on the project is expected to begin this year, with a large-scale LNG export terminal in service by 2024.

"Responsible LNG development means real benefits to Indigenous Peoples and communities, long-term careers and reliable revenue to help First Nations close the economic gap between their members and other Canadians", Ogen-Toews said, calling LNG Canada a "leader in dealing with First Nations".


The scope under the engineering, procurement, fabrication and construction contract will see Fluor and JGC design and build the two-train facility which will have a combined capacity of 14 million tonnes of LNG per annum.

"JGC will draw on its accumulated capabilities and track record of successfully delivering LNG plant construction projects", he added. But the premier appears to be more optimistic about the financial gains that LNG Canada could provide.

The green light marks the end of a seven-year effort, including two postponements in 2016 at the depths of the gas market downturn. LNG Canada has challenged the duties in court, arguing no Canadian assembly yard has the experience nor the water access to ship them to site in Kitimat on Canada's northwest coast.

Other large project approvals on the horizon include Novatek's Arctic LNG-2 project with 19.8 million tonnes capacity, after the Russian gas company's Yamal export facility started operations smoothly and quickly at the end of previous year.

Shell holds 40 percent of LNG Canada, with Petronas at 25 percent, 15 percent each for PetroChina and Mitsubishi, and 5 percent for Kogas.

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