Massive LNG Project In BC Gets Shareholders' Final Approval

The Shell logo at a petrol station in London Wednesday Jan. 20 2016

The Shell logo at a petrol station in London Wednesday Jan. 20 2016

The decision by Shell and its partners to proceed with the $40 billion LNG Canada project doesn't just mark a turning point for Canada's natural gas industry - it's a turning point for the industry worldwide, according to Wood Mackenzie.

The $40 billion project features the construction of a 670 km pipeline from northeast B.C., and a liquified natural gas export terminal in Kitimat that will process and ship LNG to Asian markets.

The project is a joint venture between Royal Dutch Shell, Malaysia's Petronas, PetroChina, Korea Gas Corporation, and Japan's Mitsubishi Corporation.

Each of the joint venture partners will be responsible for providing their own natural gas supply and will individually offtake and market their own LNG.

Feer noted that there's now a stronger likelihood that other Western Canada LNG proposals will win final approval as well.

Much of the reductions will be achieved by B.C. moving towards electrification, primarily in the transportation and industrial sectors.

LNG Canada will be a massive project with an initial output of some 14 million tonnes per annum (mtpa) from two production trains, with an option to add two more trains for a total of 28 mtpa.

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

The prospect of billions of dollars in liquefied natural gas revenues has British Columbia's government preparing for a political and environmental juggling act as Premier John Horgan attempts to hold together his minority government while appeasing ever watchful climate guardians.

"We welcome the unprecedented commitment shown by the LNG Canada partners to work within our province's ambitious climate goals", he said in the same statement. "There are specialized components that need to be imported".

"Today's announcement by LNG Canada represents the single largest private sector investment in the history of Canada", Prime Minister Justin Trudeau said Tuesday at the announcement in Vancouver.

"I am confident the B.C. Liberals will vote in support as long as the deal that the NDP has struck is beneficial to British Columbians", said Ross. The LNG facility will be built in Kitimat, a town in north-western British Columbia (BC).

The potential FIDs include "four mega trains in Qatar, Arctic LNG 2 in Russian Federation, at least one development in Mozambique and several U.S. projects", Wang said, while noting that 2019 "could be the busiest year" ever for LNG project sanctions.

But Bilous said there's little difference between the LNG project and Trans Mountain, which would twin the existing line to triple the amount of oil flowing from Alberta to the B.C. coast in order to fetch a better price on overseas markets.

"It certainly improves the psychology", Rose said last week.

Acknowledging that project development costs tend to be higher in Canada compared to the United States, Feer noted that Western Canada's LNG shipping cost advantage - no canals to transit - serves as an offset.

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