Tag Archives: Apache

Canada’s Natural gas production is under threat if it can’t find new markets

This past Tuesday, Shell Canada declared an official launch to a liquefied natural gas (“LNG”) terminal project in Kitimat, B.C. The multi-billion-dollar plant would load and esimtated 1.2 billion cubic feet per day onto LNG tankers. The project partnership, gives shell a 40 per cent interest, and 20 per cent each to Korea Gas Corp., Mitsubishi Corp., and PetroChina Co. Ltd.

With the increased production in the US and the US becoming an exporter of natural gas, it is critical for Canada to find an alternative market for Canadian natuarl gas. The only way to do this is through export via a LNG export facility.

One potential problem is that Kitimat LNG is primarily owned by American companies where other interests and politics could come into play and its corporate backers (Apache Corp. EOG Reources etc) have delayed an investment decision that was expected for early this year. An Asian backed LNG project may have a better chance of success given the huge and growing demand for natural gas in Asia. Having your customers finance the facility and participate in the ownership has a different set of motivating factors to influence the investment decision.

The take-away here is that Canada is at a critical juncture in saving their natural gas industry, and growing it by tapping into the global LNG distribution network. Certainly a point highlighed by Shell Canada president Lorraine Mitchelmore who referred to not openting up Asian markets “We are at risk. You have to find a market for this product.”

Hopefully, Kitimat LNG, and Shell’s project are not too late. Shell is leading their partnership project and intends to start front-end engineering and design on the terminal in 2013. A final investment decision could come in 2015, with construction complete by the end of the decade.

Related articles:

Globe & Mail: Shell urges quick action to secure LNG markets for Kitimat terminal

Globe & Mail: PetroChina takes stake in Shell gas field in B.C.