Kitimat LNG Projects a Go Despite China Investment

22 Nov

By Gordon Hamilton, Vancouver Sun, August 22, 2012

Royal Dutch Shell’s decision to invest $1 billion a year in shale gas exploration in China has not changed Shell Canada’s plans to build a liquefied natural gas terminal at Kitimat aimed at the Chinese market.

Despite China’s potential for shale gas production, demand there is expected to outstrip supply, Shell Canada said Tues-day in a statement.

“The exploration and development of shale gas is expected to grow in China and Shell’s investments, largely with Pet-roChina, are reflective of that growth,” Shell Canada spokes-man Stephen Doolan said. “However, the demand for energy in China and through-out Asia is expected to exceed domestic production.

“This demand for energy, coupled with the wider demand for LNG in Asia which is likely to grow by more than 80 million tonnes per annum between now and 2020, underscores Shell’s intent to continue to progress the LNG Canada project.”

China is estimated to hold the world’s largest reserves of shale gas, which can be extracted by using hydraulic fracturing, a technology already in use in North America. “Fracking” has unlocked huge gas reservoirs in North America, resulting in the price of natural gas here drop-ping to less than a fifth of the price in Asia.

The low Canadian price for gas has spurred interest in B.C. for LNG terminals to ship gas from the Peace River region to Asia.

Apache Canada, which is also developing plans for an LNG terminal at Kitimat, said Tues-day that the decision by Shell to invest heavily in Chinese shale gas has no impact on its proposed $4.5-billion terminal and pipeline.

“We are going to proceed with our plans,” said Andree Morier, communications adviser at Apache Canada, the lead company in the Kitimat LNG project. Its partners in the project are Encana Corp. and OEG Resources.

Kitimat LNG is the most advanced of several proposed LNG terminals at Kitimat. It is conducting site preparation work, has an export licence to ship five million tonnes of LNG a year and is working toward a final investment decision on the pipeline-and-terminal project.

Morier said that the Kitimat LNG project and Shell’s decision to invest in China are “mutually exclusive.” It also has had no impact on KLNG’s efforts to sign long-term LNG contracts in China, she said.

“We are continuing ongoing discussions with several Asia-Pacific companies,” she said.

Shell Canada has also purchased land at Kitimat and has selected TransCanada to develop and build a pipeline across B.C. to deliver gas to its proposed Kitimat plant.

Shell has already announced plans for a terminal that would be twice the size of the KLNG project. B.C. Energy Minister Rich Coleman has previously described Shell’s LNG proposal for Kitimat as in the $12-bil-lion range, making it one of the largest, if not the largest, investments ever in B.C.

The provincial energy ministry said Tuesday that it considers LNG to be a competitive, expanding global industry and the demand versus supply conditions worldwide support accelerated LNG growth in this province.

Royal Dutch Shell’s partner in China is China National Petroleum Corp., the parent company of PetroChina, which is one of Shell Canada’s partners in its LNG Canada project.

Shell and CNPC are also partners in other global gas projects, including Australia.

Republished from


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