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    Shell ‘Bullish’ on LNG Canada Project


$40bn project "should be the next big global LNG investment"

by: Dale Lunan

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Shell ‘Bullish’ on LNG Canada Project

The president and country chair of the Canadian subsidiary of Anglo-Dutch major Shell said May 9 he is “cautiously optimistic” that Shell and its joint venture partners in the $40bn LNG Canada project in Kitimat, BC will take a positive FID later this year.

Speaking to oil and gas executives and investors at the ARC Energy Investment Forum ‘Playing to Win’ in Calgary, Shell Canada's Michael Crothers pointed to the unexpected 30% increase in global LNG demand last year – most of it emanating from China – and the impact that higher demand would have on the development of new LNG projects.

“We’re quite bullish about that, and we think that this site for LNG Canada is the best site on the west coast,” he said. “We’ve got fantastic transit times – eight days to get to Tokyo Bay – and we have a fantastic resource base in our Groundbirch asset in the Montney, which is getting more and more stranded with the collapse in gas prices at AECO and the steady erosion of markets for our gas in the US.”

Projects like the 14mn metric tons/year LNG Canada export terminal, he said, are the only way to get Canadian gas to offshore markets, where there are “fantastic opportunities” to eliminate coal combustion in places like China, which would eliminate some 50mn metric tons/year of CO2 emissions.

“But the challenge we have, even with all these advantages, is the cost of building something like this in Kitimat,” Crothers reminded his audience. The location is remote, the weather conditions are challenging, and workers must be flown in and out and housed in purpose-built work camps.

“All of that is a challenge, [but] I am cautiously optimistic,” he said. “We are doing everything we can to make this a success and convince our shareholders – not only at Shell but at our JV partners as well – that this is indeed the project that should be the next big global LNG investment.”