Shell-Led Group Delays Decision On Canada Gas Export Plan

Shell-Led Group Delays Decision On Canada Gas Export Plan
Shell and its partners delay for the second time this year a final investment decision on a terminal to export liquefied natural gas from Canada’s Pacific Coast to Asian markets.

(Bloomberg) -- Royal Dutch Shell Plc and its partners delayed for the second time this year a final investment decision on a terminal to export liquefied natural gas from Canada’s Pacific Coast to Asian markets.

LNG Canada, which is also backed by Mitsubishi Corp., PetroChina Co. and Korea Gas Corp., cited "global industry challenges, including capital constraints" in announcing the postponement in a statement on Monday.

"Participants have determined they need more time prior to taking a final investment decision," the joint venture said. "At this time, we cannot confirm when this decision will be made."

A glut of LNG is emerging globally as ventures start up in Australia and the U.S. Analysts have cast doubt on Canada’s ability to deliver LNG exports this decade, even as the nation’s gas producers yearn for a new outlet because U.S. output increasingly pushes them out of their traditional market. A global oil market downturn is also restricting companies’ ability to spend on megaprojects.

The spread between the selling price for LNG in Asia and the gas price in Canada -- a margin that helps measure profit -- has been cut in half from about $12 per million British thermal units in 2014, LNG Canada Chief Executive Officer Andy Calitz told reporters on a conference call Monday. Some recovery is required for the project to be viable, he said.

‘In Turmoil’

The project hasn’t been canceled. It has all the necessary approvals from regulators in Canada and doesn’t require any more work in the country, he said. Representatives from all four partners are currently in Canada for meetings over the next couple days.

“The whole global LNG industry is in turmoil,” Calitz said, adding that Western Canada still has advantages including its proximity to customers in Asia. “I’m confident that the Japanese market remains available to LNG Canada.”

The group had previously postponed the decision in February, when it said it would rule on whether to proceed with construction by the end of 2016.

To contact the reporters on this story: Natalie Obiko Pearson in Vancouver at npearson7@bloomberg.net; Rebecca Penty in Calgary at rpenty@bloomberg.net To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net Carlos Caminada, David Marino

Copyright 2016 Bloomberg News.

WHAT DO YOU THINK?

Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
David McGowan | Jul. 12, 2016
Delay will cost the participants, the partners, more money in the long term than they will realize by waiting for a greater difference between cost and selling prices. Facility construction, pipelines and loading docks, will require a minimum of three years and more practically five years to complete. Any wait time will have to be added to that before any sales can be realized. There are hundreds of capped wells in Western Canada along with completed compressor sites that can supply the west coast, although compressor sites will require immediate expansion if and when sales are realized. With the present social pressure to increase cleaner energy production, even though there is little scientific support for such the only viable solution is powering facilities with natural gas. Therefore the demand for LNG can only increase and producers must be prepared in order to realize inclusion in such an increase and subsequent profit.


Related Companies
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE



Most Popular Articles

From the Career Center
Jobs that may interest you
QA/QC Specialist IV
Expertise: QA / QC / Inspection
Location: North Slope, AK, United States, AK
 
Account Manager - Degassing Services - Western Region
Expertise: Refinery Specialist
Location: Long Beach, CA
 
Technical Sales Rep. - Decontamination/Turnaround Services
Expertise: Oil Terminal / Storage Management
Location: Houston, TX
 
search for more jobs

Natural Gas : $3.64/MMBtu 0.27%
Brent Crude Oil : $53.93/BBL 1.83%
Light Crude Oil : $50.93/BBL 1.66%
Updated in last 24 hours