Shell Prepares to Double Output Capacity at LNG Canada Project

Shell is preparing to start production of liquefied natural gas from the second train at its installation in British Columbia, set to boost the total output from the facility by 6.5 million tons.

The news comes as unnamed sources told Reuters this week that Shell and its partners at LNG Canada were still having trouble ramping up output from the first train of the facility. Train 1 has been having technical difficulties since June, the Reuters sources told the publication, which has meant it was operating at less than half of its capacity, which is also 6.5 million tons annually.

The publication cited an LNG Canada spokesman as saying that the 14^th cargo to set off from the facility had been loaded in September and in a few days another one would depart from Kitimat. Reuters reported that the September export total from LNG Canada was estimated at 300,000 tons, per LSEG data, down from 400,000 tons in August. LNG Canada’s peak capacity is planned at 14 million tons of liquefied gas per year.

Backed by Shell, Petronas, PetroChina, Mitsubishi, and Kogas, LNG Canada is expected to redirect a portion of Canadian gas exports—currently flowing almost entirely to the U.S.—toward global markets. The price tag of the project is $40 billion. Construction of the first train took seven years. The first cargo set off from Kitimat in June this year.

The project is a joint venture between Shell, with 40%, Malaysia’s Petronas with 25%, Mitsubishi Corp. with 15%, Korea Gas Corp. with 5%, and PetroChina with 15%. The facility will process 1.9 billion cubic feet of natural gas per day—a significant chunk of Canada’s output.

Meanwhile, another LNG project is moving slowly to construction. The Ksi Lisims project received an environmental assessment certificate earlier this year from the government of British Columbia, and it has also received approval from the federal government of Canada.

By Irina Slav for Oilprice.com

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