LNG Canada Makes First Batch for Export

LNG Canada, the country’s first export facility for the fuel, has produced its first batch and plans on shipping it by mid-year, the company said, with unnamed sources telling Reuters the plant was only operating partially due to a problem with its first, and only operational, train.

The publication added that an LNG carrier was en route to Kitimat—the export terminal for LNG Canada—per information from LSEG. The tanker should start loading on June 29.

Backed by Shell, Petronas, PetroChina, Mitsubishi, and Kogas, LNG Canada will eventually ramp up to 14 million tonnes per annum. That capacity 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.

For now, however, production capacity from the first train of LNG Canada is 5.6 million tons per annum.

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.

Once LNG Canada becomes fully operational, natural gas exports to the United States are expected to decline as more gas is directed to the liquefaction trains on Canada’s West Coast. There are also two smaller LNG export facilities under construction there, which will further squeeze exports to the south in the future. Woodfibre LNG and Cedar LNG are scheduled for completion between 2027 and 2028.

Canada’s previous government argued there was no business case for LNG facilities but it appears the market begs to differ, with most forecasts for gas demand suggesting there was, in fact, a very strong business case for LNG production in one of the world’s largest gas producers.

By Irina Slav for Oilprice.com

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