LNG Canada, the country’s first and only operating exporting facility, has run into technical problems that caused the cancellation of at least one loading, Reuters has reported, citing unnamed sources and data from LSEG.
The sources did not provide details as to the nature of the problems, but various technical challenges are common for LNG terminals, as are lengthy repair periods. Two of the sources did tell Reuters, however, that the facility was operating at less than half of the capacity of its first liquefaction train. Two other sources mentioned a gas turbine and a refrigerant production unit as possible culprits.
LNG Canada is currently ramping up production after starting up earlier this month. Backed by Shell, Petronas, PetroChina, Mitsubishi, and Kogas, the project, located in Kitimat, British Columbia, 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 has two big advantages over competitors. One, that Shell CEO Wael Sawan recently cited, was Canada’s natural gas benchmark, currently around $0.22 per MMBtu, versus $3.12 at Henry Hub, as a cost advantage—and a pretty significant one. Proximity to Asian markets adds to the project’s appeal, with key destinations reachable in under two weeks.
“We expect that supplying LNG will be the biggest contribution Shell will make to the energy transition over the next decade, and projects like LNG Canada position our portfolio to achieve this,” Shell’s president for integrated gas, Cederic Cremers, said in the news release about LNG Canada’s first cargo earlier this month.
By Irina Slav for Oilprice.com
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