LNG project boosts gas industry confidence but not short term gas prices

Jan Cross
October 5, 2018

Upon completion, the Coastal GasLink will be a 670 km (420 mile) pipeline created to transport natural gas from the Montney gas-producing region near Dawson Creek, B.C.to the LNG Canada facility in Kitimat.

Royal Dutch Shell is to make its biggest investment in more than three years after approving a $14 billion-plus project to export liquefied natural gas from Canada.

"A year, year-and-a-half ago, the Canadian projects all looked very troubled", Feer said, citing challenges such as high pipeline costs to carry natural gas from wellsites to the coast and controversies tied to transiting land owned by First Nations.

The announcement on Tuesday, coming on the heels of Canada reaching a trilateral trade deal with Mexico and the United States on the weekend, lifted the mood in the room at an investment bank's commodity price forecast breakfast in Calgary.

The premier said during the news conference that his government will meet greenhouse gas reduction targets set by the federal government.

But LNG Canada's ability to provide a new market for Western Canadian natural gas and thus support severely depressed prices won't be seen until the facility and its main supply pipeline are built sometime in the middle of the next decade.

Opposition Liberal Leader Andrew Wilkinson, former Liberal energy minister Rich Coleman and Skeena Liberal MLA Ellis Ross, a former Haisla Nation chief and early LNG backer in Kitimat, were present at the signing ceremony with Horgan, Prime Minister Justin Trudeau and representatives from the five worldwide energy giants behind the LNG Canada project. "This represents roughly 20% of overall gas production in Canada", the statement said.

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Trudeau said the amount being spent is the largest single investment by the private sector in Canadian history. "There are specialized components that need to be imported".

The announcement was immediately cheered by the energy industry and decried by the B.C. Green Party, which is part of the coalition supporting the NDP government.

How can we can permit a facility and pipeline we don't own to be built, but we can't twin the pipeline we do own?

Clean energy advocate Pembina Institute says it is still waiting for the provincial government to reconcile LNG's carbon pollution with B.C.'s climate goals and says the LNG Canada project takes B.C.

"This [is] the biggest project sanction globally since the Tengiz expansion was approved in 2016, and the biggest greenfield project to be sanctioned since Yamal LNG in 2013".

"We believe this project has the potential to be the first of many on the West Coast of Canada, if Canadian LNG follows the global standard, being that LNG export areas tend to be "hubs" of terminals, rather than standalone facilities", National Bank of Canada analysts said Tuesday in a report.

"The momentum behind LNG Canada reflects the drastic improvement in the LNG market over the past 12 months, driven by buoyant demand in China". Since the project will be built on Canada's west cost in British Columbia it can significantly reduce the time it takes to transport gas to key Asian markets compared to USA based projects.

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