The LNG Canada project approval will open up new, high value sales markets that are likely to stimulate large investments in Western Canada's major gas plays, according to Will Scargill, senior oil and gas analyst at GlobalData, a leading data and analytics company on late Tuesday.
LNG Canada, comprising a $18 billion LNG plant to be located in British Columbia and a $3.5 billion pipeline, is the first LNG project to reach a final investment decision (FID) in Canada.
Scargill said via email that although significant new LNG capacity is expected to come on stream in the early 2020s, new mega projects like the LNG Canada project will likely be needed to meet continued demand growth through the second half of the 2020s.
He said that the project offers more competitively priced LNG on the spot market compared to that offered on the Asian market.
'The price gulf between Asian spot LNG prices of around $10 for Million British Thermal Units (mmBtu) and current realized prices of less than $2 for mmBtu for Canadian producers presents a major value upside to support investment,' he said.
According to Scargill, the initial LNG plant capacity of 14 million tonnes per annum is equivalent to over one third of British Columbia’s current gas production.
'It also surpasses the amount of gas that the province exports to the U.S., its only existing foreign export destination. The estimated $14 billion cost makes it the largest upcoming LNG investment project globally to have achieved final investment decision,' he stressed.
The project is a joint venture comprised of Royal Dutch Shell, through its affiliate Shell Canada Energy (40 percent), Petronas, through its wholly-owned entity, North Montney LNG Limited Partnership (25 percent), PetroChina, through its subsidiary PetroChina Canada Ltd. (15 percent), Mitsubishi Corporation, through its subsidiary Diamond LNG Canada Ltd. (15 percent), and Korea Gas Corporation, through its wholly-owned subsidiary Kogas Canada LNG Ltd (5 percent).
By Murat Temizer
Anadolu Agency
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