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Shell, Partners Secure Environmental Approval for LNG Canada

Royal Dutch Shell plc and its partners received formal environmental approval Wednesday for their entry in the lineup to export liquefied natural gas (LNG) from British Columbia (BC).

Shell project leader Andy Calitz called the decision a "critical milestone" marking "significant progress." But the company has more hurdles that have to be cleared, including determinations that the scheme would be economically viable and supported by adequate gas supplies. A final investment decision (FID) is expected in 2016 (see Daily GPINov. 10, 2014).

The project, LNG Canada, already has a license from the National Energy Board to export up to 3.2 Bcf/d from a terminal proposed for the Kitimat industrial port on the northwestern BC coast. Total costs of carrying out the mammoth scheme from scratch, using gas from as yet mostly untapped northeastern BC unconventional deposits and transported by still unbuilt pipelines, have been projected at up to C$40 billion ($32 billion).

The environmental approval, announced by Canada Environment Minister Leona Aglukkaq, also marked a first for the country's regulatory regime. The Canadian Environmental Assessment Agency delegated the project review to its BC provincial counterpart and accepted the environmental assessment (EA) results. The agencies tacked more than 50 conditions onto the approval, covering issues from LNG tanker speeds and wakes to continuing consultation with northern aboriginal communities.

LNG Canada is a consortium led by 50% owner Shell Canada Energy with partners PetroChina Co. Ltd. (20%), Mitsubishi Corp. (15%) and South Korea's Korea Gas Corp. (15%) (see Daily GPI, Feb. 14, 2014). According to the EA filed with the BC Environmental Assessment Office, the project could have up to four trains, with total capacity of 26 million metric tons/year.

With FID approval, the project would take up to five years to build, with the first two trains in operation as soon as 2021. Close to 4,500 people would be employed in the first phase of construction for two trains, peaking at 7,500 people. Up to 450 people would be permanently employed to operate the facility, the EA noted.

The project is supported by the Haisla First Nation near Kitimat and by the Coastal First Nations. Engagement with other First Nations was continuing late last year.

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