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Shell, Partners Unveil Biggest Kitimat Export Facility to Date

Shell Canada Ltd. and three Asian energy giants are drawing up plans to develop a 12 million ton/year liquefied natural gas (LNG) export facility near Kitimat, British Columbia -- the largest facility proposed in the west coast province to date.

There already are a half dozen or so proposals being considered in the Western Canadian province to export gas to overseas markets, but none approach the size of LNG Canada, the Shell-led project, whose partners are Japan's Mitsubishi Corp., Korean Gas Corp. (Kogas) and PetroChina Co. Ltd. Shell, which already is one of the world's top LNG producers and exporters, would operate and hold a 40% stake; the partners each hold a 20% interest.

LNG Canada as envisioned initially would consist of two processing trains, each with the capacity to produce 6 millions ton/year of LNG, with an option to expand, according to Shell. Pending regulatory and final investment approval, LNG Canada could begin exports by 2020, according to the partners.

"Our combined expertise, and our focus on technological innovation in delivering safe and environmentally sound LNG projects around the globe, ensures that our LNG Canada project would be well suited to deliver long-term value for British Columbia and increase access to new export markets for Canada," said Shell's Americas Jose-Alberto Lima, who is vice president of LNG Americas, Shell Energy Resources Co.

A formal consultation process with First Nations and community relations regarding the project has been launched, Shell officials said. Before a decision is made to move into development, the partners said they first plan to conduct engineering, environmental and stakeholder consultations.

Although the partners have not disclosed how much LNG Canada may cost to develop, it could be the largest single capital investment ever in British Columbia, said Jock Finlayson, who is executive vice president of the Business Council of British Columbia. A Japanese publication reported that the total investment would exceed US$12 billion.

"This underscores both the magnitude of the opportunity we have in this rapidly developing sector, as well as the sheer scale of the individual projects that are contemplated," he told reporters. "It's a big one. It's a huge one."

PetroChina Vice President Bo Qiliang said LNG Canada would "contribute to a further strengthening of relationships between China and Canada and will help China use clean-burning natural gas to fuel its economic growth."

Among the LNG exports projects now in the proposal stage in the province, BC LNG Export Co-operative Ltd., also known as the Douglas Channel Energy Partnership, already has federal approval, as well as a 20-year license to export from the National Energy Board (NEB) to export up to 250 MMcf/d (1.8 million tons/year of LNG) from a floating merchant terminal near Kitimat (see Daily GPI, April 11; Feb. 6). KM LNG, a partnership between affiliates of Apache Corp., EOG Resources Inc. and Encana Corp. also was granted a 20-year license late last year by NEB to export up to 1.4 Bcf/d from Bish Cove, near Kitimat (see Daily GPI, Oct. 17, 2011).

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