Royal Dutch Shell plc, which has made huge commitments this past year to invest in North America's abundant natural gas supplies by launching a huge export terminal in Canada and funding onshore fueling stations, on Wednesday agreed to buy out a Norwegian-based company that supplies small-scale liquefied natural gas (LNG) for the industrial and marine market.
The Gasnor AS purchase for $74 million "is an important step for Shell toward creating an LNG sales business," and would assist the company as it expands its reach into the LNG transportation market, the oil major stated. Shell, which already owned 4.1% of the company, expects to complete the purchase by the end of September.
Shell's LNG onshore plans have accelerated this past year. Last September the company agreed to supply Shell Flying J truck stops in Canada with LNG for use by truck fleets (see Daily GPI, April 30; Sept. 9, 2011). Last month the producer obtained a memorandum of understanding with TravelCenters of America LLC to sell LNG to heavy-duty road transport customers in the United States through an existing nationwide network of full-service fueling centers (see Daily GPI, June 11).
What Shell gets with Gasnor is an end-to-end supply chain that includes three small-scale production plants and distribution facilities with two tanker ships, a fleet of trucks and a network of terminals.
"Shell believes the LNG in transport sector will develop into a sizeable market and, given its industry leading expertise across the LNG value chain, the extension into this market is a good fit for Shell," said Shell Downstream LNG Vice President Colin Abraham. "The Gasnor acquisition provides Shell with invaluable customer and market insight built up over a number of years. This will help us to quickly develop and meet customer requirements for LNG as a transport fuel."
Shell's management team also plans to capitalize on Gasnor's experience to target European marine customers ahead of new environmental regulations that are scheduled to come into force in 2015.
The European-based major has long been a global leader in upstream LNG projects; it provided technology for the world's first commercial liquefaction plant in 1964. The producer now participates in nine operating LNG projects in seven countries that together have about 21.5 million tons/year of operational capacity. Three Shell-led projects under construction would provide 15 million tons/year of LNG capacity.
In North America, Shell Canada Ltd. in May agreed to lead a project with Asian partners to develop a 12 million ton/year LNG export facility near Kitimat, British Columbia -- the largest facility proposed in the west coast province and on the continent to date (see Daily GPI, May 16).
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