A multi-billion liquefied natural gas (LNG) facility near is inching closer to construction after a group of companies, led by Shell, were granted a long-term federal export licence.
“Our government’s plan for responsible resource development supports jobs, economic growth and long-term prosperity in British Columbia and across Canada,” said Federal Minister of Natural Resources Joe Oliver.
“This inclusive plan for shared prosperity demonstrates leadership to increase markets for Canadian LNG, while introducing new, practical environmental protections.”
Oliver announced on Feb. 26 that Natural Resources Canada has approved a 25-year licence for LNG Canada.
The consortium is made up of Shell Canada, the Korea Gas Corp., Mitsubishi Corp., and PetroChina.
Oliver made the statement at the Vancouver Convention Centre, during a keynote address to B.C.’s first international LNG conference called Fuelling the Future: Global Opportunities for LNG in B.C.
The announcement is a cabinet endorsement of a decision made public earlier in February by the National Energy Board, the federal regulator based in Calgary.
The long-term licence allows for the export of up to 24 million tonnes of LNG per year from a proposed terminal in Kitimat.
The proposed project includes the design, construction and operation of a gas liquefaction plant and facilities for the storage and export of LNG, including marine off-loading facilities and shipping.
LNG Canada will initially have two LNG processing units, or “trains,” each with the capacity to produce six million tonnes of LNG annually, with an option to expand the project in the future.
According to LNG Canada’s application to the NEB, LNG export projects are typically driven by economies of scale in order to combat the high capital intensity of the business.
Newer LNG plants have larger more efficient trains, which minimizes unit costs.
For this reason, LNG Canada intends to construct and operate the LNG terminal to its full capacity of 24 million tonnes per year.
As a result, the precise scheduling of construction for the third and fourth trains will be influenced by factors such as labour efficiencies and market demand.
The project is expected to create thousands of jobs during construction and hundreds of full-time, permanent jobs during operations.
The NEB export licence is just one of the many approvals and permits that will be required for the project.
LNG Canada will undergo an environmental assessment for the construction and operation of the proposed LNG facility, marine terminal and shipping.
A review of the potential environmental and socio-economic impacts is anticipated to be conducted through a harmonized B.C.-Canada Environmental Assessment review.
The export of LNG from the terminal is expected to start in 2019, assuming all the necessary regulatory approvals are obtained and investment decisions made.
Shell holds a 40 per cent interest in the LNG Canada project, with KOGAS, Mitsubishi and PetroChina each holding a 20 per cent interest.
TransCanada has been selected by Shell and its partners in the LNG Canada project to develop a 700-kilometre pipeline to deliver natural gas from the Montney gas-producing region, near Dawson Creek, B.C., to the proposed facility.
The partners want to take advantage of Western Canada’s abundant supplies of natural gas, by exporting the commodity to global markets, in particular Asia’s dynamic and fast-growing economies.
Currently, all Canadian natural gas exports are to the United States.
A report produced for LNG Canada by PFC Energy forecasts that strong growth in LNG demand in the Asia-Pacific Region will continue from 2020 onwards, due to expanding demand from industrial, power, transport and distribution sectors.