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Shell says it’s looking at B.C. Coast for new LNG terminal

By GORDON HAMILTON, Vancouver Sun May 27, 2011

Shell says it’s looking at B.C. Coast for new LNG terminal.
Photograph by: Leon Neal, AFP/Getty Images

Shell Canada says it is investigating the potential for a new liquid natural gas terminal to be located on the B.C. coast.

Shell “is interested in, and currently exploring LNG opportunities along the B.C. coast,” Stephen Doolan, of Shell’s media relations department said in an email to The Sun.

“We are early in the evaluation process so do not have specific details but are pursuing opportunities,” he said. “Natural gas is a key area of growth for Shell. In terms of LNG, we will continue to invest in our global leadership position as demand continues to grow.”

Doolan was responding to a queries from The Sun after references to Shell’s interest in the B.C. coast appeared in several trade journals and research reports. Those reports said Shell was in talks with Korea Gas over the feasibility of a terminal at Prince Rupert.

Doolan would not identify Shell’s partners, saying the company will only release more details “as they are confirmed.”

Petroleum Intelligence Weekly reported shortly after Japanese tsunami that, as a result of the destruction of two nuclear reactors there, “Shell and its Asian partners could scale their proposed Prince Rupert plant in British Columbia toward the top end of its mooted 8.5 million-14.0 million tonnes/year range.”

Shell has a long-standing partnership with Korea Gas, the world’s biggest buyer of liquid natural gas and it has significant holdings in both Alberta and B.C. natural gas reserves.

It also has an accelerating global interest in natural gas. Earlier this week parent Royal Dutch Shell committed to building the world’s first floating LNG facility at a cost of $30 billion US. Further, Shell is planning on spending $100 billion in capital expenditures over the next three years.

In Canada, Shell Canada paid $5.9 billion in 2008 to buy Duvernay Oil Co., a major player in B.C.’s Montney shale gas deposit near Dawson Creek.

Development of an LNG plant would cost in the range of $5 billion to $7 billion, energy analyst Bill Gwozd, of Ziff Energy said in an interview. But with natural gas selling in Asia for about $12 a unit compared to about $4 a unit in North America, that $8 differential is spawning growing interest in developing British Columbia’s potential to ship gas overseas.

“The question that the companies are now examining is: Can you get gas transported, liquefied and delivered to an Asian country for that $8 number?” Gwozd said.

The Shell proposal is one of three potential LNG terminals on B.C.’s northwest coast. Furthest advanced is the EnCana Corp., EOG Resources and Apache Corp. proposal for a $4.7 billion pipeline and LNG terminal at Kitimat to export 1.4 billion cubic feet of gas a day, making use of the existing Pacific Trails pipeline right-of-way. That project is to go before a National Energy Board hearing at Kitimat June 7. Apache executives said in that company’s quarterly conference call that gas export permits are likely to be in place by the end of the year. The first super-chilled natural gas could be shipped from there by late 2015.

The Haisla Nation at Kitimat is also preparing a joint-venture submission with LNG Partners of Houston, Texas, for a smaller LNG plant.

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