Two more North American LNG export projects planned
Thursday, 17 May 2012 | 00:00
Two North American liquefied natural gas export plants were announced, joining a lengthening list of projects aimed at shipping surplus gas overseas.
Excelerate Energy, the U.S. liquefied natural gas company founded by Oklahoma billionaire George Kaiser, plans to develop the country's first floating LNG export plant off the Gulf Coast, while energy major Royal Dutch Shell has partnered with Asian buyers to build a plant in western Canada.
The two projects add to 10 others announced in North America over the last few years as a huge supply surge from shale deposits floods the market and pushes prices far below levels in Europe and Asia.
The export of LNG, which is natural gas cooled to a liquid for shipping, marks a stark turnaround for North American energy companies, which 10 years ago were scrambling to build import terminals before shale gas production unlocked potentially decades of supplies.
It has sparked a political debate in the United States about exporting cheap resources that could be used domestically. The Obama administration said on Mo nday that it does not oppose U.S. LNG exports, though it will depend on an official analysis to guide its decision on whether to allow more gas projects to proceed.
But Canada, whose vast gas reserves are stranded without demand from the amply-supplied United States, is racing to find needy buyers in Asia willing to pay dearly for the fuel. LNG prices in Asia are at four-year highs of about $18 per million British thermal units (mmBtu), while U.S. benchmark prices languish around $2.50 mmBtu, weighed down by oversupply.
Already in Canada the Kitimat LNG project and the BC LNG Co-op have export licenses in place. In the United States, only Cheniere Energy's Sabine Pass project has full export approval.
EXCELERATE AND LNG CANADA
Excelerate's Lavaca Bay LNG project off Texas, expected to start exporting by 2017, would initially have the capacity to ship 3 million to 4 million tonnes per year (mtpa) of LNG, or 0.4-0.5 billion cubic feet per day of gas, Excelerate said in a statement. It could be expanded to 8 mtpa, or about 1 percent of daily U.S. supply.
The relatively small size of the floating liquefaction project, compared to an onshore site, could speed up construction, which is expected to take just 44 months, according to Excelerate. Most LNG projects take at least four years to build.
Meanwhile, Royal Dutch Shell and partners from China, South Korea and Japan said on Tuesday they are planning a multibillion-dollar liquefied natural gas plant on Canada's West Coast that could ship gas to Asia by the end of the decade.
Shell, along with PetroChina, Kogas and Mitsubishi Corp, will study a liquefaction plant at Kitimat, British Columbia, that would initially include two units with capacity of 6 million tonnes annually each, or a total of 2 billion cubic feet a day.
The proposal follows others for Kitimat, which looks set to become a major Pacific Rim export hub for gas produced from the massive Horn River and Montney shale gas formations in British Columbia.