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Canadian officials hope to develop LNG export industry along Pacific, Atlantic coasts

The Canadian government is hopeful that LNG export terminals will soon be built on both its Pacific and Atlantic coasts, according to the acting consul general of Canada to the US.

While the developers of the proposed LNG Canada project in British Columbia have reached a final investment decision on the construction of the facility, with an initial capacity of producing 13 million mt/year, another Bear Head LNG is going forward with plans to develop an 8 million mt/year or greater LNG export terminal in Nova Scotia, Douglas George said Tuesday on the sidelines of the Offshore Technology Conference in Houston.

Last October, partners Shell, South Korea’s Kogas, PetroChina, Malaysia’s Petronas and Japan’s Mitsubishi announced a final decision to build LNG Canada, at an estimated cost of C$40 billion (US$29.7 billion).

When built, the LNG terminal will be the largest infrastructure project ever built in Canada “and it will be the facility with the lowest greenhouse gas emissions of its kind in the world,” George said. The project will source its gas supply from the producing fields of British Columbia and Alberta, he said.

While LNG Canada is the only project to reach FID stage, a number of other companies also are looking at the possibility of building LNG liquefaction and export facilities along Canada’s Pacific Coast, George said. LNG produced in British Columbia primarily will be shipped to the Asia-Pacific market, where the demand for the fuel is expected to continue to grow for the next 20 to 30 years.

George acknowledged the many challenges that western Canadian LNG developers face, not the least of which is transporting gas from producing regions such as the Duvernay and Montney shale plays to the west coast of British Columbia.

“Some of the lands that these pipelines pass through belong to the indigenous peoples of Canada,” he said. “You have to negotiate with those groups if you’re passing through their lands.”

Ongoing negotiations are yielding “some very positive results,” he said.

In addition to the social and environmental challenges to building gas pipelines to Canada’s Pacific Coast are the physical challenges.

“The Rocky Mountains present a significant barrier in their own right,” George said.

On Canada’s East Coast, the biggest challenge to developing an LNG exporting industry is finding a source for the gas. This challenge has become especially critical since existing gas production from two projects offshore Nova Scotia has played out.

Just last week, the National Energy Board approved applications to abandon the NEB-regulated parts of ExxonMobil’s Sable Offshore Energy Project and Encana’s Deep Panuke Project, both of which had reached a stage of naturally declining production. The Sable Offshore Energy Project stopped producing natural gas in December 2018 and Deep Panuke ceased production in May 2018.

Yet even with the closure of the two projects, George said it is too early to write off the potential for gas production from offshore of the Maritime Provinces. “There’s a lot of exploration going on off Newfoundland and Labrador and also exploration in the seas off of Nova Scotia,” he said.

One such exploration project, in waters offshore Nova Scotia, appears to have come up empty. BP Canada, which completed drilling the Aspy D-11 deepwater exploration well in November 2018, has confirmed that the well did not encounter commercial quantities of hydrocarbons.

“We continue to evaluate the data from the Aspy D-11 well and have not concluded a plan for next steps,” BP Canada spokeswoman Anita Perry said in an email.

Other potential sources of supplying gas to the Bear Head LNG project would be to import gas from the nearby Marcellus Shale fields across the border in the neighboring US, or to extend a pipeline from the producing regions of Western Canada across the country to the east coast of Nova Scotia, George said.

“Does it make more sense to extend a pipeline from the US or from Western Canada?” he asked. For advocates calling for the development of a Canadian export industry on the country’s Atlantic coast, it would appear that it is still too soon to answer that question.
Source: Platts

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