Shell, partners joint Canadian LNG rush
CALGARY, Alberta (Reuters) - Royal Dutch Shell (RDSa.L: Quote) 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, the latest in a string of proposals aimed at moving huge quantities of domestic shale gas to lucrative Asian markets.
Shell, along with PetroChina (601857.SS: Quote), Kogas and Mitsubishi Corp (8058.T: Quote), 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 plant could be in service around the end of the decade, pending regulatory approvals, they said.
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. Depressed North American gas markets have slowed development of the fields as companies have been unable to earn break-even returns in many cases.
The first proposal, Kitimat LNG, is led by Apache Corp (APA.N: Quote) and includes EOG Resources Inc (EOG.N: Quote) and Encana Corp (ECA.TO: Quote). Another group, the BC LNG Export Co-operative, is made up of the Haisla First Nation, an aboriginal community, and Houston-based LNG Partners.
For the new LNG Canada project, Shell would have 40 percent and the other partners 20 percent each. Mitsubishi, PetroChina and Kogas have all invested in gas-production joint ventures with Canadian producers.
Reports have pegged the project cost at around C$12 billion ($12 billion).
The partners said the regulatory process is expected to start later this year with the filing of their project description.
(Reporting by Jeffrey Jones; Editing by Peter Galloway)
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