Canada targeting Japan for new LNG exports: minister

Wed Sep 19, 2012 12:06pm EDT
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - Japan will emerge as a top market for Canadian liquefied natural gas as developers gear up to export more than 9 billion cubic feet a day, the equivalent of nearly all the gas that flows from Alberta's gas fields into its massive pipeline network, Canada's natural resources minister said.

Five LNG plants are currently planned for Canada's Pacific Coast, and two of those already have 20-year gas export licenses, Natural Resources Minister Joe Oliver said in an interview from Tokyo. The one snag so far has been the inability of the developers to sign up customers.

Japan is already the world's largest importer of LNG. Its moves to cut its reliance on nuclear power present a golden opportunity for Canadian LNG, an industry now in its infancy, Oliver said. He was in Japan for an LNG producer and consumer conference, where he spoke to investors.

"We represent an attractive potential market and they represent a market of some considerable size - 33 percent," he said, referring to the country's percentage of global LNG demand. He pointed out that South Korea, the next stop on his Asian visit, accounts for 15 percent of demand, he said.

Companies in Alberta, the largest Canadian gas-producing province, inject more than 9 bcf a day into TransCanada Corp's (TRP.TO: Quote) pipeline network. That supply is used in Canadian and U.S. markets, and is currently fetching prices just above 10-year lows.

Japanese companies are among several from Asia that have announced investments in both LNG facilities and production assets in British Columbia, the western province that is the site of such massive shale gas regions as the Montney and Horn River.

In May, Mitsubishi Corp (8058.T: Quote) joined a consortium led by Royal Dutch Shell PLC (RDSa.L: Quote) to develop a 2 billion cubic feet a day liquefaction plant at Kitimat, British Columbia, that would come into service around 2020.

Japanese investors, including Mitsubishi Corp, Toyota Tsusho Corp (8015.T: Quote) and Inpex Corp (1605.T: Quote) have partnered with Canadian producers to develop British Columbia gas fields.   Continued...