October 20, 2011 / 4:59 PM / 6 years ago

Shell buys LNG site on Canada's Pacific Coast

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CALGARY, Alberta (Reuters) - Royal Dutch Shell Plc (RDSa.L) has bought a marine terminal on Canada's Pacific Coast as a possible site for a liquefied natural gas export terminal, a company spokesman said on Thursday.

Stephen Doolan said Shell and its partners acquired the Kitimat Marine Terminal, in Kitimat, British Columbia, from Cenovus Energy Inc (CVE.TO) and "is now exploring the potential for an LNG export terminal on the site".

Shell's plant would be the third considered for the region as Western Canadian natural gas producers look to tap high-paying Asian markets for the burgeoning output of the region's shale gas fields.

A C$5 billion ($4.9 billion) proposal by Apache Corp (APA.N), EOG Resources Inc (EOG.N) and Encana Corp (ECA.TO) to build an LNG export plant at another Kitimat site is the furthest advanced. Earlier this month the group was given Canada's first LNG export license, though a formal go-ahead for the project remains months away.

Encana, Canada's biggest natural-gas producer, welcomes the possibility that Shell could put up another LNG terminal, since the additional export capacity would allow more gas to flow out of the sated North American market.

"I think it's a great announcement and, you know, we look forward to hearing other ones as well," Randy Eresman, Encana's chief executive, said on a conference call on the company's third-quarter earnings.

"There's plenty of room for additional projects on the West Coast, so we're supporters."

Shell's partners in buying the site on northern British Columbia's coast are Korea Gas Corp (036460.KS), Mitsubishi Corp (8058.T) and China National Petroleum Corp CNPET.UL, Doolan said.

Korea Gas, also known as Kogas, is the world's largest buyer of LNG. The state-run company has bought stakes in several Canadian shale gas fields, acquiring supplies that it can ship back to South Korea, which buys more LNG than any country other than Japan.

Cenovus, which operates Canadian oil sands projects, uses the terminal to import diluent - ultralight oil or natural gas liquids that are mixed with the tar-like bitumen from the oil sands so it can flow in pipelines.

Cenovus imports about 20 percent of its diluent needs through the marine terminal. Reg Curren, a spokesman for the company, said the facility will continue to handle those imports.

($1=$1.02 Canadian)

Reporting by Scott Haggett; editing by Rob Wilson and Peter Galloway

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