December 20, 2018 / 3:11 PM / 3 months ago

ExxonMobil shelves Canada LNG export project

LONDON (Reuters) - U.S. oil major Exxon Mobil Corp has withdrawn its WCC liquefied natural gas (LNG) export terminal in Canada from the environmental assessment process, it said on Thursday, signaling that the project has been shelved.

FILE PHOTO: Logos of ExxonMobil are seen in its booth at Gastech, the world's biggest expo for the gas industry, in Chiba, Japan April 4, 2017. REUTERS/Toru Hanai

The decision to pare its LNG project portfolio follows the go-ahead of a giant Royal Dutch Shell-led project in British Columbia, and Exxon’s focus on LNG projects in Asia, the Middle East and the United States.

Global LNG demand is expected to double to 550 million tonnes per annum (mtpa) by 2030, as countries like China move away from coal to cleaner fuels. The top import market for LNG is northeast Asia.

Exxon’s West Coast Canada (WCC) LNG export project, located in northern British Columbia, was expected to produce around 15 million tonnes per year of LNG to serve Asian buyers, with plans for further expansion up to 30 million tonnes per year.

The project was being jointly reviewed by the province and Canadian environmental regulators, an assessment that had been underway since 2015, though no major documents have been filed since 2016.

Exxon formally withdrew from the process in a Dec. 5 letter to the British Columbia Environmental Assessment Office, posted on the regulator’s website.

“After careful review, ExxonMobil and Imperial (Oil Resources Ltd) have withdrawn the WCC LNG project from the environmental assessment process,” a spokeswoman for ExxonMobil confirmed in an email.

Exxon’s decision signaled it is concentrating on LNG projects with Qatar Petroleum [QATPE.UL] and a proposed expansion of its chilled-gas operation in Papua New Guinea, said Jason Feer, head of business intelligence at Poten & Partners, LNG tanker brokers and consultants.

“They have got a pretty robust pipeline of liquefaction projects globally. It would be natural to review that and see which would be competitive,” he said.

Exxon has been “taking advantage of opportunities as they become available to invest, restructure or divest assets to strengthen our long-term competitive position and provide the highest return to shareholders,” said spokeswoman Julie King.

LNG demand is growing but environmental groups say exports will boost carbon emissions in Canada, both through gas extraction and the liquefaction process.

The WCC LNG export project planned to have liquefaction and storage facilities for natural gas, loading facilities and a third-party pipeline.

Exxon’s shares were off 3.12 percent at $68.57 apiece, the lowest since August 2015.

Reporting by Ekaterina Kravtsova in London; Additional reporting by Gary McWilliams in Houston and Julie Gordon in Vancouver; Editing by Jeffrey Benkoe and James Dalgleish

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