October 6, 2011 / 3:33 PM / 8 years ago

Enbridge CEO prefers Kitimat for Canadian LNG export

Edward McAllister

Enbridge Inc. President and Chief Executive Officer Patrick Daniel speaks to shareholders during the annual general meeting in Toronto May 6, 2009. REUTERS/Mike Cassese

NEW YORK (Reuters) - Pipeline operator Enbridge Inc (ENB.TO) would prefer to supply natural gas to the Kitimat liquefied natural gas plant in British Columbia over any other export project in western Canada, the company’s chief executive told Reuters on Thursday.

Enbridge is interested in joining one of two proposed Canadian LNG projects to ship natural gas to Asia, it said this week, as ample North American supply pushes gas prices far below global levels.

But the location of Kitimat has attracted Enbridge more than Royal Dutch Shell’s (RDSa.L) potential project in Prince Rupert, also in British Columbia, company head Patrick Daniel said in an interview.

“Kitimat is the preferred project. Pipelining into Kitimat is relatively straight forward compared to Prince Rupert, which is the other proposed port,” Daniel said, though talks continue with both projects.

Kitimat, which is expected to begin exports by 2015, is a joint venture between gas producers Apache Corp (APA.N), EOG Resources (EOG.N) and Encana Corp ECA.TO.

LNG is natural gas cooled to a liquid for shipping overseas. Natural gas producers have been scrambling for approval to export LNG from North America over the past year, as higher shale gas production evaporated import needs and pushed prices far below levels in Asia and Europe.

Asian spot LNG prices are around $17 per million British thermal units, while U.S. benchmark prices languish below $4.

Enbridge plans to build a natural gas pipeline along the route of the proposed Gateway oil line, which would transport natural gas from Horn River and other natural gas fields to the coast by 2016, Daniel said.

ASIAN PREMIUM

Exporting natural gas from Canada to Asia is part of a wider move by Enbridge to make the most of high natural gas prices and long term demand growth in the Pacific Basin.

“China is the prime market right now,” Daniel said. Chinese LNG demand has rocketed in recent years as new terminals have come online, and is set to grow further as more import facilities are built.

Enbridge is looking to tap into the growing Asian market by building pipelines to supply LNG projects in Australia and Indonesia, key suppliers to China.

“We are looking in Indonesia as an LNG provider to China,” Daniel said. “We would like to build own and operate the pipelines and would be prepared to take stakes in the liquefaction plants as well on a fee per service basis.”

Additional reporting by Selam Gebrekidan and Janet McGurty;editing by Sofina Mirza-Reid

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