Canada at last stages of starting major shipments of gas, LPG to Asia

The first export cargo from Canada is destined to set sail early 2025 from Kitimat in British Columbia along the Pacific Coast, as the country regains a competitive advantage to emerge as a leading North American LNG supplier to Asia that it lost nearly a decade ago, industry participants said May 7.

"Canada is the closest to the best global market of Asia with the distance from Prince Rupert port [in British Columbia] to Tokyo being half compared with the US Gulf Coast," Racim Gribaa, president of Global LNG Consulting, said at the annual Canada Gas Exhibition & Conference in Vancouver.

As a thumb rule, it will take an LNG carrier to reach from Prince Rupert to Tokyo in 8-9 days, while from the USGC it will be double that time, he said.

His statements come ahead of the Shell-led 14 million mt/year first phase of LNG Canada project preparing to inject gas and start warming the gas liquefaction plants this summer as a precursor to full plant start up later this year.

LNG Canada is a joint venture between operator Shell, Petronas, Mistubishi Corp., Korea Gas Corp. and PetroChina and is one of the four other new LNG projects that are at various stages of development along the Canadian Pacific Coast.

They are: 2.1 million mt/year Woodfibre; 3 million mt/year Cedar; 12 million mt/year Ksi Lisims; and 2.7 million mt/year Summit Lake PG projects that are all targeting for start up before end 2030.

In early 2020s, developers such as Imperial Oil (nearly 69% owned by ExxonMobil), BG, Petronas, Chevron and Indian Oil Corp. had unveiled plans to develop multiple grassroot LNG projects in British Columbia that was designed to unlock and monetize the abundant and cheap natural gas feedgas at Duvernay and Montney in the Western Canadian Sedimentary Basin.

However, incessant delays in the Canadian federal government regulatory process and the increased need for stakeholder engagement -- particularly the several First Nation bands in British Columbia who have full ownership over the coastal and hinterland resources and marine wealth -- resulted in a lack of final investment decisions for the planned facilities.

"We are 10 years on in this opportunity and we now finally have a project [LNG Canada] that is under advanced construction," Tim McMillan, a former president of the Canadian Association of Petroleum Producers and a partner with Garrison Strategy, said at the same conference.

"We are on the cusp of incredible resources that will be developed and we have a growing list of customers," McMillan said. "Political problems in Canada probably led to the delays in us building those LNG facilities and missing a window of opportunity then [early 2020s]. But another window is opening and we need to step up as along with Asia even the Europeans are coming to us."

Target Asian market

A natural destination for Western Canadian LNG is Asia, which be a prime driver for an anticipated 30% increase in global energy demand over the next 10 years, Gribaa said.

"Asia is talking about Canada and we are on the map. We probably need to put the past behind and with LNG Canada and Woodfibre we have ample opportunities on the ground," Gribaa said.

With Canadian LNG being 40% less carbon intensive compared with USGC cargoes, the expectation will be a positive evaluation by buyers in Japan and South Korea," Graham Shanks, business development director of midstream player Enbridge and a joint venture partner in the Woodfibre LNG project, said at the same conference.

"Renewable power to produce LNG in British Columbia is a game changer and Woodfibre's 0.04 MT [of carbon dioxide equivalent] for each MT of LNG to be produced," Shanks said.

Japan seen to import more Canadian LPG

Besides LNG, demand for Western Canadian propane has been rising in Asia and in particular in Japan from Prince Rupert, Stewart Muir, CEO of Resource Works Society, said at the same conference.

"We now ship 30% of Japan's propane demand and this has happened under the radar," Muir said.

A prime shipper is Calgary-based AltaGas, which exported a first-quarter 2024 record of 115,108 b/d of LPG to Asia, which was a 16% year-over-year increase.

Growth was underpinned by strong execution at the Ridley Island Propane Export Terminal (RIPET) and the Ferndale Terminal, it said separately last week in its earnings release, adding the exports were made in 12 VLGCs that were loaded at RIPET and seven VLGCs at Ferndale.

Meanwhile, AltaGas also said it targets to take a FID it the second quarter on a 55,000-b/d Canadian LPG export facility to be called the Ridley Island Energy Export Facility (REEF) also along the Pacific Coast.

In November 2023, a joint venture of AltaGas and Royal Vopak said they will develop REEF to provide a competitive edge for Canadian producers in Asia.