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12 Jun 2024 | 19:41 UTC
By Ashok Dutta
Highlights
Japan, Korea sees Canada as 'allies'
Low carbon LNG a selling point
Circumvent pinch points for shipping
Canada's West Coast has room for multiple LNG export projects to meet a burgeoning global energy demand, particularly in Asia led by Japan and South Korea, even as the North America nation's first greenfield LNG facility is "on the cusp of a startup," industry participants said June 12.
"LNG Canada is now over more than 90% complete and we will be the first to be built on the [Canadian] West Coast," Senior Vice President Teresa Waddington said at the Global Energy Show in Calgary. "We will have the advantage of a less shipping time to Asia [compared with the US Gulf Coast]."
The first cargo of LNG to set sail from Kitimat in coastal British Columbia, which is the location of the LNG Canada plant, will be chartering a new path on its journey to the Indo-Pacific region, Waddington said, adding there is a growing interest of Canadian LNG in Japan and Korea.
"When we spoke in Japan and South Korea, what came up was they see Canada as their allies. We are across the Pacific Ocean and there are no pinch points," Waddington said following a business trip last week to those Asia nations.
"Between Fukushima and the Russian invasion of Ukraine, they are waiting for new sources of LNG and Canada will play a role in that. There is a huge hunger in Asia-Pacific for energy and they are asking what next after LNG Canada," she said.
West Coast Canadian LNG is at the heart of Asian buyers and the cargoes from don't have the challenges of going through the Panama Canal and the Strait of Hormuz that other leading suppliers like those from the Middle East and the US Gulf Coast have to navigate, president of Global LNG Consulting Racim Gribaa said at the same conference.
"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," Gribaa said, noting that, as a rule of thumb, it will take an LNG carrier eight to nine days to reach from Prince Rupert to Tokyo compared with 16-18 days from the USGC.
There are five LNG projects at various stages of development in coastal British Columbia with the most advanced being the first phase of the 12 million mt/year LNG Canada that is preparing to warm up its LNG trains this late summer, Ian Archer, a gas analyst in the Calgary office at S&P Global Commodities Insights, said separately.
LNG Canada – a joint venture between operator Shell with 40% interest, Petronas (25%), PetroChina and Mitsubishi Corp. (each 15%) and Korea Gas Corp. (5% stake) – is being built in two equal phases, with the first phase comprising of two LNG processing trains.
Under the first phase, LNG Canada targets to export a single ship every two days from Kitimat starting around mid-2025, Waddington said, noting for their part the project's JV partners are widely expected to take their share of 'equity' LNG to Asia.
The four other LNG projects 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.
"We see Canada playing a role in energy security and its now Canada's time to start supplying energy in response to energy security issues," Petronas' Policy Director Bryan Cox said at the same event.
As an upstream partner in LNG Canada, Petronas will provide feedgas for the plant from its "prolific assets" in North East British Columbia, particularly the Montney Basin, Cox said, adding besides the LNG Canada there is "room for more" greenfield export facilities.
Besides energy security, Asian buyers are also keeping a close eye on Canada's low-carbon LNG and the work that has been done by developers along the natural gas value chain, Waddington said.
"Canada has regulatory challengers with multiple layers of approval. But we have overcome that and Canadian LNG is ready to be on the map," Gribaa said.