Canada sees B.C. LNG revival as world scrambles for fuel

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Canada is taking a second crack at growing a liquefied pure fuel (LNG) export trade on its west coast a decade after hovering prices and Indigenous opposition derailed a earlier wave of proposed LNG terminals.

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This time, firms are specializing in smaller west coast initiatives they guess will probably be cheaper and quicker to construct.

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“Smaller challenge are simpler to handle, particularly in Canada,” Enbridge chief govt Al Monaco informed Reuters. “The necessity for international LNG is clearer now than it was earlier than, we’re getting a second probability and I hope we don’t blow it this time. We’ve acquired to get on it instantly.”

Environmental and regulatory hurdles to pipeline building have discouraged new LNG terminals on Canada’s Atlantic coast. B.C.’s Pacific coast is near Canada’s huge Montney shale subject and Asian markets, the place LNG costs hit a file excessive final week.

Privately owned Port Edward LNG is elevating capital and negotiating offtake agreements with Asian patrons, a Shell-led consortium is finding out the feasibility of constructing Part 2 of the LNG Canada challenge and final month Enbridge Inc outlined a $1.5 billion funding in Pacific Vitality Corp’s Woodfibre LNG challenge.

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Woodfibre will begin building in 2023 and the 14 million tonne each year (mtpa) LNG Canada challenge in Kitimat is underneath building and anticipated in service in 2025. They’re the one two out of 18 proposed initiatives to get underway.

Constructing a big LNG terminal in B.C. prices roughly double what it does on the U.S. Gulf Coast. The development, aside from LNG Canada, is for a lot smaller crops.

Builders, eager to keep away from previous errors, are securing help from Indigenous folks early, stated Karen Ogen-Toews, CEO of the First Nations LNG Alliance. Firms are additionally modifying current infrastructure to keep away from prolonged regulatory delays.

“That’s one main distinction, the size of those new LNG initiatives versus the previous ones,” stated Wooden Mackenzie analyst Dulles Wang. “Producers and builders are acutely aware of the monetary threat related to bigger initiatives.”

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Woodfibre LNG will probably be a 2.1 mtpa challenge constructed on a disused pulp mill web site close to Squamish. Port Edward LNG in northern B.C. will ship simply 300,000 tonnes each year utilizing an current dock and fuel pipelines, and has engaged funding bankers in Houston and London to boost $350 million in financing.

“There’s no query this can be a extra streamlined course of,” Port Edward LNG President Chris Hilliard stated. “By not utilizing the standard LNG method we’re capable of leverage appreciable current infrastructure.”

Exporting from the west coast opens entry to world markets to landlocked Canadian fuel producers. However the window to construct new terminals is slim. With the world focusing on net-zero carbon emissions by 2050, a report by the Worldwide Institute for Sustainable Improvement warned that Canadian LNG terminals might change into stranded property.

Mission economics could possibly be reconfigured to offer quicker returns on capital, or terminals might sooner or later be transformed to export hydrogen, Federal Pure Sources Minister Jonathan Wilkinson stated.

“I believe everyone’s attempting to get their heads round precisely how that may work,” he informed Reuters.

— With information by Steve Scherer in Ottawa