In October, LNG Canada - a joint venture between Shell, Petronas, PetroChina, Mitsubishi Corporation and KOGAS - finally tied the knot and signed a FID for the multibillion project. Due to fluctuating gas prices, the joint venture took several years to reach the aforementioned Final Investment Decision. The LNG Canada export terminal will feature two LNG trains that are able to process 14 million tonnes per annum. The joint venture partners are responsible for the transport of natural gas to the terminal located
in the small village in North-western British Columbia (see box Kitimat).
The natural gas supply for the terminal will be transported from the Montney-region in the North-eastern part of British Columbia via a 670 kilometre pipeline (see box Coastal GasLink).
Montney is a major shale gas and shale oil resource according to a comprehensive joint study in 2013 by the National Energy Board, British Columbia Oil and Gas Commission and the Alberta Energy Regulator. This study found that the potential resources contained within the formation were 12.7 trillion cubic meters of marketable natural gas, 14,521 million barrels of marketable natural gas liquids and 1,125 million barrels of oil. This estimate makes it one of the largest known gas resources in the world.
Markets out west
Most of the LNG to be produced in Kitimat will be transported to the northern region of Asia. As the IEA has predicted, natural gas demand will grow in China for the next decades.
Chinese gas demand is forecasted to grow by 60% between 2017 and 2023, underpinned by policies aimed at reducing local air pollution by switching from coal to gas. In the next five years, China alone accounts for 37% of the growth in global demand and will become the largest natural gas importer by 2019, overtaking Japan. The IEA also forecasts strong growth in gas use in other parts of Asia, including in South and Southeast Asia, driven by strong economic growth and efforts to improve air quality.
Vote of confidence
Returning to the LNG Terminal in Kitimat, government officials and the private sector have stated that the project is an example of balanced and sustainable economic development.
“It is a vote of confidence in a country that recognizes the need to develop our energy in a way that takes the environment into account and that works in meaningful partnership with indigenous communities,” Canada’s PM Justin Trudeau stated.
Although the project revolves around the exploitation of fossil resources, the joint ventures have taken measures to reduce CO2 emissions in the liquefaction process by using renewable energy as mentioned earlier in this article. LNG Canada also stressed that the exported LNG will be used to displace more ‘carbon intensive’ energy sources, meaning coal, in order to reduce the impact on climate and air quality.
Start in 2019
Before the FID, in April of 2018, LNG Canada already selected the joint venture between JGC Corporation (JGC) and Fluor Corporation (Fluor) as its EPC Contractor. According to LNG Canada, this decision was based on the consortium’s value proposition, which includes health, safety, First Nations and stakeholder management, financial strength, technical design, execution plans, contract price and schedule.
Fluor has nearly 70 years of project experience in Canada, with over 7,500 construction personnel working on Canadian projects in 2017, while JGC has experience in construction of more than 48 LNG trains globally.
The project will start in the first quarter of 2019 and will take approximately six years. The first LNG is expected to be shipped from Kitimat halfway through the next decade.
The pipeline from the Montney Basin to the terminal in Kitimat