Liquefied natural gas development requires patience

There are suggestions Shell may put brakes on BC project

SUGGESTIONS that Shell may put the brakes, however temporarily, on its Canada LNG project in Kitimat, the largest of the three liquefied natural gas plants proposed for that area, should not be a surprise.

In the race to be among the first to export LNG to Asian markets, there are bound to be stumbles along the way and not every company who starts the race is going to finish it.

In Shell’s case, any pullback could have as much to do with where Canada LNG sits on the company’s list of projects and the costs associated with each one as much as it does on the prospects for a profitable LNG export market.

Clearly, the development of a provincial LNG industry is going to require a lot of patience. Pacific Northern Gas (PNG) consumers got a taste of that need for patience Jan. 1 when the delivery cost portion of their gas bills went up. The utility pegs the increase at $49 a year for a residential consumer.

This is significant because consumers have instead been waiting for a decrease in the gas delivery cost. That’s because BC LNG, the smallest of the LNG proposals in Kitimat, would use up the surplus capacity of the existing PNG natural gas pipeline, providing significant revenues for the gas utility to lower the delivery costs for its other customers.

But BCLNG has yet to announce a construction start date, meaning the expected consumer benefit remains in limbo.


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