Shell-led LNG Canada produces first LNG amid global supply concerns
HOUSTON/CALGARY: The Shell-led LNG Canada facility has produced its first liquefied natural gas for export in Kitimat, British Columbia, a spokesperson for the project confirmed on Sunday. The new production, which will go mainly to Asia, comes amid concerns over disruptions to the 20% of global gas supply coming from Qatar, due to the Israel-Iran conflict and the possibility of Tehran closing the Strait of Hormuz, a key shipping lane.
The facility has not yet loaded its first LNG export cargo, although LNG Canada said it remains on track to do by the middle of this year. The facility is the first large-scale Canadian LNG project to begin production and also the first major LNG facility in North America with direct access to the Pacific Coast, significantly reducing sail time to Asian markets when compared with U.S. Gulf coast facilities.
When fully operational it will have a capacity to export 14 million metric tonnes per annum (mtpa), according to company statements.
Shell and its partners in the LNG Canada project are working toward reaching a final investment decision next year for doubling the project's 14 million metric tonnes per year (mtpa) capacity, Cederic Cremers, Shell's president of integrated gas, told Reuters.
He added he expected the project's first phase to fully reach its 14 mtpa capacity next year, after starting up this month.
LNG tanker Gaslog Glasgow is approaching LNG Canada's Kitimat port, according to LSEG ship tracking data. The vessel is expected to arrive on June 29 and will be loaded with LNG, the sources said.
The LNG Canada project is a joint venture between Shell Plc , Petronas, PetroChina, Mitsubishi Corporation and Kogas.
Once the facility enters service, Canadian gas exports to the U.S. will likely decline, traders said, as Canadian energy firms will have another outlet for their fuel. For now, the U.S. is the only outlet for Canadian gas.
Canada has two other smaller LNG export facilities also under construction on the Pacific Coast. The facilities, Woodfibre LNG and Cedar LNG, are expected to be completed between 2027 and 2028.
Canada exported about 8.6 billion cubic feet per day (bcfd) of gas via pipelines to the U.S. in 2024, up from 8.0 bcfd in 2023 and an average of 7.5 bcfd over the prior five years (2018-2022), according to data from the U.S. Energy Information Administration. That compares with a record 10.4 bcfd in 2002.
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