LNG Canada will have the lowest greenhouse gas (GHG) intensity of any operating liquefaction plant in the world, CEO Jason Klein says, telling an industry audience it needs to better promote the benefits of Canadian natural gas exports to get more projects off the ground.
Klein, a Shell plc executive who was tapped to replace Peter Zebedee last month, said construction of Canada’s first major liquefied natural gas (LNG) export project was 60% complete. A 10-story natural gas entry module that will take volumes off the Coastal GasLink (CGL) pipeline arrived in March, marking what LNG Canada called the “next phase” of development.
Regulatory hurdles and the critical need for cooperation with Indigenous First Nations have created a challenging environment for LNG export projects in the country despite growing global demand for super-chilled fuel. LNG Canada is the only export facility under construction in Canada – although 18 have been proposed.
Klein said LNG Canada has benefited from the expertise of its joint venture partners, which include Shell plc (40%), Petronas (25%), PetroChina Co. Ltd. (15%), Mitsubishi Corp. (15%) and Korea Gas Corp. (5%). The project has also forged a deep relationship with the Haisla Nation, whose traditional territory is in Kitimat, British Columbia (BC), where the project is under construction.
“These relationships and support through good times and difficult times are what made our project successful,” Klein told attendees of the Canada Gas & LNG Exhibition and Conference in Vancouver, British Columbia.
The $17 billion project is the largest private sector investment in Canadian history. Costs rise to $40 billion when upstream and midstream assets are included. The plant would have the capacity to produce 14 million metric tons/year of LNG from two trains. It could eventually be extended to four trains.
Kitimat was chosen for the facility because it is near an abundant supply of natural gas in British Columbia. The location also benefits from a shorter shipping distance to North Asia, one of the fastest growing gas markets in the world. The sea route is 50% shorter than from the US Gulf Coast and avoids the Panama Canal, according to Shell.
Klein also pointed out that LNG Canada would have 35% fewer GHG emissions than any other LNG facility currently in operation in the world.
“In terms of decarbonization, I really think this is one place where Canada has a special role to play. The world needs more energy and clean energy,” Klein said.
“LNG, especially in Asia, has enormous potential to reduce GHG emissions globally by displacing coal,” he added. “And right now, all over the world today, people are building new coal-fired power plants in Asia, and this industry has the opportunity to replace that coal with natural gas.”
LNG Canada and CGL’s 2.1 Bcf/d system that would serve it have entered into long-term agreements with First Nations. Sixteen of the 20 tribes along the CGL have taken a stake in the pipeline under a deal announced in March. The Haisla Nation is the majority owner of the Cedar LNG floating liquefaction project which would also be located in Kitimat.
Klein said not only have these types of arrangements marked a step forward in economic reconciliation with First Nations, but they also give projects in the region an advantage due to stricter environmental considerations as they move forward. .
“As an industry, we need to showcase our strengths,” Klein said. “You see such a consistent theme in these projects of reliability, accountability and low carbon. And if that’s the hallmark of Canada’s LNG, then we’ll win because that’s what the world needs…We have to lead the charge on what we bring to the table.