Shell buys Kitimat terminal site for proposed LNG facility
Royal Dutch Shell has purchased the old Methanex plant site at Kitimat, moving one step closer to building its proposed liquefied natural gas (LNG) terminal to access Asian markets, Vancouversun reports.
Shell bought the Kitimat marine terminal with its partners Mitsubishi Corp., Korea Gas Corp. and Chinese National Petroleum Corp., Shell Canada spokesman Stephen Doolan said in an interview.
The partnership bought the site from Cenovus "and is now exploring the potential of an LNG terminal on the site," Doolan said.
Shell's announcement is the third LNG proposal for Kitimat and marks a milestone for the company in its plans to become a major player in the Asian natural gas market. KM LNG, a partnership of Apache Oil, OEG Resources and Encana, has already received a National Energy Board license to ship 1.4 billion cubic feet of gas a day to Asia from a plant it has already started to construct. And a proposal by the Haisla First Nation and LNG Partners of Houston, Texas, for a more modest 125-million-cubicfeet-a-day terminal is working its way through the regulatory process.
Shell's plan is rumoured to be the biggest to date, at two billion cubic feet a day. Doolan said Shell is not confirming the size or cost of the proposed terminal at this point.
However, in an interview with The Vancouver Sun last September, Shell president Lorraine Mitchelmore said the size of the facility Shell is planning is "significant." It must be to make it worthwhile, she said, adding that the investment would be "in the billions."
Mitchelmore described Asia as possessing "a wealth of opportunity" for natural gas sales and said that once a site is chosen, the company plans to move quickly on its LNG plans. Shell has gone through a paradigm shift in thinking, she said, in emphasizing natural gas as a significant part of its business.
Asian markets have become the focus of the North American natural gas industry with the development of shale gas, termed unconventional gas because it's trapped in the pores of shale deposits. It is collected by injecting a combination of water and chemicals under pressure into the shale, forcing it to migrate to collection points.
The size of shale gas deposits in North America has depressed domestic prices to the $3.75 per million BTUs, about one-third of prices in Asia.
Cenovus purchased the marine terminal last November for $37 million and has been using it to ship a type of light oil to Alberta, where it's used to dilute heavy oilsands bitumen so it can be transported through pipelines. Cenovus spokeswoman Rhona del Frari said the terminal will continue to unload the product from tankers and transfer it to railcars for the foreseeable future.
Kitimat has emerged as the favoured West Coast location to access Asia's markets for oil and gas, and millions of dollars of investments are already flowing in.
KM LNG is using the old Eurocan pulp mill site as a staging area for construction of its terminal at Bish Cove, 15 km south of Kitimat. Work is underway on that project.
Rose Klukas, economic development officer for Kitimat, said she is conservatively estimating the value of the three LNG plants and associated pipelines at $10 billion. Rumours circulating in the energy industry place the size of the Shell investment alone at $8 billion.
"There's good times ahead for Kitimat, that's for sure," Klukas said in an interview.
Shell, which has shale gas properties in northeastern B.C. and Alberta, became a major player in the B.C. industry in 2008, when it paid $5 billion for Duvernay Oil's shale gas properties in the Groundbirch region.
Shell bought the Kitimat marine terminal with its partners Mitsubishi Corp., Korea Gas Corp. and Chinese National Petroleum Corp., Shell Canada spokesman Stephen Doolan said in an interview.
The partnership bought the site from Cenovus "and is now exploring the potential of an LNG terminal on the site," Doolan said.
Shell's announcement is the third LNG proposal for Kitimat and marks a milestone for the company in its plans to become a major player in the Asian natural gas market. KM LNG, a partnership of Apache Oil, OEG Resources and Encana, has already received a National Energy Board license to ship 1.4 billion cubic feet of gas a day to Asia from a plant it has already started to construct. And a proposal by the Haisla First Nation and LNG Partners of Houston, Texas, for a more modest 125-million-cubicfeet-a-day terminal is working its way through the regulatory process.
Shell's plan is rumoured to be the biggest to date, at two billion cubic feet a day. Doolan said Shell is not confirming the size or cost of the proposed terminal at this point.
However, in an interview with The Vancouver Sun last September, Shell president Lorraine Mitchelmore said the size of the facility Shell is planning is "significant." It must be to make it worthwhile, she said, adding that the investment would be "in the billions."
Mitchelmore described Asia as possessing "a wealth of opportunity" for natural gas sales and said that once a site is chosen, the company plans to move quickly on its LNG plans. Shell has gone through a paradigm shift in thinking, she said, in emphasizing natural gas as a significant part of its business.
Asian markets have become the focus of the North American natural gas industry with the development of shale gas, termed unconventional gas because it's trapped in the pores of shale deposits. It is collected by injecting a combination of water and chemicals under pressure into the shale, forcing it to migrate to collection points.
The size of shale gas deposits in North America has depressed domestic prices to the $3.75 per million BTUs, about one-third of prices in Asia.
Cenovus purchased the marine terminal last November for $37 million and has been using it to ship a type of light oil to Alberta, where it's used to dilute heavy oilsands bitumen so it can be transported through pipelines. Cenovus spokeswoman Rhona del Frari said the terminal will continue to unload the product from tankers and transfer it to railcars for the foreseeable future.
Kitimat has emerged as the favoured West Coast location to access Asia's markets for oil and gas, and millions of dollars of investments are already flowing in.
KM LNG is using the old Eurocan pulp mill site as a staging area for construction of its terminal at Bish Cove, 15 km south of Kitimat. Work is underway on that project.
Rose Klukas, economic development officer for Kitimat, said she is conservatively estimating the value of the three LNG plants and associated pipelines at $10 billion. Rumours circulating in the energy industry place the size of the Shell investment alone at $8 billion.
"There's good times ahead for Kitimat, that's for sure," Klukas said in an interview.
Shell, which has shale gas properties in northeastern B.C. and Alberta, became a major player in the B.C. industry in 2008, when it paid $5 billion for Duvernay Oil's shale gas properties in the Groundbirch region.