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NorthAmOil COMMENTARY NorthAmOil
Chevron gains expanded export licence for Kitimat LNG
Chevron has been granted an expanded export licence for its proposed Kitimat LNG export project, in a boost to Canada’s nascent LNG industry
BRITISH COLUMBIA
WHAT:
Regulators have granted Chevron a longer export licence for Kitimat LNG, which will also allow it to increase capacity at the planned terminal.
WHY:
Chevron is trying to improve the cost- competitiveness of the project ahead of an FID.
WHAT NEXT:
A new partner may also yet buy into Kitimat LNG, taking some of Woodside’s stake in the project.
THE Canada Energy Regulator (CER) – for- merly known as the National Energy Board (NEB) – has approved an application by Chev- ron Canada to export LNG from its proposed Kitimat LNG project for a period of 40 years. The approval doubles the export period compared with that in the original licence for the project, which was granted by the NEB in 2011.
In its application, Chevron said it was intend- ing to export up to 18mn tonnes per year (tpy) of LNG from Kitimat, British Columbia, to markets primarily in Asia, including Japan, China and South Korea. This also marked an increase in capacity from the original licence, which covered 10mn tpy over a period of 20 years. That licence is set to expire at the end of this year, prompting Chevron to seek a new licence for the delayed project.
“The new natural gas export licence covers a 40-year term and reflects the revised Kitimat LNG plant design to one that includes up to three LNG trains to deliver up to 18mn tpy of LNG,” a Chevron spokesman, Leif Sollid, told the Canadian Press. “The Kitimat LNG project is designed to be the world’s first all-electric LNG plant powered by renewable hydroelectricity.”
Sollid added that the project – which still requires a final investment decision (FID) – was now in its pre-front-end engineering design (pre-FEED) phase.
The CER also noted in its decision letter that it had earlier rejected a request that the regula- tory approval process on the project be restarted altogether. The request had been made by a BC environmentalist, Michael Sawyer, who had argued that adequate gas supply for the project had not been proven. A Chevron expert, mean- while, estimated Canadian and North American natural gas resources of 1 quadrillion cubic feet (28tn cubic metres) and 4 qcf (113 tcm) respec- tively, and the CER also rejected Sawyer’s claim about unproven supply.
Monetising gas
The project, like others on the Canadian West Coast, would use gas from shale formations in BC as feedstock. Indeed, the CER said separately in a long-term energy outlook released last week that the Montney shale would continue to dom- inate Canada’s natural gas output growth over the next 20 years. The regulator forecasts that Montney drilling – spurred by the development of LNG terminals on the BC coast – will result in a nearly doubling of the province’s gas produc- tion to 9.93bn cubic feet (281mn cubic metres) per day in 2040 from 5.34 bcf (151 mcm) per day currently. Chevron notes that Kitimat LNG would target the Liard and Horn River basins in northern BC, which are still in the early stages of development.
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w w w . N E W S B A S E . c o m Week 49 11•December•2019