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Canada chases new gas export markets
Privately held Kitimat LNG has taken another large step toward opening up alternative markets to the United States for Canadian gas producers by signing a memorandum of understanding with Spanish distributor Gas Natural to take gas from its proposed LNG export terminal on the British Columbia coast.
Under the deal, Gas Natural would take about 30 percent, or more than 200 million cubic feet per day, of the Kitimat facility’s LNG volumes, which will originate from shale gas plays in northern British Columbia and northwestern Alberta.
Company President Rosemary Boulton said it is hoped the deal will ease some of the gas price pressure expected to stem from the development of the Horn River and Montney shales.
MOU with Korea Gas in June The memorandum with Gas Natural comes only a month after Kitimat LNG signed a similar agreement with Korea Gas to take about 40 percent, or 280 million cubic feet per day, of the terminal’s volumes worth about C$1 billion a year over 20 years.
Both deals include options for equity stakes in the terminal.
Kitimat LNG is now on the verge of reaching formal commercial agreements with potential shippers and Western Canadian gas producers to supply gas for export, possibly to new markets in Europe and Latin America.
Although pricing terms are yet to be finalized, Boulton told the Calgary Herald “we are very close to having the whole thing sold out.”
With U.S. gas reserves up by an estimated one-third over the last two years because of drilling breakthroughs for shale plays in Texas, Louisiana and Pennsylvania, and early estimates placing Horn River and Montney reserves at up to 800 trillion cubic feet, Boulton said there is no longer a need to contemplate importing LNG into Canada.
At the same time, she said it has become obvious that Canadian producers could pay a heavy price for relying exclusively on the U.S. for its gas exports.
—Gary Park
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