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Providing coverage of Alaska and northern Canada's oil and gas industry
June 2012

Vol. 17, No. 24 Week of June 10, 2012

Canada warned clock is running

Shell says window for LNG 10 years; delegation from Japan stresses need for pipelines if Canada is to compete for Asian market

Gary Park

For Petroleum News

Royal Dutch Shell is intensifying the drumbeat, sounding a warning to Canada that unless it speeds regulatory approval and eliminates red tape it will miss the opportunity to sell LNG in Asia.

In case the message hadn’t come through from Shell’s Canadian President Lorraine Mitchelmore it was delivered with new force by the super major’s Chief Executive Officer Peter Voser during a late-May visit to Calgary.

“A lot of (LNG) projects are coming up over the next five to six years in Australia and the Middle East and if Canada wants to compete there will be a timeline of 10 years from now,” he told reporters.

“As the Asia-Pacific LNG market will nearly double by 2030, I think projects in Canada need to be built by the end of this decade if it wants to cash in on the booming demand for fuel in Asia.”

Shell is 40 percent operator with Asian partners Korea Gas, Mitsubishi and PetroChina, each holding 20 percent, in Canada’s largest current LNG project.

It carries a nameplate capacity of 12 million metric tons a year for shipment from British Columbia’s deepwater port in Kitimat.

There was an added nudge from a Japanese government and industry delegation to Calgary on June 1 which stressed the need for pipelines to carry natural gas for LNG and crude from the oil sands to the Pacific coast.

Hirohide Hirai, director of petroleum and natural gas at the Ministry of Economy, Trade and Industry, told Platts his country has a “big appetite” for both commodities and views the investment climate in Canada as stable.

“Our focus is on the upstream sector and the preference of Japanese firms will be to take Canadian LNG to consumers in Japan, rather than market it in North America,” he said.

So far this year, in addition to Mitsubshi’s stake in Shell’s LNG venture, Mitsubishi has agreed to invest C$2.9 billion as a 40 percent partner in Encana’s Cutbank Ridge gas development in British Columbia and Toyota Tsusho Corp. is ready to invest C$600 million in Encana’s coalbed methane play in southern Alberta.

Hirai said Japan has no plans to invest in pipelines, but shortage of that infrastructure will have to be overcome “if Canada wants to compete with U.S. LNG projects,” adding that Canada has the advantage of government support while the U.S. government is “still not clear on its export policy.”

In addition to the Japanese government members, the delegation includes representatives of Japan Gas Corp. and Japan Oil, Gas and Metals National Corp.






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