Dutch energy giant Royal Dutch Shell PLC is eager to press its planned B.C. natural-gas export project through Canada’s new streamlined environmental process, amid worries that this country must act quickly or risk losing access to a growing global market.
“We would be very happy to use the B.C. LNG as a test project for that,” Peter Voser, Shell’s chief executive officer, told journalists in Calgary on Tuesday, mid-way through a two-day Canadian trip.
Shell, along with partners Korea Gas Corp., Mitsubishi Corp., and PetroChina Co. Ltd., recently formalized plans to pursue a terminal in Kitimat, B.C., that would load 1.2 billion cubic feet per day of liquefied natural gas onto ships bound for Asian markets.
The company has repeatedly said that Canada needs to act urgently to build LNG export capacity, lest B.C.’s large shale-gas reserves lose out on an Asia-Pacific LNG market that is expected to double between now and 2030.
To do that, Shell is looking to Ottawa to enact changes proposed by the Conservative government that would cut red tape and set in place hard deadlines for approval of major projects.
There is no doubt that Shell sees a role for Canada in global movements of natural gas. Over the next decade, Mr. Voser said, the company’s spending in Canada – which will account for 10 to 15 per cent of the corporate total – will be weighted toward gas, despite the company’s large presence in the oil sands.
In part, that is because oil-sands economics stand behind other projects. Shell’s recently completed $14-billion expansion of its Athabasca oil sands project requires a $75 (U.S.) price per barrel of oil to break even, Mr. Voser said. Projects such as LNG exports and gas-to-liquids projects, which transform natural gas into fuels such diesel, “are much lower,” he said.
A lower break-even price means such projects are more profitable in a given oil price environment.
In recent years, Shell has slowed its pace of oil sands investments, pulling back on plans for a major expansion and instead proceeding with a three-stage “debottlenecking” process intended to add 80,000 to 90,000 barrels a day over the next decade.
“We keep the options open to expand in bigger steps if we want to do so,” Mr. Voser said, but added: “That’s not in our plans at the moment.”
The company is, however, considering more massive gas investments in North America. In the United States, Mr. Voser said, the company could see construction of “a few” gas to liquids plants on the scale of a similar project Shell recently completed in Qatar. That project, called Pearl, produces 140,000 barrels a day of refined products, as well as 120,000 barrels of other petroleum products, from 1.85-billion cubic feet a day of gas.
At this point, Shell doesn’t see a place in Canada for those types of projects, however.