Skip to main content

The Globe and Mail

Shell officially shelves plans to build Prince Rupert LNG project

AltaGas will begin construction on Ridley Island in the Port of Prince Rupert within weeks.

Royal Dutch Shell PLC has officially shelved its plans to build the Prince Rupert LNG project, which had been planned for Ridley Island in British Columbia.

But the Anglo-Dutch giant will continue in advancing the $40-billion LNG Canada plant, another liquefied natural gas-export venture.

Shell had placed the Prince Rupert LNG proposal on the back-burner since it inherited the project through its 2016 acquisition of BG Group PLC. Earlier this year, Shell had said it was in the process of reviewing the combined Shell and BG portfolio, including the project located at the southern end of Ridley Island at the Port of Prince Rupert.

Story continues below advertisement

"The Prince Rupert LNG project has been part of a global portfolio review of combined assets, which resulted in the decision to discontinue further development," Shell said in a news release late Friday.

Shell said the proposed Prince Rupert LNG project was in the assessment phase, with no development on Ridley Island. Shell is withdrawing from the lease arrangements at the site.

Shell also announced this week that it would sell most of its Alberta oil sands assets to Canadian Natural Resources Ltd. in a $8.5-billion (U.S.) deal. However, Shell said Friday that it is still leading the LNG Canada venture, a LNG export terminal planned for Kitimat, B.C.

"This project continues to be actively progressed by Shell and the joint venture participants as an opportunity to bring Canadian gas resources to the growing global gas markets," the release said.

Cameron Yost, a spokesman for Shell Canada, added that the company can see the long term potential of the Prince Rupert LNG site. "But, given the natural advantages and advanced stage of our LNG Canada project in Kitimat, we have decided to focus our attention there."

LNG Canada is a joint venture comprised of four companies: Shell, PetroChina Co. Ltd., Korea Gas Corp. and Mitsubishi Corp. Last summer, the LNG Canada consortium announced it was delaying its final investment decision on the export plant.

On Thursday, Shell chief executive officer Ben van Beurden said LNG Canada is still "very much" under consideration.

Story continues below advertisement

"It fits into our strategy very much – integrated gas is one of the core capabilities and key building blocks that we have," he said at the CERAWeek energy conference in Houston.

"We're not at the point where we can sanction the project but that will come in a few quarters."

Canada has abundant natural gas supplies but does not have any operational LNG export facilities. Plans for the expensive export facilities have been stymied by low global gas prices. As of last month, the B.C. government said there are 20 LNG export proposals for the province, a total that included the now-mothballed Ridley Island project.

With a file from Shawn McCarthy in Houston

Report an error Editorial code of conduct Licensing Options
As of December 20, 2017, we have temporarily removed commenting from our articles as we switch to a new provider. We are behind schedule, but we are still working hard to bring you a new commenting system as soon as possible. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.