Kitimat LNG export licence gets regulatory approval
CALGARY — Canadian regulators have approved a licence for Kitimat to export liquefied natural gas, heralding a new era for western Canadian natural gas producers struggling in an oversupplied North American market.
The approval issued Thursday by the National Energy Board is a first for Canada and represents the first step in securing new markets for a resource until now restricted to domestic and U.S. markets.
“The exported LNG will not only open new markets for Canadian gas production, but the board believes that ongoing development of shale gas resources will ultimately further increase the availability of natural gas for Canadians,”tiffany outlet the NEB said in a statement.
The Kitimat LNG project, backed by Apache Canada, EOG Resources Inc. and Encana Corp., would see 1.2-billion cubic feet of natural gas exported to primarily Asian markets by 2016.
“This is a great day for us and for Canada,” a jubilant Tim Wall, Apache Canada’s president, told the Herald. “It lets us to export our product and lets Canada export the vast resource that it has in B.C. and Alberta. It’s going to be a big win for Canada.”
Natural gas production in Canada has dropped by three billion cubic feet per day in the past three years to 14.5 bcf per day. The decrease is largely due to abundant shale gas in the United States pulling down prices.
In contrast, prices for LNG in Asia are three to four times higher than in North America.
The ability to ship to energy-hungry Asian Pacific markets and not depend only on the U.S. represents a renewal for Canada’s largest industry, the oilpatch, said analyst Peter Tertzakian, with Arc Financial.
“The importance of diversifying markets cannot be understated, it’s really important in terms of the longevity of the industry going forward,” he said.
Kitimat will be a significant export vehicle even at 1.2 billion cubic feet per day as Canada’s overall natural gas exports have fallen to 5.5 bcf per day, Tertzakian noted.
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