Sunday, March 27, 2011

The Canadians move ahead

In the snails paced world of arctic gas development the Canadians have pulled ahead. First, Kitimat LNG has awarded a Front End Engineering Design (FEED) contract to KBR, and announced plans to pursue an expansion of their project. The first plant will process 700 million cubic feet per day into about 5.5 million tons per year of LNG. Proposed expansion could add another 1 MTPA capacity. The proposed customers are in Asia and the target sales price of product is quoted at $12/MCF vs. $4/MCF in North American markets for the same gas. The Kitimat volumes are roughly 18% of the volumes of the Alaska Gas Pipeline project. Project description video from Kitimat webpage (LINK).

Secondly, the Canadian National Energy board has given the green light to the Mackenzie pipeline project. When completed the Mackenzie could move up to 1.2 Billion cubic feet per day of gas or about 26% of the capacity of the Alaska Gas Pipeline.

In terms of capacity the two Canadian projects will market about 44% of the volume of the Alaska Gas Pipeline. Best wishes to both projects - It's great to see some forward motion.

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