Shell Canada LNG Export License Application

Since the Alaska Gas Pipeline and LNG plant plans are in yawn mode, take a look at the Export License Application filed by LNG Canada Development Inc., (Shell Canada, Korea Gas, Mitsubishi, and PetroChina) (LINK).

The annual maximum stated in the application is 1180 BCF, or 3.2 BCF/D which is about the same as the various pipeline options proposed for Alaska.

Section 4.4 of Appendix D (Ziff Energy) addresses Alaska Gas projects in very uncertain terms:

The LNG Option is being explored more thoroughly at time of writing. Project estimates for a 3 Bcf/d pipeline to Valdez are in the order of $20-26 Billion. Costs and economics of transporting and liquefying Alaska production will be dependent on many factors including final size and nature of facility and related pipeline, and are unknown at time of writing.

Section 6.3 foresees the possibility of future "Northern Gas"

Northern Gas (Alaska/Mackenzie Delta): could flow beginning in 2025 at the earliest and, assuming favourable economic conditions, could expand up to 7% of North American supply in
2045. Although discussions for a liquefaction facility and pipeline to Valdez, Alaska are at a preliminary stage, these could impact the supply of Northern gas to North America, if economics were favourable to LNG exports. If Northern Gas is transported to Western Canada, the pipelines would be the costliest component of each project, while another $8 Billion would be needed for Mackenzie field development. Once they are built, the pipelines will have a low variable cost and will continue to flow. Expansion projects (compression) will have low incremental cost and will be likely economic.

 Once again we are in hold mode waiting for 30 July Alaska LNG progress report.

Canada LNG

Shell / KOGAS / Mitsubishi / PetroChina have announced a 12 MTPA LNG plant on Canada's west coast (LINK).  That's about half the size of the possible Alaskan LNG project.  The LNG Canada plant will be located in Kitimat B.C. home of another LNG project Kitimat LNG (LINK).  At 5 MTPA the total of the two plants is less than the possible Alaskan LNG project.

I say "possible" Alaskan LNG project for two reasons 1) LNG isn't crude oil, the potential margins and profits are much less,  and 2) Competition is heating up and Alaska is way behind Australia, the U.S. Gulf Coast and now Canada.

Maybe economies of scale will tip the balance, but remember "You can't dabble at LNG"  Alaska continues to lack the key ingredient of buyer participation.  Until a Japanese, Korean, or Chinese LNG buyer signs up for a portion of Alaskan LNG project we're all just dabbling at LNG.