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LNG Canada Project, Kitimat, British Columbia

  • Project Type

    LNG export facility

  • Location

    Kitimat, British Columbia, Canada

  • Owners

    Shell, PETRONAS, PetroChina, Mitsubishi Corporation, KOGAS

  • Initial Capacity

    14 million tonnes per annum (Mtpa)

  • Investment cost

    C$40bn ($31bn)

  • Start of Construction

    2018

  • Start of Operation

    2023

LNG Canada project is a major liquefied natural gas (LNG) export project being developed in Kitimat, British Columbia, Canada.

Comprising two LNG trains in the first phase, the LNG Canada terminal will have the capacity to export 14 million tonnes a year (Mtpa) of LNG over its estimated project life of up to 40 years.

It is estimated to cost C$40bn ($31.2bn), making it the biggest energy investment in Canada till date.

The project is being developed by LNG Canada, a joint venture between Shell Canada Energy, a subsidiary of Royal Dutch Shell (40%), North Montney LNG (25%), Phoenix Energy (15%), Diamond LNG Canada (15%), and Kogas Canada LNG (5%).

North Montney LNG is a subsidiary of PETRONAS, while Phoenix Energy is a subsidiary of PetroChina, Diamond LNG Canada is a subsidiary of Mitsubishi and Kogas Canada LNG is a subsidiary of Korea Gas Corporation.

PETRONAS became a project development partner in May 2018 by acquiring 25% stake in LNG Canada in May 2018.

The final investment decision (FID) on the project was announced in October 2018. Construction is expected to start by the end of 2018, with first LNG production expected in 2023.

LNG Canada project location and development details

The first phase of the LNG Canada project will be built on a 400ha-site in Kitimat Industrial area. It will comprise two 7Mtpa LNG trains, two LNG storage tanks of 225,000m³ each, a marine terminal capable of accommodating two LNG carriers at a time, a rail yard to load condensates, a water treatment facility, and two flare stacks of 60m and 125m height.

The natural gas received at the processing facility will first undergo carbon dioxide, water, condensate, and sulphur removal processes before being chilled to approximately -162°C. The resultant LNG will be piped to the storage tanks before being transferred to LNG carriers via two LNG loading lines. Condensate will be stored temporarily in tanks before being railed to customers.

An existing wharf at the Kitimat Port previously owned by Rio Tinto Aluminium BC will be redesigned as the marine terminal facility for LNG Canada. Each LNG carrier at the terminal will be assisted by up to three tugboats.

The LNG export facility will have the capacity to process 69,000 tonnes of gas per day (tpd), in the first phase. The second phase will add two more 7Mtpa trains to increase the total production capacity to 28Mtpa.

Upon reaching full capacity, the export terminal is expected to be visited by 350 LNG ships a year, with each ship capable of loading up to 170,000m³ of LNG.

Gas supply and LNG off-take from LNG Canada

The natural feed gas for the LNG Canada export facility will be supplied from the Montney basin in British Columbia, one of the biggest natural gas reserves in Western Canadian Sedimentary Basin (WCSB), via the 670km-long and 2.1bn cubic feet-capacity Coastal GasLink natural gas pipeline.

Each joint venture partner of LNG Canada will be responsible to provide its own share of natural gas supply for the facility and to individually off-take and market its respective LNG share.

The project aims to leverage the abundant supplies of cheap natural gas in British Columbia and the relatively short shipping distance to North Asia, where the LNG price is high.

The existing LNG shipping routes from North America to North Asia pass through the Panama Canal and cover approximately double the distance than that from the LNG Canada facility.

Power supply for LNG Canada facility

Part of the power requirement of the LNG Canada facility will be met through clean, renewable energy supply from BC Hydro, under a power purchase agreement signed in November 2014.

The remaining electricity will be generated using natural gas.

Contractors involved with LNG Canada project

Fluor and JGC won a lump sum $14bn engineering, procurement and construction (EPC) contract for the LNG Canada export facility in April 2018. Fluor’s share of the contract is $8.4bn.

Boskalis has been awarded a €100m ($115m) dredging contract for preparing the site.

BAM International, along with JJM Construction and Manson Construction, was awarded a contract worth €95m ($109m) for the construction of the wharf for the marine terminal facility of LNG Canada, in October 2017.

Ledcor-Haisla Limited Partnership was awarded the contract for site preparation for the LNG Canada export facility, in March 2016.

Bear Creek Contracting and JHW Construction have been contracted for civil works for the project, whereas ERM Consultants Canada was contracted for performing an impact assessment of the project.

A consortium of Chiyoda, AMEC Foster Wheeler, Saipem, and WorleyParsons was awarded the FEED contract for the LNG Canada export facility, in May 2014.

TransCanada was selected in July 2012 to design, build, own, and operate the Coastal GasLink pipeline for supplying natural gas to the LNG Canada terminal.

LNG Canada project development history

The LNG Canada project was conceived in 2011 with the formation of LNG Canada joint venture (JV) made up of Shell, PetroChina, Mitsubishi Corporation and KOGAS.

The JV partners announced the decision to develop the project at Kitimat, British Columbia, in April 2012 and selected TransCanada to develop the feed gas pipeline for the terminal two months later.

LNG Canada awarded the front-end engineering and design (FEED) contract for the project in May 2014, after it received a 25-year LNG export license from the National Energy Board (NEB) of the Government of Canada in 2013.

The project received environmental permits from provincial as well as federal authorities in June 2015.

NEB approved a 40-year LNG export license for the project in the second quarter of 2016.