Royal Dutch Shell Plc (RDSA) and three Asian partners will jointly develop a liquefied natural gas export project in Canada’s British Columbia province and are in talks with local communities to win their support.

1. Korea Gas, Shell Start
Discussions on Canada
LNG Project
Consulting Group of Springhill South Kore

2. Royal Dutch Shell Plc (RDSA) and three Asian partners
will jointly develop a liquefied natural gas export project in
Canada’s British Columbia province and are in talks with
local communities to win their support.
Consultation with First Nations and local residents of
Kitimat began after Shell, Korea Gas Corp. (036460),
China National Petroleum Corp. and Mitsubishi Corp.
(8058) completed a feasibility study for building a 12-
million-metric-ton LNG terminal, Korea Gas and Mitsubishi
said in separate statements today. Local communities and
the Canadian government would need to approve the
project, due to start production by 2020, Mitsubishi said.

3. Asian companies including Korea Gas and GAIL India
Ltd. (GAIL) are investing in North American LNG
projects as gas prices in the U.S. slumped to a
decade-low after a surge in shale output. Imports
from North America will cost about a 10th of what
LNG producers in Indonesia, Yemen, Qatar and
Australia charge customers in Japan and South
Korea.
Shell has a 40 percent stake in the LNG Canada
project, while the other partners have 20 percent
each, Korea Gas said. A final decision to move the
planned terminal into development will be taken
“around the middle of the decade,” according to the
project’s website.

4. The Kitimat project includes the construction of LNG production and
storage units and harbor facilities, Korea Gas said. The terminal will
initially have two LNG units, each with a 6 million ton annual
capacity, and use gas from fields in western Canada, including Horn
River and Montney, Mitsubishi and Korea Gas said, without providing
a planned investment amount.
Export Licenses
Korea Gas, the world’s biggest buyer of LNG, fell 0.9 percent to
42,400 won in Seoul, declining for the fourth straight day. Mitsubishi
dropped 0.5 percent to 1,621 yen, the lowest since Jan. 17.
The terminal may cost 1 trillion yen ($12 billion), the Nikkei
newspaper reported April 12, without saying where it got the
information.

5. Canada has granted licenses for two LNG export projects in the
Kitimat area. BC LNG Export Co-operative LLC, jointly owned by
Haisla Nation and Houston-based LNG Partners LLC, was given a
20-year license, according to a statement on April 11. In October,
the National Energy Board approved an LNG terminal planned by
Encana Corp. (ECA), Apache Corp. (APA) (APA) and EOG
Resources Inc. (EOG) (EOG)
The Horn River basin may hold 165 trillion cubic feet of shale
resources, while Montney is estimated to have 49 trillion cubic feet,
according to an April 2011 report by the U.S. Energy Information
Administration.

6. Australia Supplies
Australia, the world’s fourth-largest LNG supplier, is poised to
lose the most from Canada’s new terminals, Andy Flower, an
independent LNG analyst in the U.K., said in October. Australia
may be capable of producing about 80 million tons of LNG
annually by 2017, surpassing Qatar as the world’s largest
exporter of the fuel, Total SA Chief Executive Officer Christophe
de Margerie said May 14.
The west coast of Australia is 4,400 nautical miles from Japan,
according to Eurasia Group, a New York-based consultant. The
journey to Tokyo from Kitimat is 4,200 miles.
Australia and Qatar sell the commodity to Asia at prices linked to
oil. Gas from the U.S. is tied to Henry Hub futures, which tumbled
32 percent last year amid record output driven by extraction from
shale.

7. South Korea, which relies on overseas gas for all of its
needs of the fuel, imported 36.7 million metric tons in 2011,
according to Korea Customs Service’s website. Japan
imported 99 billion cubic meters, or 3.5 trillion cubic feet, in
2010, according to the International Energy Agency.
To contact the reporters on this story: Sangim Han in Seoul
at sihan@bloomberg.net; Yuriy Humber in Tokyo at
yhumber@bloomberg.net
To contact the editor responsible for this story: Amit
Prakash at aprakash1@bloomberg.net