LNG Canada project may cost C$40bn, says Shell

The LNG Canada project to liquefy natural gas for export to Asian nations may come with a C$40 billion price tag when completed, Royal Dutch Shell, the consortium’s leading partner said on Friday.

Shell included the estimate for the liquefied natural gas (LNG) facility near Kimimat in British Columbia in the environmental assessment it filed with the B.C. Environmental Assessment Office (EAO).

The project would create about 7,500 jobs during the construction phase, Shell says. It added that the construction would contribute about C$94 million in regional and municipal taxes annually, plus C$15 million in taxes each year when the facility was operational. It could generate about $39 billion in tax revenues (local and federal) over its lifespan.

The application stated:

“LNG Canada is proposing to spend between $25 billion and $40 billion on construction and between $7 billion and $17 billion per year during 25 years of operation, with decommissioning expected to cost between $2.1 billion and $3.3 billion.”

“The project will directly and indirectly create between 0.7 million and 1.4 million person-years of employment in Canada during construction, operation, and decommissioning, and generate between $17 billion and $39 billion in tax revenues for the government of Canada.”

The LNG Canada facility will be located on 350-400 hectares of land in the industrial area of Kitimat, in the North Coast region of British Columbia. (Photo: LNG Canada)

Decision on investment not yet made

Regulators will now spend the next 180 days reviewing the proposal before making a decision. Shell, however, warned that it and its partners have not yet decided whether the project to build the plant will go ahead.

Susannah Pierce, on behalf of Shell and its partners said there are various hurdles that need to be overcome before they make a final investment decision.

Ms. Pierce said:

“We have a number of different tracks that we’re following to try to get to a point where we can put together what we are calling a final investment decision package to present to our shareholders.”

Shell estimates the final cost of the facility will be between C$25billion and C$40 billion. Even if it ended up being nearer C$25 billion, it would still be one of the most expensive construction endeavors ever proposed in Canada.

If it ends up costing C$40 billion, the amount would still be dwarfed by the Chevron Corp led Australian Gorgon project, which is estimated to end up costing in excess of $54 billion. Shall has a ¼ share in that project.

The filed LNG Canada estimate factors in all costs, i.e. the cost for when the project is completely built, including the four trains that will liquefy up to 24 million tonnes of natural gas each year to be shipped to Asian customers.

According to Shell, the plant would be one of the least CO₂-intensive LNG facilities globally. It would emit 0.14 of a tonne of CO₂ per tonne of LNG, which is lower than the British Columbia government’s emission standards introduced in October.

Shell, which has a 50% stake in the project, said it would take about five years to be completed. Mitsubishi Corp and Korea Gas Corp hold a 15% stake each.

Environmental assessment open houses will be held on November 25^th and 26^th in Kitimat.

Video – The LNG Canada Project