British Columbia's ambitions to become North America's next major liquefied natural gas exporter took another hit on Feb. 4, as Royal Dutch Shell pushed back a final investment decision (FID) on its LNG Canada project to late 2016.
The delay came as Europe's largest oil company reported its lowest annual income in over a decade and said it would take further steps to cut costs to cope with weak oil prices if needed.
LNG Canada, located on British Columbia's rugged northern coastline, is one of the frontrunners in a now-slowing race to build Canada's first LNG export terminal. It has already been granted its key environmental permits.
A Petronas-led project, also in the province's north, was given a conditional FID in June 2015, but an environmental review is still underway and could be further delayed by new rules requiring reviews to consider the emissions of upstream gas production.
British Columbia's ruling Liberals, meanwhile, had been banking on having three LNG export terminals in operation by 2020, delivering new jobs in the near term and bolstering government coffers in coming years.
Shell has in the last year scrapped numerous multibillion-dollar projects, including a controversial exploration project in the Alaskan Arctic Sea, the Bab sour gas field in Abu Dhabi and Carmon Creek oil sands project in Canada.
"We are postponing the final investment decision on LNG Canada right through the end of this year," Chief Executive Ben van Buerden told investors on a conference call.
The LNG Canada partners - Shell, along with PetroChina Co. Ltd., Korea Gas Corp. and Mitsubishi Corp. - had planned to take FID in the first half of 2016.
Despite the delay, the team on the ground remained upbeat, noting that early work is moving ahead and the added time will be used to further derisk the C$25 billion ($18.22 billion) to C$40 billion ($29.15 billion) development.
LNG prices are sinking as demand for the super-chilled gas slows and new supply from the United States, Australia and Russia is set to hit the market through 2021.
Despite the near-term glut, Shell executives said they anticipate demand from China and other countries to increase through the next decade. ($1 = 1.3724 Canadian dollars)
Recommended Reading
Range Resources Holds Production Steady in 1Q 2024
2024-04-24 - NGLs are providing a boost for Range Resources as the company waits for natural gas demand to rebound.
Canadian Natural Resources Boosting Production in Oil Sands
2024-03-04 - Canadian Natural Resources will increase its quarterly dividend following record production volumes in the quarter.
PrairieSky Adds $6.4MM in Mannville Royalty Interests, Reduces Debt
2024-04-23 - PrairieSky Royalty said the acquisition was funded with excess earnings from the CA$83 million (US$60.75 million) generated from operations.
Exxon Mobil, Chevron See Profits Fall in 1Q Earnings
2024-04-26 - Chevron and Exxon Mobil are feeling the pinch of weak energy prices, particularly natural gas, and fuels margins that have cooled in the last year.
Enbridge Advances Expansion of Permian’s Gray Oak Pipeline
2024-02-13 - In its fourth-quarter earnings call, Enbridge also said the Mainline pipeline system tolling agreement is awaiting regulatory approval from a Canadian regulatory agency.