Royal Dutch Shell Plc and its partners announced an agreement to invest in a multibillion-dollar liquefied natural gas project in western Canada — the largest of its kind in years that will carve out the fastest route to Asia for North American gas.
LNG Canada — comprised of Shell, Malaysia’s Petroliam Nasional Bhd , Mitsubishi Corp. , PetroChina Co. and Korea Gas Corp . — confirmed the expected final investment decision in the C$40 billion ($31 billion) project, according to a statement from Shell on Tuesday.
The project marks a turning point for Canada and the global gas industry. Set to be the nation’s largest infrastructure project ever , LNG Canada augurs a new wave of investments for major gas export projects after a three-year hiatus forced by fears of a global supply glut.
LNG Canada will be able to send cargoes from Kitimat, British Columbia, to Tokyo in about eight days versus 20 days from the U.S. Gulf.
“We believe LNG Canada is the right project, in the right place, at the right time,” Ben van Beurden, Shell’s chief executive officer, said in the statement.
“Supplying natural gas over the coming decades will be critical as the world transitions to a lower carbon energy system.”
It’s also a welcome boost for Canadian Prime Minister Justin Trudeau. Selling LNG to buyers in Asia promises higher prices for the country’s gas compared to what it gets selling it almost exclusively to the U.S. via pipeline.
It also helps reaffirm Canada’s investment climate, battered by the bungled expansion of the Trans Mountain oil pipeline , which was sold by Kinder Morgan Inc. to the government for C$4.5 billion before its approval was quashed by a federal court.