Shell has hinted in recent months that LNG Canada is among the top contenders for its next major capacity expansion, as the company looks to maintain its position as the world\u2019s biggest LNG player. The company currently controls nearly 40 per cent of the global LNG market.<\/p>\n
\u201cWe’ve got a number of build options in the portfolio,\u201d Jessica Uhl, Shell\u2019s chief financial officer, said in a quarterly conference call with analysts Thursday. \u201cLNG Canada is one of the many good options that we have.\u201d<\/p>\n
Canada is seen as a preferred destination for LNG export facilities, due to its close proximity to Asian markets and competitive upstream natural gas production in B.C. and Alberta. But in recent years, political dust-ups, environmental opposition, high labour costs and unforeseen provincial taxes on LNG exports have all dampened Canada\u2019s reputation for foreign investment. None of the major LNG projects proposed on the West Coast have yet to move forward.<\/p>\n
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<\/p>\n
Meanwhile, analysts are unsure whether LNG prices will rebound high enough in coming years to justify major new export facilities. A rapid expansion in LNG projects in Australia, Russia, the U.S. and elsewhere over the past 10 years introduced a flood of new supply to the market, depressing prices.<\/p>\n
\u201cAll of those elements need to come into play,\u201d Uhl said Thursday. \u201cSo it’s not just one variable that you need to consider when trying to think about the delivered cost to a given customer.\u201d<\/p>\n
A major hang-up for LNG Canada are the steep tariffs that would be placed on pre-fabricated modules used in the construction of the plant, which would come from China and South Korea. Those import duties could reach as high as 45 per cent.<\/p>\n
In mid-2017, the Canada Border Services Agency and Canadian International Trade Tribunal imposed anti-dumping duties on steel imports from countries like Spain, South Korea and China, amid complaints by manufacturers that they were flooding the Canadian market with cheap supplies of steel.<\/p>\n
Shell and its partners have applied to Ottawa\u2019s finance department for a remission order, which would effectively waive any tariffs on those steel modules. <\/p>\n
Ottawa has yet to issue the order, and analysts say it is unlikely to happen before negotiations around the North America Free Trade Agreement come to a close. The U.S. has been increasingly open to levelling import tariffs on cheap supplies of steel from China and elsewhere, and has threatened similar tariffs on Canadian steel and aluminum imports. <\/p>\n
\u201cFinance Canada continues to carefully monitor this issue, and we are conducting normal due diligence and consultation with implicated stakeholders as we do when considering all remission requests,\u201d Finance spokesperson Jack Aubry said in a written statement.<\/p>\n
Patrick O\u2019Rourke, an analyst with AltaCorp Capital based in Calgary, said the project looks increasingly likely to move ahead as Shell looks to expand its LNG presence. A so-called \u201csecond wave\u201d in LNG demand could come in the next decade as Asian markets gradually absorb today\u2019s oversupply, analysts say, bolstering the opportunity to build new facilities. <\/p>\n
\u201cThey\u2019re still very bullish on the LNG market, they\u2019re still seeing a perceived fall in demand in the 2020 timeframe,\u201d O\u2019Rourke said. He gave the project a roughly 60 per cent to 75 per cent likelihood of moving ahead.<\/p>\n
Shell’s interest in LNG comes as part of its mammoth US$53 billion acquisition of natural gas company BG Group in 2016, which pivoted the company toward natural gas. Since the deal, Shell has divested of roughly $US27 billion worth of oil assets, including its mining and refinery operations in the Canadian oilsands, which it sold to Calgary-based Canadian Natural Resources Ltd. <\/p>\n
The naming of the key contractors for the construction of LNG Canada is a good sign that the project might move ahead, O\u2019Rourke said, though many other questions of cost and politics still linger.<\/p>\n
\u201cI think it\u2019s a positive,\u201d he said.<\/p>\n
Last month, B.C. premier John Horgan announced some tax breaks for would-be LNG exporters in the province, effectively reversing a specific LNG tax proposed by former premier Christy Clark. Horgan has been on trips to various Asian countries recently in a bid to gauge interest in LNG.<\/p>\n
\u2022 Email: jsnyder@nationalpost.com<\/a> | Twitter: jesse_snyder<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":" One analyst is giving the project a roughly 60 per cent to 75 per cent likelihood of moving ahead<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/7621"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=7621"}],"version-history":[{"count":1,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/7621\/revisions"}],"predecessor-version":[{"id":7623,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/7621\/revisions\/7623"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=7621"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=7621"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=7621"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}