Global gas giant Shell will purchase two million metric tons of liquefied natural gas (LNG) per year from Ksi Lisims LNG, said partners in a proposed LNG project in Canada.
The location of the project, which is expected to be located on British Columbia’s Pacific coast, is close to Canada’s vast Montney shale field and has a relatively short shipping distance to Asian markets. This makes it an ideal location for exporting natural gas, which is in high demand in Asia as a cleaner alternative to coal.
However, the International Energy Agency has warned of a potential supply glut in the global LNG market after 2025, as production is expected to ramp up.
Despite this, Shell is looking to increase its LNG volumes by 20% to 30% by the end of the decade. The company is also currently leading the construction of the LNG Canada project in British Columbia, which is expected to produce 14 million metric tons of LNG per year starting in 2025.
With the passing of regulatory approvals, Ksi Lisims is set to become one of Canada’s first LNG export facilities if it is built. It is also expected to be the country’s second-largest LNG facility.
The project represents a unique alliance among the Nisga’a Nation, Rockies LNG and Western LNG. It will have a capacity of 12 million tons per year (mtpa) of LNG using two floating LNG production and storage facilities, with exports potentially starting in late 2028.
According to Western CEO Davis Thames, the project expects to announce more sales agreements in the coming months but has not decided how much of its total production it will commit to contracts.
The facilities would run on hydro-generated electricity to achieve net-zero emissions by 2030, as required by the B.C. government. That plan depends on utility BC Hydro expanding transmission lines to serve LNG and mining projects in northwest B.C.
Ksi Lisims applied to the B.C. government for an environmental certificate in October and may receive a decision by year-end, Thames said.
Notably, Rockies LNG, another partner in the project, is a group of natural gas producers, including Tourmaline and Ovintiv.
