POLITICS

President of Royal Dutch Shell says BC LNG could be 'pilot' for federal streamlining

05/29/2012 07:09 EDT | Updated 07/29/2012 05:12 EDT
CALGARY - There is a "narrow window" of opportunity for Canada to take advantage of the lucrative global market for liquefied natural gas, the president of Royal Dutch Shell PLC said Tuesday.

Shell and three Asian partners plan to build a liquefied natural gas export terminal in Kitimat, B.C. that would connect Canada's vast supplies with energy-hungry markets on the other side of the Pacific.

The Anglo-Dutch energy giant announced earlier this month it will have a 40 per cent stake in the project, called LNG Canada. PetroChina, Mitsubishi Corp. and Korea Gas Corp. will each hold a 20 per cent interest. No pricetag was disclosed.

"There are projects and competition from other countries like Australia, etc. and they are coming into the (LNG) market as well," Peter Voser said in a roundtable interview with journalists.

"If Canada wants to compete against those projects when they are coming to the Asia Pacific then you have a certain time window."

An efficient, effective and timebound regulatory process that ensures "you don't actually talk for the next 10 to 15 years about approvals" is vitally important from a competitive perspective, he added.

Liquefied natural gas, or LNG, is gas that has been chilled into a liquid state, enabling it to be transported overseas by tanker.

Demand for the fuel is voracious in Asia, where natural gas fetches a price five or six times higher than it would in the oversupplied North American market.

A major overhaul of environmental assessment rules for big projects was announced by the Canadian government last month in an effort to avoid duplication and set strict time limits for project reviews.

The plan calls for three organizations — the Canadian Environmental Assessment Agency, the National Energy Board and the Canadian Nuclear Safety Commission — to conduct reviews, down from 40 government departments that can currently be involved.

Ottawa would defer to provincial reviews that meet national standards, and reviews would be limited to 12 months for standard assessments, rising to a maximum of two years.

"We would be very happy to use the British Columbia LNG as the test project for that. I think we need to work on this new regulatory framework and I personally think it can be done and it can be done in a reliable, sustainable and environmentally adequate way," Voser said.

"I think it needs to get done in this decade — certainly and you have quite a few years of construction — because the Asia-Pacific LNG market will more or less double by 2030."

With the handful of projects currently on the table, Canada has the potential to export 11 or 12 million tonnes of LNG a year by 2015-2016, doubling that once the Shell-led project comes on later in the decade.

Voser said Shell hopes to see a 25 per cent increase in production growth by 2017-2018. He said the energy giant intends to spend an average of $32 billion per year and Canadian expansion could account for eight to nine per cent of that total.

The current uncertainty in the eurozone isn't having an impact on Shell, said Voser.

"I have a personal view that the eurozone will sort out its issues and will get through this," he said.

"In Europe it is a more cumbersome political process but I think the absolute size of the problem compared to some other economies in the world is actually not that big.

"You can solve this but it needs the political will to do so."

Voser said it is just "common sense" that Greece will stay a member.

"The dependence on the European Common Market to revive the Greek economy in the long return cannot be done without having the clear relationships and access to the European markets," he added.