Shell, the global gas giant, has signed a deal to purchase two million metric tons of liquefied natural gas (LNG) per year from a proposed Canadian project, the partners announced on Monday.
A Milestone for Canada’s LNG Industry
The project, called Ksi Lisims LNG, is a co-development of the Nisga’a Nation, Rockies LNG Partnership and Western LNG. It would produce 12 million metric tons of LNG annually from two floating LNG production and storage facilities, located near the Pacific coast of British Columbia (B.C.).
The project is one of Canada’s first LNG export facilities if built and its second-largest, but it has not yet passed all regulatory hurdles. It applied to the B.C. government for an environmental certificate in October and may receive a decision by year-end, according to Western CEO Davis Thames.
The project partners said they expect to announce more sales agreements in the coming months, but have not decided how much of their total production they will commit to contracts.
Shell is looking to increase its LNG volumes by 20% to 30% by the end of the decade and leads the LNG Canada project under construction in B.C. According to a report by Reuters, that project would produce 14 million metric tons of LNG a year with shipments beginning in 2025.
A Boost for Clean Energy
LNG is natural gas that is super-cooled to a liquid state, making it easier to transport and store. It is in high demand from Asia to replace coal, which creates higher emissions. But an expected ramp-up in global LNG production risks creating a supply glut after 2025, the International Energy Agency said in October.
Ksi Lisims LNG aims to be a net-zero emissions project by 2030, as required by the B.C. government. It plans to run on hydro-generated electricity and offset any remaining emissions through carbon credits or other measures.
The project is also expected to bring economic benefits to the Nisga’a Nation, a self-governing Indigenous group that owns the land where the project would be located. The Nisga’a Nation said the project would create jobs, revenue and opportunities for its members and other Indigenous communities.
The deal between Shell and Ksi Lisims LNG is a sign of confidence in Canada’s LNG industry, which has faced delays and cancellations due to low prices, environmental opposition and regulatory uncertainty.
Canada has a competitive advantage in the global LNG market, as it has abundant natural gas resources, a relatively short shipping distance to Asia, and a strong commitment to environmental and social responsibility.
The deal also shows that Shell, one of the world’s largest oil and gas companies, is serious about its transition to cleaner energy sources, as it faces pressure from investors and activists to reduce its carbon footprint.
By investing in Canadian LNG projects, Shell is not only securing a stable supply of natural gas for its customers, but also supporting a sustainable, clean-energy future for the planet.
