Shell pushes back investment decision on Canadian LNG project

By Julie Gordon
VANCOUVER, Feb 4 (Reuters) - British Columbia's ambitions to
become North America's next major liquefied natural gas exporter
took another hit on Thursday, as Royal Dutch Shell RDSa.L
pushed back a final investment decision (FID) on its LNG Canada
project to late 2016.
The delay came as Europe's largest oil company reported its
lowest annual income in over a decade and said it would take
further steps to cut costs to cope with weak oil prices if
needed.
LNG Canada, located on British Columbia's rugged northern
coastline, is one of the frontrunners in a now slowing race to
build Canada's first LNG export terminal. It has already been
granted its key environmental permits.
A Petronas-led project, also in the province's north, was
given a conditional FID in June 2015, but an environmental
review is still underway and could be further delayed by new
rules requiring reviews to consider the emissions of upstream
gas production.
British Columbia's ruling Liberals, meanwhile, had been
banking on having three LNG export terminals in operation by
2020, delivering new jobs in the near-term and bolstering
government coffers in coming years.
Shell has in the last year scrapped numerous multi-billion
dollar projects, including a controversial exploration project
in the Alaskan Arctic Sea, the Bab sour gas field in Abu Dhabi
and Carmon Creek oil sands project in Canada.
"We are postponing the final investment decision on LNG
Canada right through the end of this year," Chief Executive Ben
van Buerden told investors on a conference call.
The LNG Canada partners - Shell, along with PetroChina Co
Ltd 601857.SS , Korea Gas Corp 036460.KS and Mitsubishi Corp
8058.T - had planned to take FID in the first half of 2016.
Despite the delay, the team on the ground remained upbeat,
noting that early work is moving ahead and the added time will
be used to further derisk the C$25 billion ($18.22 billion) to
C$40 billion ($29.15 billion) development.
LNG prices are sinking as demand for the super-chilled gas
slows and new supply from the United States, Australia and
Russia is set to hit the market through 2021.
Despite the near-term glut, Shell executives said they
anticipate demand from China and other countries to increase
through the next decade.
($1 = 1.3724 Canadian dollars)