Canada Negotiates Cost to Make Shell LNG Expansion Greener
(Bloomberg) -- Canada is stepping up talks with the investors behind the country’s largest liquefied natural gas export terminal for an expansion that would double its size while making it as low-carbon as possible, Energy Minister Tim Hodgson said.
That may involve some level of government support, both Hodgson and Prime Minister Mark Carney have suggested in separate remarks this week. It remains unclear exactly what form that would take, and Hodgson stressed the negotiations must remain private to get the deal over the finish line.
Canadians want exports to be done in “the most environmentally responsible way,” Hodgson said in an interview.
That includes the vast quantities of fossil fuel coming from the LNG Canada plant, which has a proposal to expand capacity to 28 million metric tons a year from Kitimat, on the northwest coast of British Columbia.
“It costs money to do things the right way,” he said. “So there are things that need to be negotiated which will help the proponents get to their target returns.”
Carney announced Thursday that LNG Canada Phase 2 is included in the government’s first batch of major infrastructure projects it intends to expedite. The first phase of the plant started shipping in June, and the second phase already has the headline approvals it needs. Its owners, a consortium of Shell Plc, Petronas, PetroChina Co., Mitsubishi Corp. and Korean Gas Corp., have not yet made a final investment decision.
Federal incentives for the megaproject’s expansion are under discussion, Carney told reporters Thursday, but added they would be “very modest” compared to the total capital cost.
Hodgson pointed to one area that would likely require extra cost to make LNG projects cleaner: bringing in more electricity. That would be costly, but would let the plant tap into clean hydroelectricity instead of powering itself by burning more gas.
The minister said Canada is already building “the most environmentally responsible” LNG plants in the world. But electrical transmission is one of the costs of making LNG in Canada even cleaner, he said.
“There are ways to deal with that. Some of them don’t cost any money. Some of them cost money. We’re going through those discussions with the proponent today.”
LNG Canada represents tens of billions of dollars in investment and is one of the largest private-sector projects in Canadian history. If the second phase is built and fully utilized, it would make Canada the sixth-largest LNG exporting nation based on 2024 figures, according to data compiled by Bloomberg. That’s without any other LNG export plants being considered.
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