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Shell takes lead in race to export natural gas from Canada to Asia

  • Author: Laurel Andrews
  • Updated: September 27, 2016
  • Published June 18, 2012

The race is on between energy companies to be the first exporter of Canadian liquefied natural gas (LNG) to Asia, Bloomberg reports.

The competition comes as Alaska's leaders continue to struggle with developing the North Slope vast natural gas fields, the largest proven reserves of conventional gas in North America.

Bloomberg reports that Royal Dutch Shell has selected Calgary-based TransCanada Corp. to build a $4 billion pipeline to carry natural gas from British Columbia to the Pacific coast, a move that pushes Shell ahead of its three competitors in the race to tap Asian markets.

As Canadian companies look for new markets abroad, four competing energy companies have proposed facilities that would liquefy gas for shipment overseas. But Shell's proposal is "much stronger now with the pipeline," Bob Schulz, business professor at the University of Calgary, told Bloomberg.

Early access to Asian markets is crucial for competing energy companies and nations.

Shell Chief Executive Officer Peter Voser estimates that Canadian LNG projects have four to six years to begin construction, or they will lose out to the competiton.

Chinese LNG consumption alone increased around 16 percent between 2000 and 2010, and is estimated to continue growing at a rate of 12 percent a year through 2020, Bloomberg New Energy Finance estimates.

As the scramble to tap Asian markets heats up, Alaska could lose out if it doesn't move quickly.

In January, Alaska Gov. Sean Parnell shifted his support from a $40 billion pipeline that would have shipped North Slope gas to Alberta, Canada, to one that would slice through Alaska southward to the shores of Valdez or another Southcentral port, where the gas would be liquefied and shipped on tankers.

Asian markets may have interest, including Japan, which is interested in beefing up its natural gas energy after the 2011 earthquake and tsunami shut down many of its nuclear power plants.

Alaska's partner in its proposed gas pipeline is the same as Shell's in British Columbia -- TransCanada. Under former Gov. Sarah Palin, the state approved up to $500 billion in subsidies for TransCanada to pursue a gas pipeline project.

Yet, for decades now, the leaseholders to Alaska's natural gas -- mainly Exxon Mobil Corp., BP and ConocoPhillips -- have made only incremental steps in developing the North Slope's gas fields. So the pipeline project has stalled. Parnell has indicated in recent months that progress is being made to spark development, but no details have been released.

What is certain is that as LNG projects proliferate, Alaska must examine its role in world markets -- and fast.

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