LNG Canada produces first liquefied natural gas for export, sources say

Two people who were familiar with the start-up of the plant said on Sunday that the Shell-led LNG Canada has produced its first liquefied gas for export.

One of the sources said that "at 4 a.m. local, LNG Canada began producing its first LNG."

This is the first large-scale Canadian project to start production. It's also the first major North American facility with direct access on the Pacific Coast, reducing the sailing time to Asian markets.

According to the company, when fully operational, it will be able to export 14 millions metric tons per year (mtpa).

LNG Canada has not responded to an immediate request for comment.

Two sources confirmed that the super-chilled LNG is produced by Train 1 of the facility, which has a capacity of 5.6mtpa. The first LNG cargo should be shipped at the beginning of July.

According to two sources, only a part of the plant is operational. Train 1 is experiencing problems with one of its production lines, and will only be able to produce at half capacity until the issue is resolved.

LSEG's ship tracking data shows that the LNG tanker Gaslog Glasgow has approached LNG Canada's Kitimat Port. Sources say that the vessel will arrive on June 29, and be loaded with LNG.

The LNG Canada Project is a joint-venture between Shell Plc, Petronas, PetroChina, Mitsubishi Corporation and Kogas.

Traders said that once the facility is operational, Canadian gas exports will likely decrease, since Canadian energy companies will have an alternative outlet for their fuel. Canadian gas is currently only available in the U.S.

According to U.S. Energy Information Administration data, Canada will export about 8.6 billion cubic foot per day via pipelines to America in 2024. This is up from 8.0 bcfd a year ago and averaging 7.5 bcfd for the five previous years (2018-2022). This compares to a record of 10.4 bcfd set in 2002. Reporting by Curtis Williams, Houston; Editing and proofreading by Nia Williams

(source: Reuters)