Sources say Shell-led LNG Canada is facing problems when it ramps up its production.
Shell-led LNG Canada has been experiencing technical difficulties as it ramps production up at its liquefied gas plant in Kitimat. One LNG tanker was diverted away from the facility recently without superchilled fuel, according to data provided by LSEG and four sources.
The facility is the first major LNG-export facility on the West Coast of North America and Canada, and provides direct access to Asia, which is the largest LNG market in the world.
When fully operational, the facility will convert approximately 2 billion cubic feet per day of gas (bcfd). Market participants hope that this will increase Canadian natural gas prices.
Western Canadian natural gas remains depressed due to a persistent glut of supply that hasn't yet been drained by new demand from LNG Canada, which launched on July 1.
According to LSEG, the daily spot price for the Alberta Energy Company storage hub was $0.22 per mmBtu, compared with the U.S. Henry Hub reference price of $3.12 on Tuesday.
Two of the sources stated that LNG Canada's first plant (also called a train) is operating at less than half its capacity.
According to two industry sources, the facility's Train 1 experienced technical problems with a gas-turbine and a Refrigerant Production Unit.
All sources spoke under condition of anonymity as the information was not publicly available.
A spokesperson for LNG Canada responded that a joint venture facility of the size and scope of this new build could face operational challenges as it ramps production up and stabilises.
Shell has diverted at least one LNG tanker to Peru while other tanks remain near the facility, LSEG's ship tracking data shows.
According to LSEG's ship tracking data, Ferrol Knutsen is a 170.520 cubic meter LNG tanker that was originally headed for Kitimat, but changed direction and now lies off the coasts of California, on its way to Peru.
LNG Canada is a joint-venture between Shell, Malaysian Petronas and PetroChina as well as Japan's Mitsubishi Corp.
According to statements from the company, when LNG Canada is fully operational it will be able to export 14 millions metric tons per year (mtpa).
The facility has so far exported four cargoes including its first shipment, which was on July 1. The spokesperson for LNG Canada said that another shipment will be arriving in the next few days.
A spokesperson stated that the pace of exports will increase once the plant moves from its early stages to a regular shipping schedule.
The spokesperson said that "in regular operations, we expect to load one export cargo every two days from our facility."
(source: Reuters)
