Royal Dutch Shell PLC ("Shell") has made a move to enter the competition of exporting Canadian natural gas to Asia by purchasing a marine terminal near Kitimat, British Columbia. Shell currently has partners in South Korea and Japan that are the world's top liquefied natural gas buyers. This move is part of Shell's "early stage" work to determine whether to construct a LNG export facility to export Canadian resources to Asia. Shell's newly purchased site is near land where Apache Corp. and partners are poised to construct a $5 billion-plus export terminal, a project that received a regulatory license last week.
Canadian natural gas companies are suffering from low prices as a result of strong supply from all the recent shale gas discoveries in the United States. Canada's only export customer for natural gas is the U.S. and these shipments to the U.S. have been halved in recent years. However, prices in Asia are far higher than they are in North America.
Shale gas discoveries in British Columbia's northeast are massive and the industry is of the view that these discoveries would easily supply exports and domestic consumption. Companies such as Shell believe that this shale gas might be left in the ground if exports to Asia are not opened.
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