The $5 billion Kitimat LNG project -- a venture of Canadian gas giant Encana Corporation and Apache Canada Ltd. and EOG Resources Canada Inc. -- will have the capacity to export 1.4 billion cubic feet of gas a day.
Gas will arrive to the export terminal on British Columbia's west coast via a 289 mile-long pipeline dubbed the Pacific Trails. The pipeline and plant are expected to be in operation by 2015.
Until now, the United States has been the sole export market for Canadian gas. This is the first LNG export license approved by Canada's National Energy Board since Canadian gas markets were deregulated in 1985.
"The board recognizes that forecast demand growth for LNG in the Asia Pacific region provides a new opportunity for Canadian producers to diversify their export markets," said NEB in awarding the 20-year license Thursday.
The abundance of shale gas in the United States has taken a toll on Canada's energy business. As a result, Canada's natural gas production has dropped by 3 billion cubic feet per day in the past three years to 14.5 billion cubic feet per day, the Calgary Herald reports.
"The Kitimat LNG project represents a remarkable opportunity to open up Asia-Pacific markets to Canadian natural gas and we're leading the way in being able to deliver a long-term, stable and secure supply to the region," Kitimat LNG President Janine McArdle said in a statement.
Tankers from Kitimat can deliver to key Asian markets faster than LNG competitors like Australia and Qatar. "We've got it hands down. We've got a lot shorter transport time," Tim Wall, president of Apache Canada, told the Globe and Mail newspaper.
In Asia, LNG sells for about $12 a unit compared with $4 a unit in North America.
The share of natural gas in Asia's energy mix is expected to double by 2035 says the Pacific Economic Cooperation Council.
Kitimat has gone almost completely unopposed, the newspaper says, versus fierce opposition to Enbridge Inc.'s proposed Northern Gateway pipeline project that would ship oil sands crude, also to the West Coast, for transport to Asian markets.
In granting the Kitimat license, NEB addressed potential concerns about domestic gas supplies, noting the proposed exports volume "is unlikely to cause Canadians difficulty in meeting their energy requirements at fair market prices."
Kitimat LNG expects to make a final decision on the project in 2012.
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