LNG Canada CEO says Canadian energy projects can be competitive despite delays, higher costs

CALGARY—The CEO of the LNG Canada project led by Royal Dutch Shell PLC says he remains optimistic about the industry’s prospects despite growing global competition, high construction costs in Canada and the recent cancellation of two other proposed terminals.

Andy Calitz says he believes Canada’s low-cost natural gas and relatively closer location to Asia makes it competitive with other countries vying to sell liquefied natural gas around the world.

But he conceded during a panel discussion at the Calgary Energy Roundtable that it is more expensive to build liquefaction facilities and pipelines in British Columbia, where the $40-billion project would be situated in the West Coast town of Kitimat, and those costs will affect an investment decision expected next year.

Panellist Dennis Lawrence, vice-president of production for Progress Energy, says the division of Malaysia’s state-owned Petronas regrets cancelling its Pacific NorthWest LNG project in July but is now focusing on finding markets in North America for the natural gas it is producing in northeastern B.C.

He says the cancellation, blamed on deteriorating world markets for LNG, serves as a “wakeup call” for industry, governments and regulators in Canada and a reminder that delays can ultimately sink projects.

Panellist Dave Tulk, a partner with consulting company Gas Processing Management Inc., says his firm is “very pessimistic” that any LNG project will proceed in Canada because there is no overall plan from industry or government to make it a reality.