Wednesday, 3 October 2018

Shell, Canadian LNG - and a Chilly Winter Ahead

Back to the day job ...

Shell has announced a big ($12bn) new LNG liquefaction plant, to be built in - Canada.  This is worthy of note, on two grounds.

Firstly, Shell executives have spent the past several years muttering that if they'd seen the current gas 'glut' coming, they wouldn't have gone ahead with Qatargas 4, a commensurate giga-investment a decade ago.  That's the commodities cycle for you.  So - do they now see the oversupply coming to an end?  Are they banking on China to ramp up its usage of natgas?  People have been expecting this for many years - but the big Chinese ramp of the moment is, errrr, coal.  Still, when the lemmings assemble at the LNG cliff-top ...  there are likely to me more hurling themselves over the edge.   Yes, that's the commodities cycle!

Secondly, this project was not at all top of most people's lists for the next LNG project FID - projects in the USA (and elsewhere) were supposedly ahead of Canada.  (Immediate insider commentary is that US wage rates are prohibitive in the sector.)  If Canada is looking good, there really are quite a few more projects worldwide that will fancy their chances.

However, as we all know the lead time of these ventures is measured in years.  As it happens, winter 2018-19 is looking quite tight, 'long-term glut' notwithstanding.  As Norway and the Netherlands ease back on the gas throttle, Russia has stepped in to meet quite a lot more of Europe's demand than before (to the sound of Trump's teeth gnashing).  There may not be much more to come for Europe from the east over the traditional chilly period of Jan-March next year.  Just saying ...

ND  

4 comments:

Roderick said...

May I summarise thus: Shell is either right or wrong and it's impossible to say which until the project comes on-stream in the next decade.

Nick Drew said...

Speculation is speculation!

Electro-Kevin said...

I admire your knowledge but ... FUCK this is boring.

Nick Drew said...

I shudder to think how you propose to liven things up, Kev ...