North America poses threat to gas exports
JUST hours after the Canadian government approved its third export gas project, another US export gas project, this time in Texas, has moved closer to getting the green light.
The approvals come as concern is mounting that a large rise in North American gas reserves on the back of the shale gas boom will undercut much of the optimism of Australia's gas exporters over projects being developed in the North-West Shelf off Western Australia and in Queensland.
Australia is set to emerge as one of the world's largest gas exporters over the next five years, although growth prospects further out are being hurt by the increase in the number of export projects vying for approval in North America.
On Tuesday Shell won approval for a project it is promoting in British Columbia, on Canada's west coast, which includes PetroChina, Korean Gas and Mitsubishi Corp as shareholders. Both PetroChina and Mitsubishi are participants in export gas projects in Australia.
As well, the US Department of Energy granted Pangea LNG approval to begin exports from its south Texas project. Pangea has been authorised to export up to 8 million tonnes a year of liquefied natural gas for 25 years.
And Shell has joined another consortium planning to export gas from Georgia, in the US south.
In the past, the inability of large vessels to use the Panama Canal has meant that gas from the United States could only be exported to Asia from the west coast and Alaska, but that will change from late 2015 when the canal's capacity rises following a long $US5.5 billion ($53 billion) expansion.
This, along with surging gas reserves thanks to the boom in shale gas in the US, will pave the way for gas to be shipped from the US gulf states to Asia for the first time.
The increase in export projects seeking to get off the ground in North America comes as companies such as Origin Energy are seeking to win export orders so they can boost future shipments from their domestic gas projects.
Origin Energy is developing a project with initial sales of about 9 million tonnes a year of gas exports, with a second tranche planned. It is expected to update investors this month on the progress it is making in selling gas abroad, which will enable it to give the green light to the second tranche of its Queensland project.
Origin's partner in Queensland is ConocoPhillips, which is seeking to develop an export gas project in the US for export to Osaka Gas, which is also buying gas from Origin's Queensland project.
The Pangea project needs other approvals before it can proceed, most importantly from the US Federal Energy Regulatory Commission. It hopes to be in operation by 2018.