By Murat Temizer
ANKARA
Falling oil and LNG prices coupled with the rising cost of LNG infrastructure have a negative effect on Canada's LNG projects, according to Canadian Energy Expert, Andrew Nikiforuk.
More than 18 LNG projects have been proposed but no commitments have been made in British Columbia, Western Canada due to economic reasons.
The British Columbian government aims to have three LNG facilities in operation by 2020. To achieve this goal, the government developed a LNG strategy which caught the attention of global energy players. The government offered incentives to oil companies such as Petronas and Shell by cutting taxes for LNG. With this plan, British Columbia was aiming to enter the Asian energy market.
On Dec. 5 however, Petronas, Malaysia’s state-owned energy company, delayed its LNG project in the Canadian region of British Columbia due to high costs of the project.
Canada is the fourth-largest natural gas exporter in the world after Russia, Norway and Qatar. By the end of 2012, it had 67 trillion cubic feet (2 trillion cubic meters) of proved natural gas reserves, according to the U.S. Energy Information Administration. Canada’s shale gas production is limited and the eastern Canadian shale gas basins are in the early stages of exploration and development.
"British Columbian shale gas is among the most expensive and water-intensive in the world. It is also extremely remote and therefore requires extensive pipelines through highly technical terrain," Nikiforuk noted.
He also said that there are big questions on the depletion rate of shale gas wells in northern British Columbia.
"These extreme wells typically experience 60 to 80 percent depletion rates after one year of production. That means that companies will have to spend more cash to drill and frack more wells – a debt-making treadmill for oil and gas companies," he added.
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