Canada could produce first LNG by this weekend, sources say

By Curtis Williams

HOUSTON (Reuters) -Canada could produce its first ever liquefied natural gas this weekend, from the LNG Canada export facility in Kitimat, British Columbia, two people familiar with the startup of the plant told Reuters on Wednesday.

The facility, the first of a handful of Canadian LNG projects to begin production, will be the first LNG facility in North America with direct access to the Pacific coast, significantly reducing sail time to Asian markets.

When fully operational it will have a capacity to export 14 million metric tonnes per annum (mtpa), according to company statements.

"We began cooling down Train 1 on Monday and as long as there is no unforeseen difficulty we expect to produce LNG six days from Monday. So I would say between Saturday and Sunday we can expect first LNG," one of the people familiar with the startup told Reuters.

Cooldown of Train 1 is expected to continue until Thursday June 19 and extensive flaring is expected, LNG Canada told staff in a memo last Friday.

First LNG will be produced from Train 1, with first LNG cargoes by the middle of this year, LNG Canada told Reuters on Tuesday.

Only a portion of the processing plant will be operating this weekend, according the two sources.

Train 1 which has a capacity of 6.5 mtpa, or half of the total output of LNG Canada, has had difficulties with one of its lines and it will only produce at half its capacity until it is able to solve the problem, one of the two sources told Reuters.

LNG Canada did not comment on the production challenges.

LNG tanker Gaslog Glasgow is on its way to LNG Canada's Kitimat port, according to LSEG ship tracking data. The vessel is expected to arrive on June 29 and will be loaded with LNG, the people said.

It is now seven years since the partners, Shell Plc, Petronas, PetroChina, Mitsubishi Corporation gave the project a financial go ahead.

Once LNG Canada enters service, Canadian gas exports to the U.S. will likely decline, traders said, as Canadian energy firms will have another outlet for their fuel and will sell more to other countries. For now, the U.S. is the only outlet for Canadian gas.

Canada exported about 8.6 billion cubic feet per day (bcfd) of gas via pipelines to the U.S. in 2024, up from 8.0 bcfd in 2023 and an average of 7.5 bcfd over the prior five years (2018-2022), according to data from the U.S. Energy Information Administration. That compares with a record 10.4 bcfd in 2002.

(Reporting by Curtis Williams in Houston; editing by David Evans)