Shell says LNG Canada project to cost up to C$40 billion

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By Scott Haggett

CALGARY, Alberta, Nov 7 (Reuters) - Royal Dutch Shell Plc (Xetra: R6C1.DE - news) , the lead partner in the consortium planning the LNG Canada facility on British Columbia's northern coast, said on Friday the project to liquefy natural gas for export to Asia could cost as much as C$40 billion ($35.3 billion) when fully complete.

Shell (LSE: RDSB.L - news) 's cost estimate for the LNG Canada facility near Kitimat, British Columbia, was included in the environmental assessment filed with provincial regulators on Friday.

The filing begins a 180-day review of the proposal but the company cautioned it and its partners have not yet decided whether to build the plant as it waits on regulatory approvals, a detailed cost estimate and lines up customers for the project's natural gas.

"We have ... various different hurdles to get over before making a final investment decision," Susannah Pierce, a spokeswoman for the project, said on a conference call.

"We have a number of different tracks that we're following to try to get to a point where we can put together what we are calling a final investment decision package to present to our shareholders."

Shell said it believes the facility will cost between C$25 billion and C$40 billion. However, even at the lower end of that range LNG Canada would among the costliest construction projects ever proposed in the country.

To be sure, even at the upper end of its estimate, the Canada LNG project is not the most expensive of the 10 such facilities worldwide Shell owns a stake in. The company owns 25 percent of the Chevron Corp-led Gorgon project in Australia. Shell has a one-fourth share of the 15.9 million tonne per year project, which is expected to cost $54 billion.

The LNG Canada estimate is for when the project is fully built out, with four trains liquefying as much as 24 million tonnes of Canadian natural gas annually for shipment to the Asian market.

In its application for an environmental assessment certificate, Shell said the plant will emit 0.15 tonne of carbon dioxide per tonne of LNG, which it said is below the emission standards introduced last month by British Columbia's government and will make it one of the least CO2-intensive LNG facilities in the world.

Shell said that the project could be in service in about five years following a final investment decision.

Shell has a 50 percent stake in the project, which will initially produce some 12 million tonnes of LNG per year. PetroChina Co Ltd has a 20 percent share while Korea Gas Corp and Mitsubishi Corp each hold 15 percent. (1 US dollar = 1.1348 Canadian dollar) (Reporting by Scott Haggett; Editing by Chizu Nomiyama, Marguerita Choy and James Dalgleish)