Woodfibre LNG, a liquefied natural gas (LNG) project in Canada, said it had signed a unit of BP as its first customer, a crucial step towards developing the export facility.
Woodfibre said on Wednesday BP Gas Marketing Limited had agreed to buy 0.75 million tonnes per year (mtpa) of LNG for 15 years starting in 2023, when the project in British Columbia is expected to come onstream.
The facility’s capacity is expected to be 2.1 mtpa.
It said it was also working on an agreement “for BP Canada to provide gas transportation and balancing services ensuring a reliable delivery of gas to the Woodfibre LNG export facility over the 15-year term”.
Dozens of companies are planning LNG export terminals in North America to capitalise on gas made accessible from shale drilling technology. Signing up committed, long-term buyers is vital for financing and building such projects.
Royal Dutch Shell approved its 14 mtpa project in Kitimat, northern British Columbia, in October, triggering a new cycle of projects to be built to meet an anticipated LNG shortage in mid-2020s.
But the LNG Canada project is the only one in Canada to have progressed to construction stage.
Woodfibre LNG is a subsidiary of Pacific Oil & Gas, part of the Singaporean conglomerate RGE. Pacific Oil & Gas operates two LNG import terminals in China, as well as other upstream and midstream oil and gas assets.
LNG produced on the west coast of Canada is likely to be sold in Asia which accounts for about 75 percent of global demand. There are at least half a dozen LNG export terminal projects planned in Canada, and more in the United States.