The third natural gas pipeline across Northern BC, aiming at Asian markets

Analyst Commentary, Miller Chu: Natural gas consumption and production imbalance – poised for shale gas development Spectra Energy Corp. (NYSE:SE) and BC Group PLC (LSE:BG.L) are teaming up to build a new natural gas pipe line from northeastern BC to Prince Rupert aiming to export to the Asian markets including China. The 850 kilometer pipeline will be one of the three pipelines that transport natural gas to coastal BC for export, which will be capable of carrying 4.2 Bcf/day. The natural gas will be transformed to liquid natural gas (LNG) at BC Group’s potential LNG facility at Prince Rupert. With an estimated cost of C$8.0 billion, the project will be completed over the course of next several years aiming to gain access to the mass Asian markets. According to the recent EIA report, China consumed 4.6 Tcf of natural gas in 2011 while the production was only 3.6 Tcf, making the country a net natural gas importer for the fourth consecutive years since 2007. With the goal of increasing natural gas consumption to 10% of total energy consumption by 2020, the country is likely to remain as a net importer for the years to come. China currently imports over 75% of its natural gas from Asian countries such as Australia and Indonesia.

References: The Globe and Mail (Sep 10), Spectra Energy (Sep 10), EIA

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