(BOE Report)- Led LNG Canada has begun the process of starting up its second 6.5 million tonnes per annum (mtpa) liquefied natural gas processing unit known as Train 2 in Kitimat, British Columbia, a company spokesperson told Reuters on Thursday.
The startup of Train 2, however, is happening as the company continues to experience technical problems at Train 1, according to two people with knowledge of its operations. The train was reported by sources to have technical issues in July, a month after it had started first production.
LNG Canada is the first major LNG export facility in Canada, and the first on the west coast of North America that provides direct access to Asia, the world’s largest LNG market.
The facility took almost seven years to be built and has been operating at less than half its stated capacity, the people said.
“We have had to swap out the supercore, and while string 2 is running, string 1 is down,” one of the two people told Reuters.
When asked about the technical issues, the company spokesperson pointed to ongoing export activity at the terminal and said flaring that started on September 11 had ended.
“A 14th cargo departed the LNG Canada facility on September 30. A 15th cargo is expected to depart in the coming days,” the spokesperson said.
In September, LNG Canada exported less of the superchilled gas than the month before, with only four cargoes leaving the port for a total export of just under 0.3 million metric tons compared with the 0.4 million tons it sold in August, according to preliminary ship tracking data from financial firm LSEG. When fully operational, the facility is expected to convert about 2 billion cubic feet of gas per day (bcfd) to LNG, which market participants have hoped will boost Canadian natural gas prices.
The slow ramp-up of LNG Canada, however, has contributed to daily spot prices slumping to record lows last week, as it has failed so far to drain a gas glut that built in anticipation of increasing demand from the plant, causing pipeline congestion.
Gas storage in Western Canada remains at last year’s record highs, according to investment bank Jefferies, and Reuters reported last week that some gas producers are aggressively cutting output in an effort to ease an ongoing glut.
LNG Canada is a joint venture between Shell, Malaysia’s Petronas, PetroChina, Japan’s Mitsubishi Corp, and South Korea’s KOGAS.
On Tuesday, MidOcean – an LNG company backed by EIG and Saudi Aramco – announced a plan to buy a fifth of the Petronas venture that holds a 25% share of LNG Canada.
(Reporting by Curtis Williams in Houston and Amanda Stephenson in Calgary; Editing by Nathan Crooks and Marguerita Choy)
