Original: financialpost.com/commodities/energy/oil-gas/lng-canada-tanker-traffic-falls-short-expectations
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The number of tankers carrying liquefied natural gas from LNG Canada’s terminal fell short of analysts’ expectations last month, as technical hiccups have slowed the B.C. facility’s startup at a tough time for Western Canada gas producers.
Just five vessels sailed from the terminal in Kitimat, B.C. during the month of September, LNG Canada confirmed last week. It was short of the seven that had been expected, RBC Capital Markets said in note which pointed to a slower ramp-up of production at the Shell plc-led project since operations began in July.
Roughly 15 tankers per month will be required once the facility reaches full capacity, RBC noted.
“For the last few months LNG Canada has been behind expectations,” Ian Archer, associate director, North American natural gas at S&P Global Inc., said. “There’s been one or two LNG tankers kind of consistently floating off the coast of Haida Gwaii, waiting to be loaded, which suggests that the ships were scheduled at a certain rate, but the LNG facility (output) was disappointing.”
Technical issues have slowed the ramp-up of production at the terminal, though the second of the facility’s two giant gas processing units, known as Train 2, has begun the process of starting up.
While that work is ongoing, an LNG Canada spokesperson said the project’s 17th tanker left the B.C. terminal this week, with another expected to depart in the coming days.
But the traffic is still not measuring up to earlier forecasts.
“The facility is now struggling to meet our initial demand expectations,” a team of TD analysts led by Aaron Bilkoski said in a note last week, suggesting LNG Canada’s demand for natural gas had averaged between 0.6 and 0.7 billion cubic feet per day in September, well short of expectations.
Sluggish exports have led to slower-than-expected gas uptake at the B.C. terminal, causing knock-on effects for natural gas drillers in Western Canada that saw daily spot prices fall into negative territory last month.
Part of the problem heading into the fall was that summer gas exports to the U.S. were already down year over year, Archer noted.
“We already had kind of a bearish base environment,” Archer said. “The hope was that LNG Canada would take more gas out of the system, but because they haven’t, it’s also been bearish.”
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