Canadian LNG projects "difficult to justify," report says

|By:, SA News Editor

High development costs - including the billions needed to fund drilling programs, new export terminals and thousands of miles of pipe across the wilderness - make discount sales of Canadian liquefied natural gas “difficult to financially justify," the International Gas Union says in a new report.

West coast LNG projects proposed by Chevron (CVX), Exxon Mobil (XOM) and others may struggle to meet demands by overseas buyers for sales volumes linked to low North American gas prices instead of higher Asian prices, the report says.

CVX, for one, has balked at demands for discount sales from its 5M metric tons/year Kitimat, B.C., LNG proposal, arguing higher prices are needed to justify the huge capex involved in building export infrastructure.