A project to export liquefied natural gas from British Columbia's west coast to markets in Asia received approval from regulators Thursday.

KM LNG is a joint venture between some of North America's largest natural gas producers: Apache Corp. (APA), Encana Inc. (ECA) and EOG Resources Inc. (EOG). The venture received the license from Canada's National Energy Board to export from the deepwater port in Kitimat, B.C.

The license is a step forward for the project, which is still undergoing a feasibility study by the partners. If approved, the terminal could begin shipping natural gas to markets in Asia by late 2015, eventually shipping up to 1.4 billion cubic feet of natural gas a day.

It's the first license Canadian regulators have issued to export LNG, reflecting the shift in North American gas markets over the last several years as horizontal drilling technology unlocked vast new supplies of natural gas from shale rock. The new supplies sent North American gas prices plummeting, and plans to open more terminals to import natural gas from abroad were converted to export from oversupplied markets in the U.S. and Canada.

In a similar step, the U.S. has approved plans by Houston-based Cheniere Energy Inc. (LNG) to export LNG from a terminal in Louisiana.

The KM LNG project, led by Apache, received a 20-year license from the Canadian government to export more than 9 trillion cubic feet of gas over the life of the project.

Calgary-based Encana said in a recent presentation that an LNG export terminal will help find markets for gas produced from the Horn River basin in northeastern British Columbia, which is rich but a long distance from markets in the U.S. The company estimated that Asian countries will need an extra 15 billion cubic feet a day of new gas supply by 2020 in order to keep up with the growth in demand.

Encana, Apache and EOG are expected to make a decision on whether to proceed with the terminal's construction in the first quarter of next year, after the feasibility study is complete.

-By Edward Welsch, Dow Jones Newswires; 403-229-9095; edward.welsch@dowjones.com

Cheniere Energy (AMEX:LNG)
Historical Stock Chart
From Aug 2024 to Sep 2024 Click Here for more Cheniere Energy Charts.
Cheniere Energy (AMEX:LNG)
Historical Stock Chart
From Sep 2023 to Sep 2024 Click Here for more Cheniere Energy Charts.