UPDATE 1-Canada must act fast or miss LNG window-Shell CEO

Tue May 29, 2012 6:58pm EDT

* Shell's Voser says Canada can't weather regulatory delay

* Supports Ottawa's plans for streamlining

* Can add Athabasca oil sands volumes for under $50/bbl

By Jeffrey Jones

CALGARY, Alberta, May 29 (Reuters) - Canada only has until the end of this decade to build up its liquefied natural gas industry or face being overtaken by other countries looking to cash in on booming demand for the fuel throughout Asia, Royal Dutch Shell Plc's chief executive said on Tuesday.

Shell, which plans a multibillion-dollar liquefaction plant on Canada's West Coast, believes Ottawa's controversial moves to streamline regulatory reviews for energy projects are necessary to avoid missing the opportunity as the Asia-Pacific LNG market is forecast to double by 2030, CEO Peter Voser said.

"A lot of projects are coming in over the next five to six years, and then there is kind of a window. Then we can see, already, later on after that window the next wave coming," Voser told reporters after meeting the oil major's Canadian staff in Calgary. "So there's clearly a window to be captured."

This month, Shell, along with partners PetroChina , Kogas and Mitsubishi Corp, detailed plans for a 2 billion cubic feet a day LNG plant at Kitimat on the Pacific coast to be in service by around 2020. It joined at least two other groups planning similar plants at that port, one led by Apache Corp and another that includes the Haisla First Nation. None of the proponents have sanctioned the projects yet.

Canada's gas industry, buffeted by depressed North American markets, is looking to the Asian market as massive gas reserves get unlocked in the Horn River shale basin of British Columbia and in other deposits. Shell has a growing British Columbia unconventional gas play called Groundbirch.

That prospect, along with LNG plans and massive Alberta oil sands and heavy crude holdings, will account for a growing percentage of Shell's worldwide spending, which is now about $32 billion annually, Voser said.

"TEST PROJECT"

Prime Minister Stephen Harper's Conservative government is proposing a series of legislative moves to speed up approvals of projects, including putting fixed timelines on reviews and taking final decision-making away from the regulators and handing it to the federal cabinet. Green groups complain that the streamlining amounts to gutting environmental protections.

"I'm aware of what is the discussion -- effective, efficient and time-bound -- and at Shell we would be very happy to use British Columbia as a test project for that," he said.

"I think we need to work on this new regulatory framework, and personally think it can be done, and it can be done in a reliable and sustainable and environmentally adequate way so that you can have all these discussions you need to have upfront."

"If this upfront period is 10 years, then others will fill the hole."

The company's biggest project in Canada is the 255,000 barrel-a-day Athabasca oil sands project in northern Alberta, in which it has a 60 percent stake.

Current plans are to increase that by 80,000-90,000 bpd through the end of the decade in three phases of "debottlenecking" the current equipment. That can be done at oil prices of less than $50 a barrel, or less than half the current Brent crude price, Voser said.

The company is also awaiting regulatory approval for its steam-driven Carmon Creek oil sands holdings in Alberta's Peace River region. On Monday, Shell said it was selling another development, known as Orion, so it could focus on Peace River.

"It is not making the ranking internally. Carmon Creek is a long-term technology play, where we think we bring different strengths to the table. We want to develop that huge resource," he said.

Current plans call for two 40,000 barrel-a-day phases over the next decade.

Voser said he expects Canadian oil sands spending to rise into a high single-digit percentage of Shell's overall budget, up from 5 percent to 6 percent currently.

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