LNG Canada is potentially hours away from its first production of LNG, marking the country's entry into the sector with the only LNG terminal on the North American West Coast.

The facility at Kitimat, British Columbia, is expected to produce its first LNG in three or four days, Reuters reported on June 18. The report was attributed to unnamed sources.

A spokesperson for LNG Canada did not confirm the report and referred to the most recent update on the company’s website in an email to Hart Energy. On June 15, LNG Canada posted a notice that flaring activity would increase beginning the next day. The flaring is part of the facility's start-up activities for its first LNG train.

LNG Canada is licensed to export an equivalent of 1.84 Bcf/d of natural gas once the facility completes its first phase of construction.

An analyst at East Daley Analytics said the facility’s opening would most likely not have a major immediate impact on the U.S. market. It could potentially raise natural gas prices in Canada.

After startup, liquefication trains the size of LNG Canada’s can spend three or four months in the initial commissioning phase as all parts of the operation are tested after first LNG is produced, said Ian Heming, research analyst at East Daley Analytics.

Companies and analysts will monitor the Alberta Energy Co. (AECO) price index to determine how the new facility is moving the market. AECO in Canada serves a similar role to the Henry Hub price index in the U.S. 

“As deliveries to the facility increase, we expect we may see AECO prices increase as that demand pulls volumes from pipelines moving gas south to the U.S.,” Heming wrote in an email to Hart Energy.

Canadian producers may lower exports to the U.S. during the initial startup to meet the bump in demand north of the border. However, producers will most likely respond to fill any demand gaps once LNG Canada comes fully online and demand levels out.

“Especially if AECO prices stay above historic averages,” Heming said.

Once it starts production, LNG Canada will be the only west coast export terminal in North America. The next project expected to come online is Sempra’s Energia Costa Azul in Mexico, which is scheduled to begin commissioning next year, Heming said.

The only potential western U.S. LNG project is Alaska LNG, which has a planned production start date in 2031.

According to the Canadian government, the country has seven LNG export projects at some stage in development, the majority slated to begin operations between 2027 and 2030. The total production capacity of all the projects, if completed, would amount to 50.3 million tons per year.

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