Back to top

Image: Bigstock

Chevron (CVX) to Double Kitimat LNG Plant Size in Canada

Read MoreHide Full Article

Chevron Corporation (CVX - Free Report) recently applied to the National Energy Board of Canada for nearly doubling the Kitimat LNG plant’s size, per Reuters. The plant, which is currently in the designing phase, is located in the northern part of the British Columbia province of Canada. Chevron has Woodside Energy Ltd. of Australia as the 50-50 joint-venture partner in the project.

Chevron, the operator of the project, re-evaluated the Kitimat LNG plant’s original plan of two trains and 10 million tonnes per annum (Mtpa) of production capacity. Targeting to reduce the cost of supply, the energy major came up with a revised plan, which includes three trains and 18 Mtpa of production capacity. The project is not expected to come online before 2023 and cost Chevron more than $500 million.

Although Chevron’s Kitimat LNG project awaits final investment decision, it is expected to lead to tremendous growth possibilities in the long term. The plant will increase the demand for domestically produced natural gas and is located at a strategically significant position — in the West coast of Canada, close to Asia — for export. Hence, Chevron will be able to easily address the rising demand for cleaner energy sources in the domestic market as well as in Asia, avoiding the long and costly route through the eastern side and using the Panama Canal.

Notably, the company has Royal Dutch Shell plc (RDS.A - Free Report) as a competitor in the region. The Netherlands-based integrated company is also developing a LNG plant in Kitimat with its partners including PetroChina Company Limited (PTR - Free Report) , among others. The facility is expected to have a 14-Mtpa initial production capacity, having the option of doubling it with increasing demand.

Price Performance

San Ramon, CA-based Chevron has gained 8.2% in the past year compared with 1.9% collective growth of the industry it belongs to.

Zacks Rank & Stock to Consider

Currently, Chevron has a Zacks Rank #3 (Hold). Investors interested in the energy sector can opt for a better-ranked stock as given below:

Vienna, Austria-based OMV Aktiengesellschaft (OMVJF - Free Report) is an integrated energy company. It delivered average positive earnings surprise of 7.3% in the trailing four quarters. The stock currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>

More from Zacks Analyst Blog

You May Like