You could call Canadian natural gas the energy security solution that’s hiding in plain sight – an opportunity waiting to happen. If Canada can make development of our liquefied natural gas (LNG) industry a national imperative, we can be a major supplier of natural gas to both Asia and Europe.
Even before Russia invaded Ukraine in February 2022 – putting Europe’s natural gas supply in jeopardy and escalating prices – the global demand for natural gas was soaring. In 2021, demand for energy in many European countries outstripped supply as renewable energy sources fell short of need and governments looked to traditional energy sources, including natural gas, to help ensure homes, businesses and industries could keep functioning. In China and India, demand for natural gas continues to be strong as these countries seek sources of natural gas to replace coal-fired electricity generation, which has significantly higher emissions.
Natural gas demand is predicted to increase
In its World Energy Outlook 2022 report STEPS scenario, the International Energy Agency (IEA) indicates natural gas demand is forecast to increase 5 per cent by 2030, reaching 4.4 trillion cubic metres per year. Natural gas is seen as a reliable, affordable energy source, a key backup to renewable energy and a portable form of energy that can reach remote and energy-poor regions of the world.
That natural gas demand presents an open-door opportunity for Canada. With our vast natural gas reserves, Canada is among the world’s top producers of natural gas, which can be exported to global markets in the form of liquified natural gas (LNG).
But we’ve got some challenges ahead if Canada is to realize this global opportunity for LNG exports.
Canada’s LNG projects today
Less than a decade ago, more than a dozen LNG facilities were proposed for construction on Canada’s west coast. Currently, one large LNG facility is under construction near Kitimat, B.C. The LNG Canada project and the associated Coastal GasLink Pipeline will take natural gas production from northeastern B.C., make LNG from it, and ship that LNG to Asia-Pacific markets.
Another West Coast LNG project, Woodfibre, is also under construction. Meanwhile, Tilbury in Delta, B.C. has been making and shipping small volumes of LNG since 1971 and has plans to expand the facility. Other Canadian LNG projects in the proposal stage include Cedar LNG, a development that would be wholly owned by the Haisla First Nation, a first for Canada.
Canada could follow the U.S. example, creating LNG infrastructure
In 2015, the United States and Canada were both producing more natural gas than they used at home, and both had a shared issue — little infrastructure to export LNG. At that time, more than a dozen LNG projects were proposed in both Canada and the United States.
With a strong business environment and political will, the U.S. has rapidly expanded its LNG presence, going from exporting a mere 0.4 billion cubic metres of LNG for the entire year of 2014, to exporting more than 0.3 billion cubic metres a day in 2017. In 2021, the U.S. surpassed Qatar as the world’s leading exporter of LNG – a complete turnaround in just seven years.
Why should Canada expand LNG exports?
As natural gas prices escalate and the energy crisis continues to evolve, countries are scrambling to reshape the movement of natural gas around the world including the challenge of replacing 200 billion cubic metres of natural gas exports from Russia. As Russia wields energy dependence as a political weapon, and relies on oil and natural gas sales to fund its war of aggression in Ukraine, Canada has a responsibility to offer aid—and one of the key things it can do is export more LNG.
In Europe, plans for about 20 LNG import terminals have recently been announced or accelerated. Germany, which currently has no LNG import terminals, has allocated about US $3 billion to build four floating LNG terminals and connect them to the country’s natural gas pipeline network. China, the world’s top LNG buyer in 2021, has 10 new import terminals expected to come online in 2023 alone, and capacity will roughly double through to 2025 (BloombergNEF).
Read more: Missing the boat: natural gas exports
Some have argued that developing natural gas and LNG flies in the face of reducing global greenhouse gas emissions. But using responsibly produced Canadian natural gas to create and export LNG would contribute to reducing overall global emissions while addressing critical global energy security issues at the same time.
Natural gas producers in B.C. are increasingly looking to power operations such as drilling and processing with hydroelectricity instead of diesel or other fuels, which reduces emissions. Likewise with LNG Canada’s Kitimat facility, which is designed to operate on hydroelectricity. And using Canadian natural gas to supplant coal for generating electricity in overseas markets could reduce regional emissions by up to 62 per cent according to a June 2020 study published in the Journal for Cleaner Production.
And let’s not forget natural gas production, and the construction and operations jobs associated with pipelines and other infrastructure, present a huge opportunity for Indigenous prosperity and first-hand involvement with project proposals and development.
Canada can increase LNG production and LNG exports
It’s entirely within Canada’s grasp to increase LNG production and LNG exports. Rapidly building an LNG industry is challenging but we only need look south of the border to see how quickly the U.S. grew its natural gas and LNG production and is now able to serve global markets. The world needs Canada to do the same.
Canada offers the additional advantage of producing natural gas and LNG with high environmental standards for emissions, water management and more.
Countries around the world are looking to Canada as a reliable source of LNG. Germany, China and others are investing billions to develop LNG import / re-gasification facilities, creating an opening for Canada to supply natural gas for decades.