Inlet facilities module arrives at the material offloading facility, LNG project site March 10 2022
Image courtesy LNG Canada

O&G101: LNG development in Quebec and Atlantic Canada

Proposed liquefied natural gas developments in Quebec and Nova Scotia could help balance energy security, especially in Europe.

Canada once had a number of proposals to build and operate liquefied natural gas (LNG) export facilities in Quebec and Atlantic Canada. These facilities would have been ready to supply secure, reliable Canadian natural gas to the world and help support global energy security. Unfortunately, nearly all of those proposals have been stalled or cancelled. But it’s not too late to turn that situation around.

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As we’ve seen recently, Europe is in a very vulnerable position with respect to energy supply, notably natural gas. Europe gets up to 40 per cent of its natural gas from Russia. Despite Russia’s invasion of Ukraine, European countries are in the difficult position of having to maintain that supply source because there are few other options.

President Vladimir Putin has even threatened that Russia could turn off their natural gas supply to Europe. That would cripple the continent’s businesses, factories and power generation, leaving people without heat and electricity for homes, hospitals, schools and industries.

Read more: COMMENTARY: The U.S. is now the world’s largest LNG exporter

Canada has abundant natural gas supplies available for export. By building LNG export facilities, we can step up to help meet European demand with our responsibly produced, low-emissions natural gas and displace dependency on natural gas from Russia. With its relatively lower greenhouse gas emissions profile, natural gas can also help reduce global GHG emissions by displacing higher-emitting sources like coal.

Proposed Canadian LNG projects

According to Natural Resources Canada, five projects were proposed in Quebec and Nova Scotia. Of these, the three proposals that advanced farthest through economic and regulatory evaluations are:

  • Énergie Saguenay (Saguenay, Quebec) – up to 11 million tonnes per annum (MTPA), equivalent to 1.5 billion cubic feet per day (Bcf/d), using natural gas from Western Canada. Also, the availability of Quebec’s renewable hydro-electricity to operate the facility would reduce the plant’s greenhouse gas emissions by 84 per cent compared to a similar-size plant in the U.S. Gulf Coast. The project was rejected by both the provincial and federal governments.
  • Bear Head LNG (Port Tupper, Nova Scotia) – Phase 1 would produce up to 8 MTPA (1 Bcf/d). Although the project has regulatory approvals, construction has not proceeded due to investment uncertainty.
  • Goldboro LNG (Goldboro, Nova Scotia) – capacity to produce up to 10 MTPA (1.3 Bcf/d). The proponent company says, “As of June 30, 2021, we have not been able to meet all of the key conditions necessary to make a final investment decision. Cost pressures and time constraints due to COVID-19 have made building the current version of the LNG project impractical.”

Read more: New study predicts growing global demand for LNG

Unfortunately, none of these projects has moved into the construction phase, due to regulatory barriers and investment uncertainty. Yet LNG facilities in Quebec and Atlantic Canada would be well positioned to supply European markets, including low-emissions production and a shorter sailing distance to European markets than many competitors.

lng canada marine terminal lng canada courtesy of
LNG Canada is building a liquefied export terminal on the B.C. Coast that will serve markets in Asia; building a terminal in Quebec or Atlantic Canada could export Canadian natural gas to markets in Europe. Photo courtesy LNG Canada.

Canada’s LNG opportunity

Although Canada currently lacks the facilities and infrastructure to supply LNG to markets in Europe, it’s likely the energy crisis and natural gas shortages in Europe will persist for years. There is a window of opportunity for Canada.

The European market is substantial, with total annual consumption of natural gas in 2020 at about 380 billion cubic metres (13.4 billion cubic feet). However, natural gas production in Europe declined by about 80 per cent from the high point of 233.5 billion cubic metres produced in 1998 – meaning Europe has become heavily dependent on imports.

Read more: Canada: The world’s best LNG

Finding alternate sources of natural gas is not easy. The U.S. continues to ramp up its production and export of LNG, in some cases diverting LNG exports away from markets in Asia to Europe instead. Qatar is the world’s largest exporter of LNG and could meet some of Europe’s demand, but that supply could be unreliable depending on evolving geopolitics in the Middle East.

Current events are revealing how energy and geopolitical influence are intertwined, exposing real risks to global peace and security. Countries around the world are in need of a stable source of affordable energy provided by a trusted partner like Canada.