Canadian Manufacturing

Canada can become an LNG player but challenges still lie ahead: report

by Cleantech Canada Staff   

Cleantech Canada
Exporting & Importing Manufacturing Operations Sales & Marketing Technology / IIoT Cleantech Energy Oil & Gas ExportEdge

According to an NEB report, Canada produces more natural gas than it needs to meet domestic demand. Meanwhile, increased production in the U.S. has hit Canadian exports and has spurred interest in shipping Canadian gas overseas

CALGARY—Canada is a late entrant to the global liquefied natural gas market and the next several years will be critical to the development of the Canadian LNG industry.

This is according to a new report released by the energy information and analysis unit of the National Energy Board.

The report, Canada’s Role in the Global LNG Market, looks at changing LNG market dynamics, including lower prices and increasing competition, which it says have created uncertainty among LNG projects proposed in Canada.

The NEB says global LNG demand has been growing, especially in Asia and parts of Europe.


According to the report, Canada produces more natural gas than it needs to meet domestic demand, and while the U.S. has been the traditional market for surplus Canadian gas, rapidly increasing U.S. shale gas production has reduced this demand and spurred interest in developing Canadian LNG exports for overseas markets.

Since 2010, the NEB has received 43 LNG export licence applications, with 35 of them receiving approval. There are 24 planned projects—18 based along the B.C. Coast and the remaining in Quebec and the Maritimes. However, only one project, Woodfibre LNG near Squamish, B.C., has reached a final investment decision to proceed.

The report says Canada has enough remaining natural gas to fuel roughly 350 years of supply, based on current consumption rates. Most of this is in shale formations in Alberta and B.C.

The NEB asserts that Canadian LNG projects have access to gas that is not only abundant but inexpensive, and coastal projects have the unique advantage of close proximity to lucrative markets in Europe and Asia.

However, where there is advantage there is also difficulty.

High costs are associated with developing LNG processing facilities in remote locations with limited infrastructure and in cases where the construction of new pipelines is required to supply gas. Increased competition has also made it difficult for Canadian projects to sign long-term supply contracts, and falling prices in recent years is cause for concern as well.

“In recent years, there have been a number of LNG projects proposed in Canada, and significant investments have been made into their planning and approval. Despite this, Canada has yet to emerge as an active participant in the increasingly competitive global LNG market, but proponents are still actively working on projects on both coasts,” said Shelley Milutinovic, chief economist, National Energy Board.

Despite Canada’s latency in getting LNG export projects off the ground and challenges associated with becoming a major player, the opportunity is there for Canadian producers to begin the process of carving out a space for themselves in this burgeoning industry.


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