Blog: Time for real federal action on LNG


Call it doublespeak, fuzzwords, mediaspeak, or just plain confusing. But what does Ottawa mean by its constant befuddlement on LNG exports?

It begins, of course, with Prime Minister Trudeau responding in late August to pressing German appeals for LNG from Canada by saying there has “never been a strong business case” for exports to Europe from Canada’s East Coast.

“There needs to be a business case,” he insisted. “It needs to make sense for Germany to be receiving LNG directly from the East Coast.”

The PM also said: “There has never been a strong business case because of the distance from the gas fields, because of the need to transport that gas over long distances before liquefaction.”

If there is a business case for pipeline expansion to move Western Canadian natural gas to any East Coast LNG plant, it was long ago torpedoed by Quebec and Ottawa.

First, Quebec blocked any LNG development or any pipeline to feed it. Then the federal government leaped onside, also rejecting the GNL-Québec project and its pipeline on so-called environmental grounds.

So Ottawa’s answer then was: We should ship more natural gas to the U.S., which then would turn it into LNG and sells it overseas. We’ve been selling Western Canadian gas to the U.S. recently for as little as US$3.63 for a million British Thermal Units. The U.S. has been selling LNG to Europe for more like US$60 per MMbtu, and sometimes even more.

Canada obviously stands to lose billions if that remains the federal solution to Europe’s energy crisis.

The prime minister went on to speak of Canadian hydrogen exports to Germany instead. But nobody in Ottawa has been able to produce or speak to any “business case,” or anything remotely approaching one, for such hydrogen exports.

And we note that, in the same week, Ottawa announced it would spend $900 million of your money on electric-vehicle chargers across Canada. Does it have a “business case” for this? Apparently not: it says this $900 million “will help establish a business case” (for the private sector to fund the rest of the network.)

Move on now to the first week of October, and Natural Resources Minister Jonathan Wilkinson said Canada has set up working groups with Germany and the European Union to determine whether it can “potentially assist with LNG” from eastern Canada.

“Minister Wilkinson has spoken often and directly with his German and European counterparts, and with members of the private sector, regarding LNG opportunities on Canada’s east coast,” added Keean Nembhard, a spokesman for Wilkinson.

A German government source who was not authorized to speak on the record said Canada and Germany “are still working on” a possible LNG project.

“While there are real opportunities for exporting LNG in Canada, companies must decide what projects are economically feasible,” Nembhard continued.

And he said Canada will “support and grow Canada’s energy sector in line with our allies’ needs and the imperative to flight climate change.”  Whatever those fuzzwords means was unexplained.

Wilkinson followed that up on Oct. 4 with this: “There are a lot of us who believe that LNG from . . . the B.C. coast is a major opportunity. But, of course, it needs to be done in a manner that actually is consistent with Canada’s own climate objectives.

“We haven’t given up on those (East Coast) projects, and we still are talking to the Germans . . . but at the end of the day, there has to be a value proposition that the customer is willing to purchase, and that’s the challenge.”

Soon after all that, Wilkinson declared that “the Germans have to be willing, effectively, to pay a premium for the gas.” He spoke of paying the costs of necessary infrastructure, but explained no further.

Unanswered questions: What would be the “premium” Berlin should pay? And would it make our LNG more expensive than LNG imports from the U.S.?

Then, last week, Finance Minister Chrystia Freeland joined the bafflegab brigade, saying Canada will look at supporting more LNG terminals — as long as they are “economically viable” and as long as they can be proven to be displacing coal-fired power generation.

LNG “is an important transition fuel,” Freeland told reporters in Washington at the end of annual IMF and World Bank meetings. “We will always be looking at economically viable LNG projects.”

But she never explained what “economically viable” means. Nor did she explain how exporters would have to “prove” (to Ottawa’s satisfaction) that their LNG displaced coal?

A few days later, Foreign Affairs Minister Mélanie Joly visited Japan and South Korea, and declared she found there a growing appetite for LNG from Canada beyond the opening of the LNG Canada project in 2025.

“We will become a major supplier of key energy for them, starting in 2025,” Joly said. “There is a lot of interest for all of us to go even further.”

But how much further? LNG Canada’s Phase Two? And who is “all of us.” Does Ottawa see, and support, LNG operations beyond LNG Canada, Woodfibre LNG, and Fortis BC?  What about support for Indigenous-led Cedar LNG and Ksi Lisims LNG? And small-scale Port Edward LNG? Who knows.

All we have to date is federal mediaspeak and instant soundbites.

We need clear answers.

And while we wait for these clear answers we see the U.S. now has seven active LNG-for-export plants, plus another 15 approved by the Federal Energy Regulatory Commission, and 14 more awaiting approval. And 17 applications to export U.S. LNG are being processed.

As the Business Council of BC says: ‘The saga of LNG amounts to a truly epic Canadian policy and political failure. . . . a significant lost economic and environmental opportunity for B.C. and Canada.”

And lost opportunities for First Nations, too.

We are on the brink of a recession here, Canada needs some strong new revenue streams for our endangered economy, and opportunity for Indigenous peoples.

It’s long beyond time for Ottawa to make a genuine plan for LNG exports — and deliver on it.

(Posted here 20 October 2022)

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