Blog: Long future seen for Canadian LNG

The Canadian Gas Association sees growing Asian demand — from Japan in particular — for Canadian LNG.

And it’s not alone in seeing a long future for LNG: Executives in the natural-gas industry expect strong demand for the fuel in Asia through 2040 and 2050 as countries continue their coal-to-gas switch, and look to meet emission reduction goals.

And a new report from U.K.-based Evaluate Energy says that, by 2030, Canada could be supplying five per cent of global LNG — slightly more than the gas-rich Middle East.

Timothy Egan, president of the Canadian Gas Association, told S&P Global Commodity Insights: “A number of Asian embassies, and Japan in particular, have been talking to Canadian industry players about securing supplies and are saying ‘We want you in the market and we want your product.”

It’s a welcome message, coming as Coastal GasLink completed pipeline installation on the 670-km line to feed natural gas to LNG Canada (and the Haisla Nation’s Cedar LNG project). And that has generated suggestions that LNG Canada might be able to start up in late 2024, rather than the mid-2025 target previously given.

“Based on everything that we’re hearing and seeing, LNG Canada may start taking some test gas volumes by the middle of next year,” RBN Energy managing director Martin King said in an interview before the Coastal GasLink announcement.

“There’s a palpable sense in the gas business that we’re going to actually have a real, viable outlet for Canadian gas exports other than the United States.”

Evaluate Energy says the U.S. and Qatar will meet most LNG demand to 2030. But “further out, there are opportunities for future supply growth.”

The report adds: “The future growth market for LNG is Asia. As Europe looks to cut its gas demand, Asia-Pacific gas demand will grow by at least 50 per cent by 2040.”

If all five LNG projects or expansions in B.C. are completed (LNG Canada, Ksi Lisims LNG, Cedar LNG, Woodfibre LNG and Fortis BC’s Tilbury Island expansion) B.C. will export 6.8 billion cubic feet per day of LNG, the report estimates.

Those projects will have comparatively lower carbon-emissions intensity than competitors, and that should appeal to buyers.

“Canadian projects — with their cooler climate, shorter shipping distances, hydro-based electricity grid and upstream methane emissions reductions — are very well placed to compete.”

The latest outlook from the International Energy Agency (IEA) was less optimistic, but did see gas and LNG continuing to be vital to energy markets, even as the world moves more quickly to reduce emissions and to ease off on fossil fuels.

Egan said Canada’s LNG missed an opportunity a decade ago, but the picture has changed in three ways: Canada now sees “overriding First Nations support for resource development”, there’s a global energy crisis, and LNG developers in B.C. promise high environmental standards for their planned projects.

“There is now an extraordinary Indigenous support for LNG development and that’s a big change. We have Indigenous ownership (in the Cedar LNG and Ksi Lisims LNG projects) and broad support for the export of LNG. This is a critical condition for the well-being of the industry. . . .

“It is becoming harder and harder to say no, and we now see the development of a popular momentum of Canada doing more with its gas.”

Last year the world used 4.16 trillion cubic metres of natural gas per day. On the “current trajectory” identified by the IEA, LNG demand rises to 611 billion cubic metres in 2030. Trade continues to increase, reaching 656 billion cubic metres in 2050.

If governments actually deliver on all their many climate-control promises, the IEA sees LNG demand would rise to 588 billion cubic metres in 2030 and ease to 242 billion cubic metres in 2050.

And the IEA notes: “An unprecedented surge in new liquefied natural gas (LNG) projects coming online from 2025 is set to add more than 250 billion cubic meters per year of new capacity by 2030, equivalent to around 45 percent of today’s total global LNG supply.”

As Alberta’s Canadian Energy Centre points out: “Driven by emerging economies in Asia, on the current path the IEA projects total world energy consumption will increase by 15 per cent over the next three decades.”

The Centre adds that Canada’s LNG will have some of the lowest emissions in the world. And that Indigenous Peoples have a stake in exporting it.

The IEA said continued investment in oil, gas and coal is essential in all of its scenarios.

And, says the Canadian Energy Centre: “That investment and development should happen in Canada, where responsible, reliable producers and exporters are committed to emissions reduction.

“As the IEA’s latest outlook once again shows, the world needs more Canadian energy, not less.”

Map: LNG routes to Asia

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