Enbridge CEO – Canadian LNG sector anticipating new projects

Source Chris Varcoe is a Calgary Herald columnist.

Any way you look at it, gas and LNG is going to be key to global energy,’ said Enbridge CEO Al Monaco

The sad, simple refrain about Canada’s efforts to build more LNG projects — ‘one and done’ — could be coming to an end.

Canadian oil and gas leaders believe the window is opening once again to build new liquefied natural gas projects in the country, beyond the lone facility now under construction.

As gas prices surge in Asia and Europe, and concerns about energy security escalate, industry executives see momentum developing for the creation of a larger LNG industry in this country.

“Any way you look at it, gas and LNG is going to be key to global energy,” Enbridge CEO Al Monaco told the Scotiabank CAPP Energy Symposium on Wednesday.

“People are finally starting to get the fact that Canadian LNG is a jewel. Why is that? It’s low cost and it’s extremely abundant.”

The head of the country’s largest pipeline company said he’s excited about the competitiveness of western Canadian LNG to address concerns surrounding energy security, reliability and affordability, and to lower greenhouse gas emissions by displacing coal.

LNG can also pair up to help backstop renewable energy projects.

“You could see a 40 per cent increase in global LNG by 2025,” Monaco added.

At the investment forum, a similar sentiment was heard from several players about the potential to build more projects needed to export super-cooled gas, which is converted into a liquid state and shipped by LNG tankers.

Officials from Canada and the United States are talking with European leaders about LNG and how North America could help wean their countries off Russian gas.

Even before Russia’s brutal invasion of Ukraine, LNG prices in Asia and Europe surged due to cold weather, tight supplies and growing demand.

LNG prices in Asia were close to US$32.5 per million British thermal units (mmBTU) earlier this week, according to Rystad Energy. U.S. benchmark natural gas prices have also jumped this year, closing Wednesday at US$6.03 per mmBTU.

However, Canada has made painfully slow progress over the past dozen years to build the new export industry.

Canada’s national energy regulator began getting export licence applications for LNG facilities in 2010 to ship natural gas to non-U.S. markets. At one point last decade, 18 separate projects were proposed for the Pacific coast; other ventures were pitched off the Atlantic coast.

Many projects were sidetracked when global LNG prices dropped in the middle of the last decade and regulatory delays added up. Earlier this year, the federal government rejected the proposed Energie Saguenay LNG development in Quebec after the province turned it down in 2021.

Only one development, the mammoth $18-billion LNG Canada project, has received a green light from investors and is under construction. The Globe and Mail reported Wednesday that the Shell-led development is now examining a potential expansion.

The project, with a liquefaction plant and export facility to be located at Kitimat, B.C., is expected to begin operations in the middle of this decade.

Other proposals remain in the hopper.

The smaller $1.6-billion Woodfibre LNG project near Squamish, B.C., has been moving closer to getting a green light for full construction. It recently approved a $625-million budget for the year.

The Haisla Nation in British Columbia has been advancing its Cedar LNG project — a proposed floating liquefaction facility near Kitimat — and partnered last year with Pembina Pipeline on the development.

“We are seeing obviously greater demand in Europe . . . and as we’re talking about moving LNG west into the Asian market, this is certainly an opportune time,” Pembina’s interim chief financial officer Cameron Goldade told the symposium.

“So far, the early indications are quite positive on the commercial discussions.”

The Nisga’a Nation in northern B.C. formed an alliance with a group of domestic natural gas producers — Rockies LNG Partners — and Western LNG to advance the proposed Ksi Lisims LNG Project off the province’s northwest coast.

CEOs with three of the partners in Rockies LNG — Birchcliff Energy, NuVista Energy and Peyto Exploration and Development — spoke Wednesday at the forum about the project’s merits and the importance of getting additional LNG developments launched.

Moving ahead with the project would reduce global emissions by replacing coal used in electricity generation, while the venture would produce more royalties and jobs in Western Canada and economic activity within the Nisga’a Nation, said Birchcliff CEO Jeff Tonken.

“We believe that Canada has an obligation to meet world demands,” Tonken said. “We need to sell western Canadian gas in the LNG market so we as Albertans get the best possible price for our natural gas.”

Getting an LNG project across the finish line isn’t easy.

Canada largely missed out on previous waves of international LNG development, while the U.S. raced ahead to become the top global exporter in December.

While there are great expectations for LNG projects in Canada, other countries are also looking at growing their sectors.

Industry analyst Ian Archer, an associate director with S&P Global, expects Canada will eventually export five billion cubic feet of gas per day from the expanded LNG Canada project, Woodfibre LNG and potentially a “reasonably sized” facility or two smaller ones that move ahead.

However, the difficulty in building new pipelines in Canada to transport natural gas supplies to the B.C. coast for export remains a major hurdle.

“People are correct in pointing out Canadian gas is very low cost, and Canadian LNG has a very short shipping distance to Asia. Where the issue lies is on the infrastructure between those two points,” Archer said.

“Where ‘one-and-done’ still may remain a mantra is in building infrastructure capacity to connect those two nodes. And, honestly, that is still really challenged.”

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