Canada has an opportunity to scale up its liquefied natural gas industry and become one of the world's top exporters, according to a new report. The country currently has one operational LNG facility, but the federal government aims to grow exports to upwards of 100 million tonnes per year. Reaching that goal could generate nearly a quarter million jobs annually and nearly $1 trillion in investment by 2050, the report from S&P Global found. Several hurdles must be overcome, including a lengthy permitting process and a lack of proposed projects by the private sector.
"If Canada can address its permitting issues and its cost issues, Canada can play a very big role in global LNG, which would be obviously beneficial for the Canadian economy and would help to globalize its economy and make its economy less dependent upon on its neighbour to the south," said Daniel Yergin, vice-chairman of S&P Global. He said Canada has many advantages, including vast natural gas reserves that can be produced at low cost and a relatively short shipping route to Asia. The report notes Canada's permitting process has taken 27 months longer compared to Texas, and pipelines cost 160 per cent more to build. Building pipelines to transport gas from Alberta and northeast British Columbia to the West Coast has been complex and expensive. The Coastal GasLink project, developed by TC Energy and partly-owned by local First Nations, faced several delays and cost overruns while crossing about 625 lakes, rivers, creeks, wetlands and streams.
Some experts have said Canada will never be an LNG-exporting superpower because of the difficulty in developing energy infrastructure. There is also competition from many other countries, including the United States. The federal government has introduced new legislation aimed at speeding up regulatory reviews. Yergin said investors will want to see proof of permitting reform since lengthy wait times can be very costly for companies.
LNG Canada is the only LNG export facility in the country, with a capacity of 14 million tonnes per year. Six other facilities are either under construction or in development, which would together produce just over 50 million tonnes of LNG annually. Yergin said Asian buyers want LNG from Canada, especially as conflict in the Middle East has disrupted the global natural gas market. "There's a strong interest in diversification," he said. "You need a diversified portfolio, and it would be beneficial to have resources that don't have to go through choke points." Demand for natural gas is expected to grow over the coming decades due to factors ranging from population growth to power demand from AI data centres and air conditioning. The report also notes Canadian LNG has 55 per cent lower greenhouse gas intensity compared with similar projects in other countries.