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Canada's 'second chance for LNG' comes with US pause on approvals
Gary Park for Petroleum News
The Canadian LNG sector, led by previously hesitant Alberta Premier Danielle Smith, is buoyed by President Joe Biden's move to pause approvals of new LNG export terminals, seeing this as a "second chance" for Canada to overtake the U.S. global dominance of the export business.
"I hope Canada doesn't blow the opportunity to accelerate some of the projects" that have been left at the starting gate after a decade in which the United States has transformed itself into the global LNG powerhouse, Smith told reporters. She was speaking at a news conference in Washington, D.C., on Jan. 29 after meeting with a number of senators trying to persuade them to take advantage of the pause in approvals of U.S. LNG projects while the Biden administration takes a "hard look at the impact of LNG exports on energy costs, American energy security and the environment."
Canadian projects could be impacted The Canadian LNG industry believes the pause could impact planning for seven LNG export terminals in Canada and 12 billion cubic feet per day of U.S. shipments.
Reuters news agency has forecast the U.S. review will last several months, a period in which fresh life could be breathed into 24 Canadian export proposals that Smith estimates could get go-ahead decisions during the next 12 to 18 months.
"Will we? I don't know," Smith said.
Others are less hesitant about the prospects, with Wood Mackenzie analyst Dulles Wang suggesting the Biden moratorium could be an opportunity for LNG projects in Canada to move forward even though there are domestic issues to be resolved including the construction of gas pipelines from Canadian gas fields to export liquefaction terminals.
"There has been a really strong impetus for world-wide LNG buyers, to look outside of the U.S. given the regulatory uncertainty in the U.S. which could be a boost for Canada," said Wang.
Smith said Europe is taking measures to invest in natural gas because it's a lower-emitting fuel than oil. "In Canada we've got to get our heads straight on that," she said.
Greg Ebel, the CEO of Enbridge, a partner in British Columbia's Woodridge LNG project, said he doesn't believe Biden's pause in the development of LNG will have any material impact on his company's LNG plans on either side of the Canada-U.S. border and he's not convinced it sends a long-term signal to either country. However, he said that for Canada it could present an opportunity to back LNG projects.
Critics Critics say LNG is problematic as a climate solution in many ways, especially David Hughes, president of Global Sustainability Research. "If you consider the full-life cycle emissions of LNG, you've got emissions from transporting LNG from British Columbia to Asia, you've got emissions from the liquefaction process, you've got emissions from drilling and flaring and methane leakage across the entire value chain," said Hughes.
He said that building additional LNG capacity now essentially locks in greenhouse emissions for the long-term and will make it impossible for countries to meet their climate commitments in the future.
"It's already a horror show from an environmental point of view because all of the existing projects were built with 30-year or 50-year life spans," Hughes said, leaving the LNG industry with a massive headache to resolve if Biden's pause is removed.
--GARY PARK
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