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Canadian LNG: late to the party?

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It is well known that Australia and the US will provide substantial additions to global LNG capacity over the next five years, but Canada is positioning itself to become a major LNG exporter as well. Canada has significant natural gas resource potential, and the location of proposed terminals on its west coast will be in close proximity to growing Asian markets. The Canadian government is also seeking to open up alternative markets to the US for its energy exports. However, due to increasingly competitive market conditions and high infrastructure costs, Canadian LNG will only emerge as a major player in the longer term.

Canada’s National Energy Board (NEB), the federal government’s energy regulator, has authorised ten LNG export licenses, all for the construction of liquefaction terminals in British Columbia (B.C.) on Canada’s west coast. The total capacity of these approved licenses is over 150 million tpy, which theoretically would make Canada the largest global LNG exporter. The NEB is also reviewing a further 11 LNG export licence applications – including seven for terminals in B.C. and another four in Canada’s east coast provinces – and has authorised the export of natural gas via pipeline to provide feedstock for two proposed LNG export projects in the US north west. On paper, it seems that Canada’s LNG sector is on the cusp of a boom given its abundant resources of natural gas and approximately 20 projects in the regulatory pipeline.

However, to date there has yet to be a Final Investment Decision (FID) made on a Canadian LNG project, with investors still weighing up significant costs and uncertain market conditions before committing the finances. There are several drivers and constraints to the development of Canada’s LNG sector, however only a few projects will actually proceed, and, with perhaps one or two exceptions, those that do will only be starting up in the 2020s at the earliest.

The drivers

Available resources

Canada is the fifth-largest gas producer in the world, and the third-largest gas exporter. It is also one of the leading holders of natural gas reserves, approximately 70 trillion ft3, mostly located in the Western Canadian Sedimentary Basin. However, as Canada is completely dependent on the US as a gas export market, it is seeking to develop alternative markets given that the US’ need to import gas from its northern neighbour is being reduced due to the shale gas boom. Developing LNG export capacity is the only viable way Canada can diversify its gas export markets. It is fortunate, therefore, that Canada has substantial resources of natural gas, including shale gas. According to the US Energy Information Administration (EIA), Canada has…..


Written by Peter Kiernan, The Economist Intelligence Unit (EIU), UK. Edited by


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