U.S. Study Highlights Strong “Business Case” for LNG Development – Will Canada Take Note?

U.S. Study Highlights Strong “Business Case” for LNG Development – Will Canada Take Note?

RECENT POSTS

U.S. Study Highlights Strong _Business Case_ for LNG Development – Will Canada Take Note cover-01

Unlike Canada, the U.S. has been quick to take advantage of the global liquefied natural gas (LNG) opportunity. Between 2014 and 2020, for example, the U.S. built seven LNG export facilities and approved 20 more [1].

Our southern neighbour has already tripled its LNG exports over the past five years, will double it again by 2030, and could double it yet again under existing approvals [2].

And all that hard work is paying off --- literally.

A new study by S&P Global shines a light on LNG's immense impact on the American economy [3]. According to the authors – including Daniel Yergin, S&P Global Vice Chairman and a world-leading energy expert – the U.S. LNG industry has become a significant and growing sector of the economy despite the regulatory hurdles it now faces.

Report Highlights

  • LNG has added USD $408 billion (CAD $586 billion) in gross domestic product (GDP) to the economy since 2016, supporting an average of 273,000 direct, indirect, and induced U.S. jobs.
  • As of 2023, the sector generated larger revenues than U.S. corn and soybean exports, roughly double U.S. movie and TV-related exports and half of U.S. semiconductor exports.
  • The U.S. is the world’s top LNG supplier; it replaced almost half of the lost Russian natural gas into Europe after the 2022 Ukraine War.
  • U.S. LNG industry growth is expected to double its U.S. economic footprint by 2040
  • LNG is projected to add USD $1.3 trillion (CAD $1.86 trillion) in GDP and support an average of 495,000 direct, indirect, and induced U.S. jobs through 2040
  • The sector is projected to generate USD $2.5 trillion (CAD $3.59 trillion) in revenues for U.S. businesses, more than USD $900 billion (CAD $1.29 trillion) in expenditures, and USD $165 billion (CAD $237 billion) in tax revenue through 2040

*Note: currency conversions done using Dec. 22, 2024, exchange rate

Canada Should Take Note

Not long ago, Canada had 18 proposed LNG export facilities: 13 in British Columbia, 3 in Nova Scotia, and 2 in Quebec [1].

Today, just seven LNG export projects are underway (all in B.C.), representing CAD $109 billion in investment and an annual production/export capacity of 50.3 million tonnes per annum (mtpa) [4] --- a mere fraction of what Canada could have had if it weren’t for several project cancellations.

For example, below are a handful of now-cancelled Canadian facilities, their location, respective projected construction costs, and estimated export capacities (in million tonnes per annum):

  • Pacific Northwest LNG (B.C.) - $36 billion – 18 mtpa
  • Kitsault LNG (B.C.) - $34 billion – 20 mtpa
  • Kitimat LNG (B.C.) – $30 billion – 10 mtpa
  • Aurora LNG (B.C.) - $28 billion – 24 mtpa
  • West Coast Canada LNG (B.C.) - $25 billion – 30 mtpa
  • Steelhead LNG (B.C.) - $18 billion – 30 mtpa
  • Prince Rupert LNG (B.C.) - $16 billion – 21 mtpa
  • Saguenay LNG (Q.C.) – $14 billion – 11 mtpa
  • Goldboro LNG (N.S.) – $13 billion – 10 mtpa
  • Grassy Point LNG (N.L.) - $10 billion – 20 mtpa

*Note: facility facts above sourced from [5][6][7][8][9][10][11][12][13][14][15][16][17][18][19]

The facilities above – not representative of all now defunct Canadian LNG projects – would have accounted for $224 billion in direct investment for construction alone in addition to 194 mtpa, accruing significant additional economic activity, taxes and royalties, and job creation for Canadians for decades to come.

For perspective, 194 mtpa of LNG export capacity equals about 25.5 billion cubic feet per day (bcfd). The U.S. is expected to reach 24.3 bcfd by 2027, up from about 11.4 bcfd today [20].

Down, But Not Out

While Canada has missed numerous opportunities in the LNG sector over the past decade, global demand for natural gas continues to grow to new record highs.

When Canadian projects don't move forward, other nations like the U.S., Qatar, and Australia are quick to fill the void – as evidenced by their expanding market share and economic gains. The U.S. study discussed above makes this painfully clear: while our southern neighbour reaps hundreds of billions of dollars in economic benefits over the long term, Canada has left significant opportunities on the table.

With our economy facing headwinds and many Canadian families struggling with the rising cost of living, we simply cannot afford to miss the next wave of LNG development. Projects like the Prince Rupert Gas Transmission (PRGT) Line and Ksi Lisims LNG facility represent crucial opportunities for economic growth, job creation, and global energy security.

The lesson is clear: Canada must take decisive action to support its LNG sector or risk watching from the sidelines as other nations capitalize on growing global energy demand.

The time for hesitation has passed. Canada's economic future may very well depend on our ability to learn from past missed opportunities in the natural resources sector and ensure that current and future projects, like the upcoming LNG facilities in B.C., move steadily from proposal to reality.

SOURCES:

1 - https://www.fraserinstitute.org/commentary/canadas-lost-lng-opportunities-due-dearth-export-facilities

2 - https://www.energy.gov/articles/statement-us-secretary-energy-jennifer-m-granholm-updated-final-analyses

3 - https://www.spglobal.com/en/research-insights/special-reports/major-new-us-industry-at-a-crossroads-us-lng-impact-study-phase-1

4 - https://natural-resources.canada.ca/energy/energy-sources-distribution/natural-gas/canadian-liquified-natural-gas-projects/5683

5 - https://secondstreet.org/wp-content/uploads/2019/06/Policy-Brief-%E2%80%93-Natural-Resource-Development-%E2%80%93-Final-ENG.pdf

6 – https://www.cbc.ca/news/canada/nova-scotia/pieridae-goldboro-lng-negotiating-with-ottawa-1.5953360

7 – https://www.cbc.ca/news/canada/montreal/saguenay-lng-duhaime-quebec-election-1.6568960

8 - https://news.gov.bc.ca/factsheets/factsheet-lng-project-proposals-in-british-columbia

9 – https://www.cbc.ca/news/canada/calgary/pacific-northwest-lng-delays-petronas-1.4352004

10 – https://natural-resources.canada.ca/sites/nrcan/files/emmc/pdf/197323_-_Attachment_1_-_2022_Major_Projects_Inventory_Report_vsept12.pdf

11 - https://www.northernsentinel.com/news/woodside-follows-chevron-and-bails-on-kitimat-lng-project-6177360

12 - https://financialpost.com/commodities/energy/scrapped-nearly-150-billion-worth-of-energy-projects-shelved-in-canada

13 - https://www.rivieramm.com/opinion/opinion/developing-canadas-first-lng-export-terminal-22038

14 - https://www.projects.eao.gov.bc.ca/p/588511eeaaecd9001b828062/project-details

15 - https://www.gem.wiki/WCC_LNG_Terminal

16 - https://www.gem.wiki/Prince_Rupert_LNG_Terminal

17 - https://iaac-aeic.gc.ca/050/documents/p80115/103948e.pdf

18 - https://www.novascotia.ca/nse/ea/goldboro-lng.asp

19 – https://www.cbc.ca/news/canada/newfoundland-labrador/first-nations-liquified-natural-gas-1.6184785

20 - https://www.eia.gov/todayinenergy/detail.php?id=60944

21 - https://natural-resources.canada.ca/energy/international/nacei/18057