Canadian LNG Can Provide Energy Security to the World

Energy Amnesia & Security

"This collective amnesia that has existed about energy security has now been ended by the electric shock of this invasion of Ukraine." @DanielYergin of @IHSMarkit explains the impact Russia's invasion of Ukraine will have on energy markets around the globe. #OOTT pic.twitter.com/Wqll1TpUI2
— Power Lunch (@PowerLunch) February 24, 2022

Events unravelling in Europe seem to be lifting the veil of energy "amnesia" some European nations have developed over the past several years, says a leading authority on global energy, politics and economics.

Daniel Yergin, Vice Chairman of IHS Markit, explained how many western countries have more or less turned a blind eye to their national energy security in a recent interview with CNBC.

"This collective amnesia that has existed about energy security has now been ended by the electric shock of this invasion of Ukraine, which is really highlighting how precarious and how important energy security is, which just does not receive the attention it should have received," Dr. Yergin said.

He quickly pointed out the success of the U.S. liquefied natural gas (LNG) industry in helping alleviate some of Europe's near-term energy concerns.

"The U.S. has a very important strategic asset in terms of natural gas LNG exports, and if we weren't exporting to Europe right now, there probably would not be unified sanctions because Europe would be too vulnerable. The U.S. is providing half of the LNG imports that Europe is now getting."

CNBC host Tyler Mathisen nodded his head in agreement, then makes an inference from what Dr. Yergin has just shared.

"I am no deep thinker on any of this Mr. Yergin but it seems to me that energy security IS national security… I think that's sort of the point you're making there," said Mathisen.

Dr. Yergin nodded back in confirmation.

Europe's Natural Gas Security in Turmoil

Europe today has an energy security problem. It's no secret that domestic natural gas production has declined dramatically and the continent relies primarily on imports to meet its natural gas needs.

According to the U.S. Energy Information Administration, pipeline imports from Russia – the region's largest supplier – grew from roughly 11 billion cubic feet per day (bcf/d) in 2010 to more than 13 bcf/d in 2020. Norway, another major natural gas importer to Europe, averaged roughly 9 bcf/d in 2010 and 2020 as the development of new reserves in the Barents Sea were insufficient to offset declines from mature fields in the North Sea.

Apart from pipelines, liquefied natural gas (LNG) imports were also an important part of Europe's energy mix, accounting for roughly 20 per cent of all natural gas supplied to the EU-27 countries and the U.K. in 2020.

Europe's LNG imports fluctuate from year-to-year – from as low as 3.6 bcf/d in 2014 to as high as 10.1 bcf/d in 2019. But in light of recent events, European LNG demand is expected to soar as policymakers look to alternative sources for natural gas other than from pipelines such as Nord Stream and Brotherhood.

If only there were another major LNG exporter to provide Europe with the natural gas it needs – perhaps the tragic events unfolding in Ukraine would have looked drastically different than they do today.

Canada Can Help Provide the World with Natural Gas

Canada, like Australia and the U.S., is blessed with an abundance of natural resources. We are home to the world's third-largest oil reserves and will have the ability to ship sustainably produced natural gas from British Columbia to global markets within a few short years.

Canadian LNG shows incredible promise to help meet strong global demand in Europe and elsewhere while reducing the environmental impacts of higher-emission electricity generation across the globe. Canada can also help other countries diversify their future energy supply.

Look at the facts:

#1 - LNG Canada, now under construction in British Columbia, is designed to have an emissions profile that undercuts the current best-performing LNG plants in the world by 32% (LNG Canada)

#2 – A fully developed LNG Canada export facility could reduce global carbon dioxide emissions by up to 82 megatonnes -- equivalent to taking 18 million cars of the road each year OR 15% of Canada's overall GHG emissions (Desjardins, Crude Views Weekly Note Nov 23rd, 2019)

#3 - Woodfibre LNG, another up-and-coming west coast facility, estimates it will reduce GHG emissions by 45% when its product is used to replace coal-fired power generation in China (Woodfibre LNG)

#4 - Ksi Lisims LNG, an Indigenous-led project in the preliminary stages of development in Canada, has made the unprecedented commitment to operate with a net-zero emissions profile within three years of commencing exports (Ksi Lisims LNG)

#5 – The now defunct Energie Saguenay LNG project in Quebec was estimated to have a GHG emissions profile that is 84% lower than similar-sized producers in Asia and the U.S. (Canada's Green LNG Advantage)

#6 - Another defunct project, Nova Scotia’s Bear Head LNG was to export 8 million tonnes per annum at full capacity and do so generating 30% less carbon emissions compared to other competing technologies (Bear Head LNG).

#7 - A third defunct project on this list (of nearly a dozen and a half across Canada), Pieridae/Goldboro LNG’s land facility had an estimated max capacity of 10 million tonnes per annum. (Goldboro LNG)

#8 – Compared to coal-fired power and heat generation, Canadian LNG to China could accomplish a 34% to 62% reduction in CO2 emissions per unit of electricity generated (Study, Science Direct)

#9 - It takes 10 days to ship LNG from Canada's West Coast to Asia compared to 24 days from the U.S. Gulf Coast (Shell). Shorter shipping routes mean less fuel burned and GHGs emitted.

#10 - Global demand for LNG is projected to increase 50% by 2030 (Morgan Stanley) and 90% by 2040 (Shell)

Economic Benefits of LNG for Canadians

As one of the most transparent, regulated and environmentally conscious natural gas producers on the planet, it would be short-sighted of Canada not to pursue the economic opportunities presented by becoming a top LNG exporter.

According to a 2020 report by the Conference Board of Canada, the economics associated with developing a healthy LNG industry on the west coast are too large to ignore:

> Between 2020 and 2064, total annual investment would average over $11 billion, totalling in excess of $500 billion over the entire period.

> For Canada as a whole, LNG would mean 96,550 more jobs a year and over $6 billion in wages.

> For British Columbia, there would be over 71,000 more jobs a year and over $4.6 billion in wages.

> From 2020 to 2064, over $108 billion in provincial revenue could be generated for the provinces. Of this total, nearly $94 billion would go to British Columbia.

> Canada's federal government could expect to see $64 billion in total additional revenue from 2020 to 2064

Canada's ESG Advantage

Canada also outperforms many of the world's top natural gas producers and exporters on various Environmental, Social and Governance indices.

For example, of the world's top 10 natural gas exporters, Canada is a leader on the following:

Canada is a Stable & Secure Source of Supply

Todays' events are a stark reminder of how important national energy security is for all countries across the globe. Let's be hopeful that policymakers have woken up from their "energy amnesia" as Dr. Yergin so eloquently said, and are more mindful of sources of supply moving forward.

Should European politicians and those from elsewhere globally seek more responsibly produced natural gas from places like Canada? Given the evidence above, the answer to that question could not be any more straightforward.

Let's just hope that we are all taking note of Dr. Yergin's valued commentary and are now giving national energy security the attention it needs.

Now, it is up to our leaders to support the development of a healthy LNG industry in Canada for the good of Canadians, global energy security and the environment.

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"Canada is the world’s fourth-largest exporter of oil and has the third-largest known reserves, and is alone as a democracy in the top rankings." Via: @ExnerPirot https://t.co/09EVsuQ8We
— Canada Action (@CanadaAction) March 2, 2022