Canadian LNG Can Help Prevent Global Gas Shortages

Key Points

• The global energy crisis happening now is causing prices to soar for everything from electricity to groceries

• Canada has the gas reserves and technical know-how to help supply the world with some of the energy it needs, we just have to kickstart the development of our LNG industry and stop lagging behind competitors

• Canadian LNG projects are some of the least carbon-intensive plants globally and the best choice for future supply in an increasingly environmentally focussed world

evolution of natural gas prices in European Markets - intercontinental exchange

Euro News

As global demand for energy continues to march upwards, families around the world are facing shortages of the energy products required to generate electricity and heat their homes. The crunch we are facing today is unlike anything we have seen in recent history, and energy prices are skyrocketing as a result.

The impact of rising energy prices is, and will continue to be widespread throughout all areas of the economy. The most obvious result of this pressure on markets will be an increase in heating and electricity bills. And, for consumers and businesses, it's critical to understand that higher energy prices ultimately increase the cost of almost everything else in our lives.

Businesses facing rising expenses related to power, transportation and supplies will have no choice but to pass those on to hard-working families who purchase products and services. Meanwhile, the World Bank has officially warned that rising energy prices pose a significant inflation risk in the near future. 

Unfortunately, as we head into the winter - a seasonally demanding time for natural gas - the problem is likely to get worse. In fact, experts are advising Canadians to consider locking in their natural gas and electricity prices as soon as possible because key indicators suggest that prices are almost certain to increase by a substantial margin.

Underinvestment In Oil & Gas

Global LNG Demand Growth to 2030At least, by international comparison, the pressures facing Canadians are less concerning than the dire situations seen overseas in Europe and Asia.

In nations like the United Kingdom, for example, factories have been forced to shutdown while political leaders are speaking openly about impending food shortages as a result of the ongoing energy supply shock and massive price increases.

In China, electricity shortages forced industrial production to grind to a halt while traffic lights failed amid electricity rationing just this past September.

But what should concern Canadians and those abroad are the warnings of more energy shortages to come. If energy-producing nations do not take immediate action to correct the mass underinvestment in the global oil and gas sector, the situation will only get worse in the decades ahead.

For example, experts are predicting that Asia - the most populated part of the world - is set to see its long-term demand for energy double between now and 2050, while the continent's own energy production is simultaneously projected to decline in the near future.

As it currently stands, Asia is expected to face a severe energy deficit, which will percolate into the global markets and exacerbate the current energy crisis seen abroad. If Asia is unable to meet its own energy needs, that pressure will undoubtedly spill over into Europe, and from there, to the rest of the world.

Canadian LNG Can Help... Eventually

LNG shipping times from Canada's West Coast to Asia

While energy shortages are deeply concerning for families grappling with huge increases in their energy bills, there is an opportunity for Canada to rise up and help our international peers.

Canada is home to abundant natural gas reserves and is uniquely positioned to help millions of families and businesses globally by supplying them with responsibly produced natural gas. We also have some of the least carbon-intensive LNG projects under construction or proposed in the world.

A flourishing Canadian LNG industry would help provide a cleaner future while also generating an immense level of prosperity for Canadians by exporting gas to global markets apart from the U.S. The facts are clear:

Obviously, more LNG development is good for Canadians from an economic standpoint, but can more Canadian LNG on global markets help solve the energy crisis? In the short-term, not so much, because of how our infant LNG industry has lagged behind flourishing sectors such as those seen in Australia, Qatar and the U.S. But if we start now, the opportunity remains to help address the rising demand for global energy and prevent future supply shortages like the one that's currently crippling many businesses across Europe.

Challenges With LNG DevelopmentCoal to gas switching has helped saved millions of tonnes of CO2 being emitted into the atmosphere

Despite the fact that we have vast proven reserves of natural gas and the technical know-how to sustainably produce and export the resource to international markets, Canada has, for the most part, failed to advance the development of its LNG industry.

In recent years, numerous projects have been proposed with no success. As it stands, there are at least 17 major proposed export terminals that have been held up for a variety of reasons. Noteworthy, however, is that these projects are found across the country: British Columbia, Quebec, and Nova Scotia. As such, the opportunity to capitalize on LNG is in the best interests of the entire country, and not just any single province.

Fortunately, there has been a single major success in developing our natural gas export industry to reach customers other than the U.S., with the LNG Canada facility now under construction in British Columbia. However, it is bittersweet that this common-sense project is finally underway.

On one hand, both Canadians and the rest of the world can be thankful that this major infrastructure project is creating thousands of jobs while supplying our international partners with much-needed energy. On the other hand, it is difficult for most Canadians to believe that we have only approved one project, while today the U.S. is home to more than 100 operating LNG facilities which have made it the second-largest exporter of natural gas in the world.

When it comes to serving the world's rising demand for LNG, Canada can and should do better.

Canada's Only Customer & Biggest Competitor

Canadian LNG Less GHG Emissions from Liquefaction

As Canada has yet to complete any LNG export terminals with access to tidewater, the U.S. remains our sole customer for natural gas. Today, 100 per cent of Canada's natural gas exports head south across the border to our American friends.

Canada has fiddled its fingers on LNG development, no doubt, while the U.S. has made leaps and bounds in developing its own industry. To put it plainly, our closest trading partner and ally has been expanding domestic natural gas production at breakneck speed while nearly tripling its export capacity since 2013.

us natural gas imports exports US EIA

U.S. Energy Information Administration

In the 1950s, America was a net importer of natural gas by quite a substantial margin. However, all has changed in recent years with the discovery of new mega shale gas reserves like the Marcellus field and the development of new technologies that have unlocked these reservoirs for production.

In 2017, the U.S. became a net exporter of natural gas for the first time ever and is showing no signs of reversing course.

In contrast, here in Canada, our natural gas exports have actually been in a slow but steady decline because our only customer no longer needs as much of our gas while also succeeding in increasing exports into some eastern Canadian provinces.

canada trade of natural gas natural resources canada

Natural Resources Canada

Maria van der Hoeven, former Executive Director of the International Energy Agency (IEA), put Canada's natural gas export problem into context on an ARC podcast this past year.

"It's important that LNG Canada gets built because in a few years, the United States, Canada's only current customer, will become completely self-sufficient in gas. So Canada must find new outlets for its natural gas," she said.

And Mrs. van der Hoeven's prediction was right. Today, our biggest natural gas trading partner has become our biggest competitor, and our exports are suffering as a result.

If Canada doesn't start looking towards international markets for new customers right away, we may just see our entire natural gas industry disappear – and the countless jobs supported by the sector along with it.

Canada's Green LNG Advantage

LNG Canada emissions profile better than the rest

Canadian LNG exports offer a unique opportunity to clear the air and help fight climate change across Asia, while also potentially being a source for gas-hungry Europe.

Canada's "green" LNG advantage is shown by the following facts (not an exhaustive list):

> When compared with coal, Canadian LNG to China for power and heat generation could accomplish a 34-62% reduction in CO2 emissions per unit of electricity generated

> LNG Canada, at full capacity, could displace up to 40 coal-fired power plants in Asia, equivalent to removing 80% of emissions from all cars on Canada's roads each year

> LNG Canada, our only project to date, is designed to have an emissions profile that undercuts the current best-performing LNG plants in the world by 32%

> Newly proposed LNG projects such as Cedar LNG and Ksi Lisims LNG are initiatives by First Nations looking for own-source revenues and economic independence from Canadian governments

> Woodfibre LNG, when compared with using coal for power generation in Asia, will help reduce GHG emissions by 45%

> Ksi Lisims LNG, a newly proposed export facility by Nisga’a Nation & partners, has pledged to accomplish net-zero emissions within three years of commencing operations

> A 2018 Delphi Group study found the GHG intensity performance of 19 LNG facilities globally ranged from roughly 0.15 (for the LNG Canada plant) to 0.44, with one outlier reaching about 0.70 tCO2e (tonnes of CO2 equivalent)

Canada's "ESG" Advantage

canada is a top global exporter of natural gas and ranks top on ESG metrics

Canada also has an inherent advantage over other major natural gas producers and exporters when considering Environmental, Social and Governance performance.

Take, for example, that of the world's top 10 natural gas exporters, Canada is a leader on the following indexes:

With stronger protections for human rights and the environment than most other major natural gas producers and exporters, it only makes sense to support the development of Canada's LNG industry.

Let’s Support Canadian LNG

Canadian LNG Benefits Global Environment GHG Emission Reductions

Let’s support the development of Canadian LNG projects to help prevent global energy shortages today and in the future.

Let’s support best-in-class Canadian LNG projects because they can help clean the air and fight climate change across Asia.

Let’s support the hundreds of thousands of Canadian workers who rely on the natural gas sector to put food on the table for their families.

Let’s support up-and-coming projects like Ksi Lisims LNG and Cedar LNG to help Indigenous communities achieve economic independence and generate own-source revenues.

If you’re with us, we invite you to join us on Twitter, Instagram and Facebook today. Hope to see you there!

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