MYTH: Canadian LNG Projects Will Take Too Long to Build

MYTH Canadian LNG Projects Will Take Too Long to Build COVER PHOTO

Liquefied natural gas (LNG) opponents in Canada are really pulling out all the stops lately. Their latest attempt to mislead Canadians about the responsible development of our LNG industry is that these projects will take "too long" to build, making them an unviable source for the world's future energy needs.

What's missing amid this anti-Canadian LNG rhetoric is much-needed context around project timelines, future energy demand growth projections, and how coal-to-gas switching benefits the global environment. 

Context #1 - Global LNG Demand Growth

Canadian LNG Export Facilities vs. U.S. LNG Export Facilities (2021)

According to Shell's latest outlook for 2022, global demand for LNG is projected to skyrocket nearly 90 per cent to 700 million tonnes per annum (mtpa) by 2040, up from 380 mtpa in 2021.

To put things into perspective, LNG Canada's first two trains have a capacity of 7 mtpa each, accounting for approximately four per cent of the 320 mtpa growth between now and 2040. With the option to expand to four trains for a capacity of 28 mtpa, LNG Canada could account for just over eight per cent of future demand growth spanning two decades.

Given the fact that LNG Canada's emissions profile is projected to be 32 per cent lower than the world's current best performing liquefaction plants, operating at full capacity (26 mtpa) would be a huge win for the global environment.

Ksi Lisims is another LNG project currently in the planning stages on Canada's west coast. Led by the Nisga'a Nation, proponents have made an unprecedented commitment to net-zero emissions within three years of commencing operations after its first shipment in 2027-28.

With a capacity of 12 mtpa, getting Ksi Lisims built would also be a huge win for global GHG reduction efforts, as would other now-cancelled projects in Canada.

Quebec's now-defunct Energie Saguenay project was projected to have an emissions profile that was 84 per cent less GHG-intensive than similar-sized producers in the U.S. and Asia.

The Bear Head LNG project in Nova Scotia, another defunct east coast project, was to export eight mtpa and generate 30 percent less carbon emissions than other competing technologies.

It's clear that Canadian LNG projects, cancelled or not, are expected to be some of the lowest GHG-emitting facilities of their kind. In a world with growing LNG demand and an increasing focus on environmental outcomes, we should be championing these world-class export facilities for the benefit of Canadian families, global energy security and the environment.

Context #2 - LNG Project Timelines

Canadian LNG Export Capacity vs Qatar LNG Export Capacity in 2021

Canadian energy projects are required to undergo an excruciatingly slow regulatory process, creating huge uncertainty for investors. Initial costs are also typically high, resulting in hesitancy by proponents to spend hundreds of millions, if not billions of dollars on projects that may eventually not be approved by Canada's Minister of Environment and Climate Change.

A great example of the red tape bogging down Canadian LNG competitiveness on the global stage:

> Canada took more than three and a half years to give federal approval for the Pacific NorthWest LNG in B.C.. Proponents eventually shelved the project in July 2017.

> The U.S. took just over one year to provide approval for the Sabine Pass LNG project in Louisiana. The project now exports 30 mtpa of LNG and made its first shipment in 2016.

With its vast wealth of natural gas reserves, Canada has an opportunity to expedite the development of its LNG industry and account for more future demand growth.

Just look to the United States – the world's largest LNG export as of early 2022 – for an example of what Canada should be doing to advance its own LNG sector. In March this year, the Biden administration announced they would expedite approvals for LNG projects to help end the EU's dependence on Russian energy by 2027.

Canadian projects don't take "too long" to build, they just undergo one of the world's most stringent environmental regulatory approval processes. You'd think anti-Canadian LNG activists would be happy about that - and they are, but for all the wrong reasons.

Unfortunately, Canada's long and drawn-out regulatory process affects our energy sector's competitiveness on the world stage. If we ever want to see more responsibly produced Canadian energy on global markets, we must work on improving the speed at which new infrastructure is approved and built while keeping points #1 and #3 in mind.

Context #3 - Benefits of Coal-to-Gas Switching

Canadian LNG Export Capacity vs Australian LNG Export Capacity in 2021

The substantial environmental benefits of coal-to-gas switching for power generation are made clear by the following facts:

> Switching just 20% of coal-fired power to gas in Asia can potentially save 680 megatonnes (MT) of carbon dioxide (CO2) emissions every year.

> Since 2010, coal-to-gas switching has prevented 500 million tonnes of CO2 from being released into the atmosphere, the equivalent of putting an extra 200 million electric vehicles running on zero-carbon electricity on the road.

> In 2019, the U.S. electric power sector produced 1,724 million metric tons (MMmt) of CO2, 32% less than in 2005 largely a result of coal-to-gas switching.

> Three independent lifecycle analyses conducted by researchers at the University of British Columbia, University of Calgary, and Stanford University found that switching from coal to Canadian LNG for power generation in China could reduce GHG emissions by 34% to 62%.

> German fossil fuel power plants emitted 33% less CO2 emissions in June 2019 year-over-year due to coal-to-gas switching.

Economic Benefits for Canadians

Latvia ambassador says his country wants Canadian LNG

Canada has been plagued by cancelled LNG projects, with only one of 18 proposed export facilities under construction since the late 2000s. While major exporters like Qatar, Nigeria and the U.S. ramp up efforts to provide the world with more LNG deliveries, Canada's regulatory processes create lengthy delays and mass uncertainty for investors.

It's time that Canada champions the development of its LNG industry. Our export facilities are some of the least-carbon-intensive projects of their kind in the world, and the economic benefits they would bring to our communities are hard to look past.

According to a July 2020 report by the Conference Board of Canada, a healthy LNG industry in British Columbia producing 56 mtpa could generate the following:

> $11 billion in total economic activity between 2020 and 2064, totalling more than $500 billion over that time frame

> Over $108 billion in provincial revenues between 2020 and 2064, the lion's share ($94 billion) within British Columbia

> 96,550 more jobs and $6 billion in wages generated annually in Canada each year

> For British Columbia alone, over 71,000 more jobs a year and over $4.6 billion in wages

Those figures are no small peanuts.

Why should we let other natural gas exporters reap the benefits of a well-developed LNG industry and not opt for those benefits ourselves? Shouldn't we do our best to bring those jobs and economic activity to communities here at home rather than abroad to producers with weaker protections for human rights and the environment?

We believe the answer is clear: the world needs more responsibly produced Canadian LNG!

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Canada's LNG projects may take longer to build than in other jurisdictions like the U.S. However, the advantage of more Canadian LNG on global markets is clear: our projects are some of the cleanest globally, and we should be a preferred source of supply for the world's future natural gas needs.

Join us today on Twitter, LinkedIn and YouTube to discuss Canada's world-class natural resource sectors and partake in a balanced, fact-based and non-partisan discussion with Canadians from coast-to-coast!

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