LNG could help break Canada's dependence on the U.S. energy economy — but there are no guarantees
Debate over environmental, economic impacts as industry calls for 'Team Canada' approach
There's something new on the scenic skyline in Kitimat, B.C., more than 600 kilometres up the coast from Vancouver.
A bright orange flare, burning above LNG Canada's sprawling export terminal as tests on the facility are conducted ahead of the very first shipment of liquefied natural gas from Canada to Asia, scheduled to happen in the next few months.
Teresa Waddington, vice-president of corporate relations with LNG Canada, was in Kitimat earlier this month when the Greek tanker Maran Gas Roxana, made its way through the Douglas Channel carrying a load of LNG that will be used for equipment testing before the project comes online.
"It was a big moment for me as a Canadian," she said.
"It is going to diversify Canada's energy export market ... Canadian gas offers a whole new opportunity."
With the backing of Shell, Petronas, PetroChina, Mitsubishi Corporation and the Korea Gas Corp., the $40 billion LNG Canada project has been described by the federal government as the "largest single private sector investment in the history of the country."
And set against the backdrop of the trade war with the United States, both LNG Canada and the entire liquefied natural gas industry have taken centre stage in a federal election which has centred around major party leaders promising to support more projects like this one in order to diversify Canada's energy economy.
There are five potential LNG projects in British Columbia at various stages of approval, and the province's NDP government has promised to move quickly to get them through the queue. The topic dominated local candidates' debates in both Kitimat and Fort St. John, the economic centre of B.C.'s gas-producing Peace region, with both Conservative and NDP representatives touting their party's support for getting projects online (Liberal candidates did not attend). And Quebec recently said it would reconsider an LNG project it previously rejected over environmental concerns.
But even with broad cross-party support for getting LNG to market, the industry faces challenges, both from environmental groups who argue it is irresponsible to develop it further and from projects in other parts of the world, particularly Alaska, which could hinder future investment.
What is liquefied natural gas?
LNG is made from natural gas, a fossil fuel often extracted from northeast B.C. and Alberta through a practice called hydraulic fracturing, or fracking. It involves drilling down into the ground and injecting a mixture of water, sand and chemicals into the ground to force the release of the oil and gas.
The gas is then shipped via pipeline to terminals, which cool it to about –160 C, at which point it can be shipped overseas for use as a fuel.
It's estimated that B.C. has stores of 93 trillion cubic metres of natural gas, mostly found in the northeast and Natural Resources Canada estimates LNG has the potential to add $7.4 billion a year to the national economy by opening up new overseas markets for a product that is otherwise landlocked to North America.
Environmental impacts
LNG is often referred to as "clean" because burning it for fuel causes fewer emissions than coal or oil, but that claim is disputed by some analysts because of the energy and destruction it takes to produce.
One of the known impacts of fracking is an increase in earthquakes, which have been felt with increasing frequency in B.C.'s Peace River region in recent years.
There's also the need to build pipelines to support the projects.
In the case of LNG Canada, it is the Coastal GasLink pipeline, whose construction sparked nationwide protests due to the fact it was forced through Wet'suwet'en and Gitxsan territory in northwest B.C. by court injunction, against the wishes of hereditary chiefs who had warned of the cultural and environmental impacts the project would have in passing through forests and more than 620 lakes, rivers, streams, creeks and wetlands.
During construction, the 670-kilometre project received dozens of citations for failures related to erosion and sediment control, racking up fines of hundreds of thousands of dollars, including for pumping high levels of sediment into fish-bearing streams.
Tara Marsden, sustainability director for the Gitanyow hereditary chiefs, worries the current push to approve new projects will sideline environmental concerns.
She has helped organize opposition to a new pipeline in their traditional territory, the proposed Prince Rupert gas transmission line that would run 800 kilometres to a planned terminal on a coastal island, which Mardsen warns will harm salmon habitat and accelerate climate change.
Though the project has the support of the neighbouring Nisga'a Nation, which jointly owns the project with Texas-based Western LNG, Marsden points out the company has significant backing from Blackstone Inc., a major American asset manager whose CEO publicy endorsed Trump and contributed to his campaign — undermining any notion that the project is needed to push back against the American president.
"This isn't about getting out from under the thumb of Americans," she said. "It's actually about enriching people who are in Trump's inner circle."
However, Eva Clayton, president of the Nisga'a Lisims government, has characterized the project as an opportunity for "Indigenous people to develop a pipeline project in our own way," which the nation says includes an opportunity for other First Nations along its route to take an ownership role.
Taylor Wale, a biologist and member of the Gitxsan Nation shares Marsden's worry about the impact of more projects.
"Right now, the water is really low and the fish populations are down," she said.
"So we're risking our food security. We're risking the futures of young people on the land, and we're risking culture, essentially."
Economic and political opportunities
But Crystal Smith, elected chief of the Haisla Nation, says when done properly, LNG presents an economic opportunity for First Nations like hers.
Speaking at the London Stock Exchange about the project in a recent panel discussion, she says her nation partnered with corporations to build the first export terminal in Kitimat, and the experience provides a path for future development.
"It was a long process to be able to build that relationship to the point that we currently have right now," she said, and is anticipating the construction of their own Cedar LNG, a proposed floating terminal in Kitimat that would use gas from the same pipeline as LNG Canada.
All funding for the project is secured, and it's expected to start shipments in 2028.
Smith says she believes it to be the largest majority-Indigenous owned project of its kind in the world. And, she says, the trade war with the United States is driving demand.
"Although it's not a great scenario for Canadians to be experiencing, it is an opportunity for Canadians to realize exactly the wealth that we have in our natural resources and to be able to capitalize on them," she said.
The Conservatives have declared themselves all-in on future LNG projects, with promises to approve future projects quickly and to repeal Liberal rules aimed at environmental protections they say are hindering investment.
Ellis Ross, the former chief councillor of the Haisla First Nation who helped negotiate the LNG Canada project, is now running for the Conservatives. Pierre Poilievre said at a campaign stop in Terrace that the party would bring "incredible riches" to other First Nations who partner on future projects.
The Liberals have also expressed their support for future projects and speeding up approval processes, but Mark Carney has placed more emphasis on working with provinces and First Nations to get them done.
He has vowed to make Canada an energy superpower, and just before the election, his government pledged up to $200 million for the Haisla-led Cedar LNG project.
And federal NDP incumbent Taylor Bachrach, running against Ross, pointed out at a community forum in Kitimat that many of these projects are moving forward under the provincial NDP, citing that party's ability to balance economic, environmental and Indigenous concerns.
That sort of broad consensus is what François Poirier, the chief executive of pipeline operator TC Energy, called for in recent remarks to the Canadian Club Toronto.
"We have the supply. We have a transportation cost advantage and the demand is there for the taking," he said in the April 10 address, stating that Canada is well-positioned to be the number one exporter of LNG to Asia, provided the projects are prioritized.
Poirier said that over the past 15 years, Canada has fallen behind in the race to develop LNG, especially when compared to its biggest rival in the export market, the United States.
He added that policy certainty over project approval timelines is paramount if Canada is to compete for investment — it can take a decade for projects to come to fruition in this country.
"We risk ceding market share to our competitors, but more importantly, we are entrusting our energy future to others, and we are losing the opportunity for economic sovereignty that should be standard for a resource-rich country like Canada."
Race against Alaska
A particular concern at the moment is renewed interest in Alaska LNG, a multi-billion dollar project that has long been on the books but has been hindered by its enormous $44 billion cost and scope, requiring 1,300 kilometres of pipeline travelling from north to south.
Despite those obstacles, Alaska LNG has received renewed interest following an executive order issued by U.S. President Donald Trump on his first day in office related to Alaska resource development and a recent op-ed from the chair of the Alaska Gasline Development Corp., outlining the path forward for the project, along with the challenges it faces.
If Alaska LNG is somehow successful in sewing up contracts with Asian buyers, it makes it harder for B.C. projects further behind in development to secure enough demand to justify their own plants, said Kent Fellows, an economist with the University of Calgary's School of Public Policy.
"With an LNG market, that competition happens at the time the facility is built, so timing the market can end up really, really important," he said.
However, the CEO of Canada's biggest natural gas producer said there should be plenty of interest to go around.
Mike Rose, who heads up Tourmaline Oil Corp., foresees worldwide demand soaring over the next decade and argues Canadian companies will play a major role in filling it.
"We won't be oversupplying because there might be a project that comes on in Alaska," he said. "We need all of them."
But Michael Sambasivam, a senior analyst with the net-zero shareholder advocacy group Investors for Paris Compliance, said "outdated assumptions" underpin the common view that Asia is an enormous growth area for natural gas demand and that Canada is perfectly suited to fill it.
"The mandate of the Government of Canada should not be to push these projects forward at any cost, which seems to be … the patriotic push right now," he said.
"LNG has been painted as a bit of a money printer."
His organization published a report in December that noted an overbuild of LNG globally, uncertain demand in emerging markets, high Canadian production costs and political risks.
"We're late to the game a little bit," Sambasivam said. "The height of LNG demand is likely already in the rear-view window."
Poirier, though, argued there is still an opportunity provided there is a "Team Canada" approach to growing and selling the industry worldwide, with the prime minister, premiers, businesses and Indigenous leaders pushing a unified message.
"Collectively, we'll have to travel to Asia and market ourselves and underscore that Canada is back in business and is a good risk to take."
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With files from Lauren Krugel of the Canadian Press