Canada is getting a second shot at becoming a major LNG player
Projects in various stages of development could represent capital investment of $109 billion
A decade after a promised boom in the liquified natural gas industry failed to materialize, Canada has arrived at the starting line, rekindling some aspirations of becoming a major LNG player.
The long-awaited LNG Canada project is now up and running — and there are six more projects in various stages of development. If all of them come through, together they would represent $109 billion in capital investment, according to Natural Resources Canada.
This comes amid renewed political appetite to build major infrastructure, bolster the Canadian economy and diversify exports away from the U.S.
But the U.S. still leads Canada by a wide margin as an LNG exporter, and even if all projects currently under development end up being built, some warn Canada may have already missed the chance of being a major player.
"I don't think Canada's ever going to be an LNG-exporting superpower," said Ed Crooks, vice-chair of the Americas for global consultancy Wood Mackenzie. But he said the country has plenty of room to ramp up its export capacity.
'It means prosperity'
One proposed facility is in a small fishing community about 800 kilometres north of Vancouver.
The Nisga'a community of Gingolx, population roughly 500, is known as the seafood capital of the Nass River.
In the next few years, it could have a conspicuous new neighbour: Ksi Lisims LNG, a floating terminal that will export LNG to Asia.
The project is proposed by the Nisga'a Nation of B.C. in partnership with Rockies LNG, a group of Western Canadian natural gas producers, and Western LNG, a Houston-based company that develops LNG export facilities.
"It means, in one word, prosperity," said Eva Clayton, elected president of the Nisga'a Nation.
Clayton said the nation has gone "through the trenches" over the last 10 years to get the project off the ground, and hopes to make a final investment decision later this year.
Failure to launch
Ksi Lisims is among seven proposed LNG projects at various stages of development. Most have Indigenous ownership or partnerships — a major shift from the projects proposed a decade ago.
At the time, a few dozen LNG projects were proposed in B.C. as part of an initial wave of interest in the nascent industry. The majority of those projects were cancelled for a variety of reasons, such as regulatory hurdles and a crash in commodity prices.
The U.S. only began ramping up its LNG exports in 2016, but has continued to build to become the world's largest exporter of LNG.
Some experts say the diverging outcomes speak to the level of policy uncertainty and red tape that companies in this country have had to contend with.
"One of the fundamental problems has been it's been very, very difficult to build any kind of energy infrastructure in Canada," said Crooks.
"Anything you try and build, there are a lot of people that have objections," he said, pointing to community groups and environmental activists raising concerns with either the specific location or broader ecological impact of a project.
Times may be changing. Ottawa, along with B.C. and Ontario, have each passed legislation aimed at speeding up major projects — though not without opposition. Public polling suggests Canadians are becoming more comfortable with the idea of new infrastructure, including pipelines.
Demand for natural gas is expected to grow 70 to 80 per cent through 2050, according to Wood Mackenzie. That's thanks to a variety of factors, ranging from the world's growing population to power demand from AI data centres and air conditioning to the role of natural gas as an alternative to coal.
Canada has significant natural gas reserves, and B.C.'s Northwest coast provides a quick and secure route to markets in Asia.
The U.S. is eyeing the same opportunity. While much of the U.S. export facilities are located on the Gulf Coast, one proposed $50-billion mega-project is located in Alaska. The White House is backing the project, including around $30 billion US in loan guarantees.
"It could be, certainly, a major competitor for projects on Canada's West Coast," said Martin King, a Calgary-based analyst with RBN Energy.
Heather Exner-Pirot, director of energy, natural resources and environment with the Macdonald-Laurier Institute, says the Alaska project does face certain logistical challenges. Because of where the resource is located, it would need a longer pipeline traversing terrain, and materials, equipment and labour would have to be transported to isolated areas, driving up costs.
Still, she said, the project could present a pretty compelling case to investors.
"Alaska really wants it and all levels of government are aligned," said Exner-Pirot. "You have the secretary of energy, you have the governor of Alaska, you have everyone getting together and saying, 'We want your investment, we'll build fast, we're a reliable exporter."
Ellis Ross, Conservative MP for Skeena-Bulkley Valley, isn't convinced the current political momentum around building major projects will translate into success.
"What I see right now is this rhetoric — it's virtue-signalling," said Ross, who is also former chief councillor of the Haisla Nation. "I don't think this government is truly sincere in turning Canada into an energy superpower, let alone fast-tracking major projects."
Rushing in
Others are concerned the country is veering in the wrong direction, green-lighting projects without fully considering the environmental consequences.
The community of Kispiox, about 300 kilometres up the Skeena River, is known as a fishing destination and boasts being the steelhead capital of the world.
"This is one of the rare parts of the world where you can drink from the streams, you could drink from the rivers," said Kolin Sutherland-Wilson, elected chief councillor of the Kispiox Band.
The community is also about 15 kilometres from the Prince Rupert Gas Transmission line, which would transport natural gas from northeastern B.C. to the Ksi Lisims project on the coast.
Sutherland-Wilson said community members are concerned about the impact on the local watershed and salmon population. While the B.C. government recently approved the pipeline's continued construction, he expects there will likely be further protests, and is part of a group challenging the pipeline's approval in B.C. Supreme Court.
"I would say this is the calm before the storm right now," he said.
Climate concerns are another variable. Natural gas can help countries get off coal, but it is still a fossil fuel.
While the pendulum of public discourse has recently swung away from climate change, it will inevitably swing back, said Crooks at Wood Mackenzie.
Window of opportunity
That means Canada has a narrow window to capitalize on the current upswing in LNG demand. Dulles Wang, another analyst with Wood Mackenzie, said the next five to 10 years will be critical, when demand from markets in Asia is expected to be strongest.
"Beyond that, the story is a lot murkier, because the role of gas in the energy space is becoming much more uncertain," said Wang, a director on the firm's Americas gas and LNG research team, who said that at a certain point, renewables could start to displace natural gas.
"The clock is definitely ticking."
Clayton with the Nisga'a Nation is optimistic about breaking ground on her LNG project next year.
She's eager to see the first vessel come up the river to pick up the first shipments, which could happen as early as 2029.
"It's going to be amazing, and it's going to be bringing a lot of smiles and happiness to our people," said Clayton. "We see the project not just benefitting for the moment, but in perpetuity."