Canadian LNG industry strikes a defiant note
A lobby group for exports foresees a bright future despite a long history of setbacks
Canadian LNG exports could hit 56mn t/yr by 2035, according to a report funded by industry group the Canadian LNG Alliance. But that optimism seems at odds with further gloom at projects still moving ahead and years of project cancellations and abandonments.
Investment in infrastructure, additional LNG projects and the expansion of Shell’s $40bn LNG Canada Phase 1 project in Kitimat, British Columbia (BC) are identified as drivers in reaching 56mn t/yr. "Canada's LNG industry holds potential economic benefits for Canada," says Roger Francis, director of sustainability at market researcher the Conference Board of Canada, which authored the report, A Rising Tide: The Economic Impact of BC's liquefied natural gas industry.
There is little doubt Canada has the gas reserves to support a substantial expansion of its LNG export industry. But a combination of economics, opposition from environmentalists and First Nations indigenous groups, and inter-state and federal-state tensions have scuppered all but a handful of projects.
Even among those moving ahead, in February Australia’s Woodside wrote down $720mn from the value of its 50pc stake on the 10mn t/yr Kitimat LNG project. In December, its operator and other owner Chevron reduced funding for Kitimat and said it would look to sell its stake.
According to research network Global Energy Monitor, almost 240mn t/yr of proposed Canadian LNG export capacity is on its ‘cancelled or troubled LNG terminals list’ (see Fig.1). This includes 88mn t/yr from projects where progress has simply ground to a halt, 128.5mn t/yr that has been formally cancelled or halted and slightly over 23mn t/yr of capacity that is in theory moving forward, but where Global Energy Monitor has noted recent setbacks. A 56mn t/yr future seems a long way from here.