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There may still be hope for Canada to become a global liquefied natural gas exporter, just not until after this decade ends.
In a report published Thursday, the International Energy Agency warned “securing investments for new export facilities in Canada remains a challenge, as global LNG markets are well supplied.” Fatih Birol, executive director of the Paris-based agency, told BNN in an interview the nascent industry being planned for the British Columbia coast can still get off the ground.
“I am sure, and our numbers show that there is room for Canadian LNG after 2020,” he said. “I believe Canada can play a very important role in the Asian LNG markets, especially if they can continue to put pressure on the cost of production.”
Recent delays involving the two projects widely seen as frontrunners (among the 26 that are being planned) have cast doubt on the industry’s prospects. The Shell-led LNG Canada project and the Petronas-led Pacific Northwest LNG project, both valued at more than $30-billion, have held off giving the green light for construction to begin as prices in the region they plan to serve have plummeted.
“In Asia, LNG prices only one and a half years ago, were about $20 [per million British Thermal Units], they are today only $5,” Birol said. “That is a big drop.”
“We are always talking about low oil prices but LNG prices are also very low, why? Because the demand is currently weak plus lots of LNG is coming to market from the U.S. and from Australia through 2020,” Birol said.
The first cargo of LNG produced from American shale basis left port in Louisiana late Wednesday evening, bound for Brazil. U.S. export terminals are coming online much faster than in Canada largely because most of them are so-called “brownfield” projects where pre-existing import terminals are being reconfigured for exports. Canada’s projects are all what the industry refers to as “greenfield”, whereby massive industrial facilities must be erected on what were previously empty patches of land.
British Columbia’s latest provincial throne speech acknowledged “new challenges” facing the nascent sector that would have an impact on “initial timelines,” while steadfastly maintaining “success is not for quitters” and that the province “must begin to export [LNG].” Post-2020 is now the timeline even the most optimistic analysts are using to estimate when Canada’s first LNG shipments could leave the B.C. shore.
While Birol did not address Canada’s westernmost province sticking to the expectation of 100,000 new jobs and $100-billion in government revenue that it set in 2011 when it was first building a framework for LNG, the IEA chief expects the sector to achieve at least some success.
“The world needs Canadian energy,” he said.