Break Out

The world is head­ing to­wards a more uni­fied global mar­ket for nat­u­ral gas used for trans­porta­tion, power and heat­ing – a his­tor­i­cal first. To earn its place at the ta­ble, Cana­dian gas will have to break out of the western basin and go head-to-head with th



which to­gether con­trolled 60 per cent of global proven re­serves, met in Tehran and agreed to co­or­di­nate their gas poli­cies. They were dream­ing. But the troika are key mem­bers of the 12-na­tion Gas Ex­port­ing Coun­tries Fo­rum, so con­sumers sat bolt upright when they read head­lines declar­ing the group a “Gas OPEC.” But the no­tion of a global gas car­tel was pre­ma­ture at best. Rus­sia only had pipe­lines, Qatar re­ally only sold LNG, and Iran was a net im­porter.

To­day, air­planes fly into Aus­tralia on gas-de­rived jet fuel, Ger­mans pump gas-born diesel from Qatar. Ship­ping firms plan LNG fu­el­ing sta­tions on the Great Lakes, Brazil buys chilled gas from Nor­way and Tesla au­to­mo­biles purr along Amer­i­can high­ways charged from power sta­tions that once burned coal. The world is ringed by a grow­ing net­work of LNG ter­mi­nals sell­ing what is seen as a tran­si­tion fuel by coun­tries that want to be­come low-car­bon economies. In a decade, North Amer­ica’s coasts may bris­tle with ex­port ter­mi­nals com­pet­ing against Aus­tralian, Rus­sian, Mid­dle Eastern, African and pos­si­bly Latin Amer­i­can LNG sup­pli­ers. As we re­port in “Gas of Ages,” in the long term, gas glows.

But the short and medium terms flicker for Western Cana­dian pro­duc­ers as they fig­ure out how to break out of their iso­lated cor­ner of the con­ti­nent. The reach of the Mar­cel­lus shale play is rapidly grow­ing into tra­di­tion­ally Cana­dian ex­port mar­kets, such as the U.S. Mid­west, North­east and Eastern Canada, as de­tailed in “The Beast Below.”

Iron­i­cally, lo­cal de­mand from oil sands SAGD fur­naces has weak­ened the ex­port po­si­tion of Western Cana­dian gas pro­duc­ers. It has left them un­able to fill ex­port pipe­lines to ca­pac­ity with Al­ber­tan gas, so pipe­lines op­er­a­tors boosted prof­its by re­vers­ing them to send U.S. gas into what will soon be their for­mer mar­kets – at full ca­pac­ity. Canada’s shale gas de­vel­op­ers will be­come in­creas­ingly hemmed in as they fight for mar­ket share in a sat­u­rated North Amer­i­can net­work. Our “Full Mont­ney” re­port de­tails their LNG break-out hopes.

Gas as a universal feed­stock in a sin­gle global mar­ket – the very thing those plan­ners in Tehran dreamed of eight years ago – could be­come more of a re­al­ity. But it won’t be them who con­trol it. In­stead, they will fight for mar­ket share along­side world­wide ex­porters, hope­fully in­clud­ing Canada.

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