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
IN 2008, RUSSIA, IRAN AND QATAR,
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.