Canada should be ready for next LNG boom

Politicians missed the boat on gas-exporting opportunity

As governments grapple with how to balance their books and Canadians wonder where the next wave of middle-class jobs might percolate from, consider a recent report from the International Energy Agency (IEA). In it, massive worldwide demand for natural gas is profiled. The report, Gas 2017, contains useful nuggets for energy-rich Canada.

The release is particularly timely, given the sudden cancellation of Petronas’ planned $36-billion liquefied natural gas (LNG) export terminal in British Columbia. It’s another painful lesson on why Canada cannot take energy sector investment and high-paying jobs for granted, as if investment in Canada was somehow guaranteed

The IEA report illustrates why Canadians should favour extracting, processing and exporting natural gas. Demand is growing in the U.S. as well as Mexico, and also in the developing Asian countries. Those are potential export markets beyond current Canadian exports to the U.S., if our own domestic reluctance can be overcome.

The IEA report looks out to 2022 and unintentionally finds a number of bright spots for Canada. For example, the number of countries that now import natural gas increased to 39 nations from 15 in 2005. Until recently, power companies have driven the demand for gas as coal-fired power electricity plants were shuttered and many converted to gas. The IEA believes industrial sector growth will drive up demand over the next five years. Worldwide, natural gas consumption is forecast at 4,000

Potential has been stymied in Canada by anti-resource development ideology.

billion cubic meters (BCM) in 2022, up from 3,630 BCM last year. That’s a not-insignificant, 10 per cent jump.

China is a key driver of increased demand. The IEA predicts that natural gas consumption in China will, by 2022, be five times current usage. One reason is economic since natural gas is relatively cheap. Another is environmental. China’s long-suffering population, living with deadly air pollution, will benefit from increased natural gas consumption as it replaces dirtier coal-fired power. “The environmental advantages of natural gas, particularly when replacing coal,” asserts the IEA, “deserve more attention from policy-makers.”

Indeed, and the environmental benefits should be widely noted by policy-makers in Canada given our potential to extract and export more LNG to high-demand markets.

However, that growth potential has long been stymied in Canada by anti-resource development ideology or merely uninformed governments that lack an awareness of how other countries have taken advantage of the boom in natural gas demand. Petronas, it must be said, is cancelling its megaproject when the industry is active and investing elsewhere in the world.

In Australia, for example, the consulting firm Deloitte estimates that 103,000 construction jobs were created as that countries’ LNG export terminals were built over the last few decades. An additional 55,000 to 65,000 jobs are estimated to be permanent in the LNG sector and supply-line chains once all the Australian facilities are completed.

Today, Australia, the U.S., Russia and Qatar are dominant in LNG exports. Still, as a counterpoint of sorts, in Australia the government gave itself the power to restrict exports if the gas is needed domestically. That’s one reason Canada might have another shot at an LNG industry in the next boom.

Another possibility for more market access depends on how the current shortage of investment in new LNG infrastructure plays out. Problematically, in British Columbia, the new government and Premier John Horgan would have to get past its anti-LNG coalition partner, the Greens led by Andrew Weaver.