Canada is poised to join the ranks of the world’s largest exporters of liquified natural gas (LNG).
As recently as June, when B.C.’s LNG Canada went on-stream, Canada exported no LNG.
With the potential doubling of LNG Canada’s capacity, Canada would become the sixth-largest LNG exporter.
And there are about half a dozen more LNG projects under development in Canada. Most are intended to serve a booming Asia-Pacific market.
LNG demand is rising with its use as a “bridge,” or transition, energy source, replacing oil and coal and their higher CO2 emissions. LNG is among the pillars of Canadian energy superpower status that the Carney government is intent on creating.
At an estimated cost of $48.3 billion, the first phase of LNG Canada on B.C.‘s northwest coast in Kitimat, is among the biggest private-sector infrastructure projects in Canadian history.
The expansion, dubbed LNG Canada Phase 2, is prominent among the five projects announced last week in the first tranche of “nation-building” infrastructure projects that Prime Minister Mark Carney means to expedite.
It might seem odd that Carney would embrace fossil fuel projects.
The former UN special envoy on climate change and finance seemed, until quite recently, to oppose further fossil fuel development.
In his 2021 book “Value(s): Building a Better World for All,” Carney wrote that the fight against climate change requires that “more than 80 per cent of current fossil fuel reserves (including three-quarters of coal, half of gas, one-third of oil) would need to stay in the ground, stranding those assets.”
Yet, the Carney government is expected to give favourable consideration to additional LNG plants and at least one crude oil pipeline project.
The Trans Mountain Pipeline (TMX), which began oil shipments last year, could expand its enormous capacity by as much as 30 per cent, or 300,000 barrels per day, with the addition of more pumping stations on the pipeline.
The $34 billion TMX, a federal Crown corporation, transports crude oil from Edmonton to a terminal in Burnaby on B.C.’s west coast.
There is also talk of reviving the Northern Gateway oil pipeline that was to take Alberta oil to the B.C. coast but was blocked by the Trudeau government.
And a much-discussed expansion of the port at Churchill, Man. could see the port become the eastern terminal of an “energy corridor” across Western Canada that might include an oil or gas pipeline.
So, what are the compelling reasons for Carney’s more positive regard for fossil fuel developments? After all, these projects will encourage increased oil and gas production and boost Canada’s greenhouse gas emissions.
The most obvious rationale is to more fully exploit Canada’s natural resources endowment to make the economy more resilient as it contends with Trump tariff attacks.
Another factor is that projects like expanding LNG Canada and TMX are “shovel ready,” having obtained most of their necessary permits.
They are almost certain of getting a green light within the much-shortened two-year approval process Carney has mandated.
The government also is intent on generating momentum for building big, after decades of frustration in getting major projects approved and built.
Domestic and international investors have largely given up on Canada with its obstacles to large-scale development.
The hope is that when they see some early projects underway, they will be more easily persuaded to invest in large-scale Canadian energy, critical minerals and other projects.
Carney is counting on private capital as the chief source of funding for big infrastructure developments.
LNG Canada is a showcase given its roster of blue-chip international investors — Shell PLC, Malaysia’s Petronas, PetroChina, Mitsubishi Corp. and Korean Gas Corp.
Ottawa is negotiating with the owners of LNG Canada to modify the design of LNG Canada Phase 2 so that it is powered by clean hydroelectricity rather than burning more natural gas.
Ottawa will cover some of the extra cost to make LNG Canada one of the world’s “most environmentally responsible” LNG facilities, Tim Hodgson, the federal energy minister, said last week.
The $5.9 billion Cedar LNG project, also near Kitimat and scheduled to come on-stream in 2028, is powered by hydro.
So is the $12 billion Woodfibre LNG project near Squamish, B.C., which begins production in 2027.
And the Ksi Lisims LNG project in northwest B.C., a $10 billion venture that will start serving Asia-Pacific markets in 2029, will be powered by hydro.
It might be that these nation-building projects are almost secondary to Canada’s ambition to go from laggard to leader in getting big things done.
Dawn Farrell, former CEO of TMX, heads Carney’s new Major Projects Office for expediting big projects.
Farrell said last week that “to get to one project, one review, one decision in a two-year timeline, (that) will set Canada apart globally and attract enormous inflows of capital.”
The challenge will be to maintain today’s sense of urgency as more proposed projects come to the fore.
