By Bruce Lantz
Canada’s British Columbia province is breaking ground on several fronts in LNG production. And the world is watching closely.
Canada is the world’s sixth-largest gas producer and the west coast liquefied natural gas (LNG) industry is being watched closely as the world seeks alternatives to the Russian gas supply after its invasion of Ukraine. But despite having 18 proposed projects over the past few decades, only one facility, LNG Canada in Kitimat, BC, is under construction. So, experts say it’s about time Canada rose to the challenge, as global demand for LNG is projected to grow 76% by 2040 and a dozen other nations have already expedited the development of their LNG industries.
“Natural gas is a transition fuel that can help other nations make the change from coal to cleaner energy while helping to lift populations out of poverty,” Karen Ogen, CEO of the First Nations LNG Alliance, said in a statement.
Any increase in LNG exports will be welcome news for nations such as Germany, Japan and South Korea who wanted Canadian gas but were forced to source it from other less responsible countries, such as Qatar. And it will be full of positives for Canada. By displacing coal-fired power in Asia, Canadian LNG can reduce emissions equivalent to taking 41 million cars off Canadian roads; pretty good since the nation only has 36 million registered vehicles. Also, a strong LNG sector in BC could generate more than $500 billion in economic activity, almost 97,000 more jobs per year, and $6 billion in wages for Canadians.
Others are certainly aware of the opportunities. The United States recently approved LNG exports from the Alaska LNG project as the United States competes with Russia to ship natural gas from the Arctic to Asia. The Alaska Gasline Development Corp. [AGDC-NYSE] project allows the export of gas to countries with which the United States does not have a free trade agreement.
The $39-billion Alaska LNG project is expected to be operational by 2030 if it gets all the required permits, with the exports going mainly to countries in Asia. The project includes a liquefaction facility on the Kenai Peninsula in southern Alaska and a proposed 1,300-kilometre pipeline to move gas stranded in northern Alaska across the state. The project has been opposed by environmental groups.
There are signs that Canada also is beginning to pay attention. While the Shell-led LNG Canada project is under construction, Woodfibre LNG has announced world-class goals, the Nisga’a First Nation is planning the Ksi Lisims LNG export facility north of Prince Rupert, BC, and the Haisla First Nation is partnering with Pembina Pipeline Corporation [PPL-TSX; PBA-NYSE] to create Cedar LNG, a floating LNG facility on Haisla-owned land near Kitimat, even as the provincial government has toughened emissions standards for new LNG projects.
The BC government has moved to toughen emissions standards for new LNG projects, creating a benchmark climate plan but setting a high hurdle for the industry — the requirement that any projects up for environmental assessment must have a realistic plan to have net-zero emissions by 2030. The new regulations also include an oil and gas emissions cap and plans to accelerate the electrification of the economy.
The $10-billion Ksi Lisims LNG project is designed as a floating facility which includes a pipeline to transport natural gas from the northeast corner of the province for export to Asia. The First Nation is partnering with a group of Western Canadian natural gas producers called Rockies LNG Partners and a Texas energy company, Western LNG. They have vowed to reach net-zero emissions within three years of beginning operations, which is anticipated to be in late 2027 or 2028, and export 12 million tonnes of LNG annually.
The backers of Woodfibre LNG, a $4-billion liquefied natural gas export facility due to go into operation in 2027 near Squamish, BC, have announced its Roadmap to Net Zero, a plan to achieve net-zero emissions by the time their plant starts operating in 2027 — 23 years ahead of government regulation. If successful, it will be the first LNG plant in the world to achieve net zero, with 14 times fewer emissions than a conventional LNG facility, while producing 2.1 million tonnes of LNG annually. Also, Woodfibre will offset emissions during the construction phase of the project, using carbon credits secured from others. The project is backed by Pacific Energy Canada Ltd., with a 70% share, and Enbridge Inc. [ENB-TSX], with a 30% stake.
“Woodfibre LNG’s roadmap prioritizes emissions avoidance and reduction opportunities, and we are proud to have a credible strategy in place that will make us the world’s first net-zero facility,” Woodfibre president Christine Kennedy said in a statement. “Alongside the leadership and vision set out by the province’s new Energy Action Framework, achieving net zero allows Woodfibre LNG to advance the global energy transition, furthering economic reconciliation and contributing to British Columbia’s standard of living.”
The company’s net zero roadmap commits to implementing certain GHG-reducing technologies and outlines incremental opportunities to reduce emissions further as technologies develop and become more affordable. The roadmap will be updated annually to include new technologies, efficiency improvements and new industry practices. Woodfibre LNG is also the first Canadian industrial project to recognize a non-treaty indigenous government, the Squamish Nation, as a full environmental regulator.
“Woodfibre LNG’s announcement comes at a time when global trading partners such as Japan are calling on the Government of Canada to provide a reliable, sustainable source of LNG to support global energy demands, said Pacific Energy president Ratnesh Bedi in a statement. “The Woodfibre LNG project has a critical role to play in demonstrating that British Columbia and its diversified portfolio of energy offerings can contribute to a low-carbon future, both at home and abroad.”
The $3.2-billion Cedar LNG project, the first in Canada to have an indigenous majority owner, will use electricity to operate the LNG facility and export terminal, which will be supplied with natural gas by the Coastal Gaslink pipeline, which is under construction. It’s expected to have an export capacity of three million tonnes of LNG a year and will employ 500 people during its construction and 100 people when it’s in operation. With environmental approvals in place and a final investment decision expected in the third quarter of this year, it’s viewed as an historic step toward economic self-determination for the Haisla people. Cedar LNG has entered into a memorandum of understanding with Montney play producer ARC Resources [ARX-TSX] for a 20-year liquefaction services agreement that could cover 1.5 million tonnes of LNG per year, approximately half of Cedar LNG’s production.
“This agreement is an important step forward in delivering our low-cost, low-emission natural gas to key demand markets, and increasing ARC’s exposure to LNG-linked natural gas prices,” ARC president and CEO Terry Anderson said.
In the coming months Cedar LNG’s proponents will be focusing on advancing work across four key streams — engineering, regulatory, commercial discussions and financing to enable the project to go forward.
“Together with our partner Pembina Pipeline we are setting a new standard for responsible and sustainable energy development that protects the environment and our traditional way of life,” Haisla Nation chief councilor Crystal Smith said in a statement.