Varcoe: 'Nonetheless loads of room for Canada to be a critical participant' in international LNG race, says Enbridge head

Varcoe: 'Nonetheless loads of room for Canada to be a critical participant' in international LNG race, says Enbridge head

This nation has but to see one LNG challenge accomplished but, though that deadlock is about to vary with the development of a number of tasks

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After years of rising at a quick tempo, international demand for pure fuel is forecast to gear down over the following few years, whereas international LNG provide is predicted to race forward by 2026.

A brand new report by the Worldwide Vitality Company (IEA) tasks a slowdown within the development of pure fuel consumed on the earth, forecasting it’s going to peak in North America in 2023 earlier than declining subsequent 12 months.

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But, it additionally highlights the chance forward for nations which are keen and in a position to export liquefied pure fuel (LNG), notably the USA.

It’s simply another reason Canada wants to make sure it has a agency spot within the international LNG sector — one thing trade leaders and vitality specialists proceed to spotlight, even with final month’s projections by the IEA that oil, coal and pure fuel demand will peak this decade.

“There are plenty of forecasts. You realize, I’ve been on this enterprise lengthy sufficient to see peak oil many instances and it’s by no means really hit peak oil. This 12 months, the world will use extra oil than it’s ever used earlier than,” Enbridge CEO Greg Ebel mentioned in an interview Friday.

“Pure fuel is a important element in so many alternative areas of the world and can proceed to take action as a part of our sustainability objectives, as a part of backup for renewables . . . Increasingly more individuals need to have a greater life-style and meaning low cost, reasonably priced, safe vitality.

“And, inevitably, for many years and many years to come back, that’s going to contain pure fuel and oil.”

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The most recent IEA report launched Tuesday forecasts international demand for fuel will dip from a median development charge of two.5 per cent yearly (between 2017 and 2021) to 1.6 per cent from final 12 months to 2026.

It cites a number of elements for the decline, together with improved vitality effectivity requirements and the ramp-up of renewable energy.

“The world’s fuel markets have entered a brand new and extra unsure interval that’s more likely to be characterised by slower development and better volatility,” the IEA’s Keisuke Sadamori mentioned in a press release.

Greg Ebel
“What’s Canada doing unsuitable? We’re shifting too slowly,” Enbridge CEO Greg Ebel mentioned final week. Photograph by Equipped picture

“We count on a considerable improve in new LNG capability coming on-line within the years forward, which ought to ease a number of the tightness and safety of provide issues.”

Whereas markets reminiscent of Europe and North America are anticipated to see fuel consumption fall over the medium time period, greater demand is anticipated in Asia, Africa and the Center East.

And the strategic significance of super-chilled liquefied pure fuel will proceed to broaden.

“LNG export tasks will probably be a key driver of upstream developments,” the report states.

A few figures within the report are value contemplating.

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The company forecasts LNG provide will improve by 25 per cent, or 130 billion cubic metres, all over the world by 2026. The US will make up about half of all incremental provide, cementing its place because the world’s largest and fastest-growing fuel exporter.

The report additionally tasks LNG exports south of the border will rise by a shocking 60 per cent by 2026 in contrast with final 12 months’s ranges, as extra liquefaction capability is added on the U.S. Gulf Coast.

(The research tasks fuel output in North America will climb by 1.8 per cent yearly between this 12 months and 2026.)

For Canada, LNG additionally represents a chance.

Because the world’s fifth-largest pure fuel producer, fuel output in Canada has elevated over the previous decade. Coal utilized in energy era has more and more been changed by lower-emitting fuel.

Western Canada has large reserves of fuel, notably within the Montney formation in northern British Columbia and Alberta.

Complete Canadian fuel gross sales volumes will improve to about 21 billion cubic toes (bcf) per day by the top of the last decade, up from 17.5 bcf per day at the moment, based on a report by RBC Capital Markets.

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It estimates about two-thirds of all fuel wells drilled in Western Canada by 2030 will goal the formation, supported by LNG initiatives.

“The dominance of Canada’s Montney shale play is about to go international,” the RBC report states. “A number of phases of LNG tasks are set to (be) driving the expansion of Canadian fuel volumes.”

This nation has but to see one LNG challenge accomplished but — 18 separate developments have been proposed at one level final decade — though that deadlock is about to vary.

The LNG Canada growth in Kitimat, B.C., led by Shell, is predicted to start working as early as 2025. The smaller Woodfibre LNG challenge close to Squamish is now below development, co-owned by Pacific Vitality Corp. and Calgary-based Enbridge.

The Woodfibre LNG site
The Woodfibre LNG website is seen on Howe Sound as work continues to arrange for development, in Squamish, B.C., Wednesday, July 5, 2023. Photograph by DARRYL DYCK /THE CANADIAN PRESS

Different tasks are advancing. A closing funding resolution on the proposed Cedar LNG challenge is predicted through the fourth quarter of this 12 months.

Ebel, who spoke final week to the Toronto Area Board of Commerce and advocated for extra LNG growth in Canada, famous the U.S. has change into the world’s largest fuel exporter in simply seven years.

But, it’s been a “misplaced decade” for this county’s LNG aspirations.

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“What’s Canada doing unsuitable? We’re shifting too slowly,” he advised the viewers, noting fuel exports may displace coal utilized in different nations and decrease emissions.

“Even with the U.S. growth, there’s nonetheless loads of room for Canada to be a critical participant.”

He’s not the one one who thinks Canadian fuel can play a big position within the worldwide LNG trade.

The nation may probably ramp up its LNG exports to greater than 5 bcf per day, mentioned Dulles Wang of vitality consultancy Wooden Mackenzie.

With Canada’s quick transport instances to rising Asian markets and its low-emissions LNG, this nation has a number of pure benefits, though there’s additionally a have to construct extra pipeline capability, he added.

“It’s not too late,” mentioned Wang, the director of Americas Gasoline and LNG analysis at Wooden Mackenzie.

“The expansion within the LNG market will proceed nicely into the 2040s — and if we will get tasks began or off the bottom by the early 2030s, there’s undoubtedly nonetheless time for these LNG tasks.”

Chris Varcoe is a Calgary Herald columnist.

[email protected]

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