Canada’s only liquified natural gas (LNG) facility began operations last year, and a new report suggests the country has the potential to become a leading global exporter. The S&P Global report highlights significant opportunities but also notes challenges, including lengthy permitting processes and limited private sector projects. The federal government aims to boost LNG exports to over 100 million tonnes annually, up from the current 14 million tonnes produced by the single operational facility.
The economic impact of reaching this goal could be substantial, with nearly $1 trillion in investment in the natural gas industry by 2050 and nearly a quarter million jobs annually, according to the report. Daniel Yergin, vice-chairman of S&P Global, emphasized that addressing permitting and cost issues is crucial for Canada to play a major role in the global LNG market. “If Canada can address its permitting issues and its cost issues, Canada can play a very big role in global LNG,” Yergin said.
Western Canada has vast natural gas reserves, which can be produced at some of the lowest costs in North America. However, building pipelines to transport the gas to the West Coast has been complex and expensive. The Coastal GasLink project, for example, faced delays and cost overruns, as well as opposition from Indigenous communities and environmentalists. Some experts argue that Canada may never become an LNG-exporting superpower due to these challenges and competition from other countries.
Despite these hurdles, Canada has advantages, including a relatively short shipping route to Asia and lower greenhouse gas intensity compared to similar projects in other countries. The report notes that Asian buyers are interested in Canadian LNG, especially given disruptions in the global natural gas market due to the conflict in the Middle East this year. The federal government has introduced new legislation to speed up regulatory reviews, but investors will need to see proof of permitting reform to move forward.