Canada eyes role in global gas markets via LNG exports, targets Asian buyers

Canada is eyeing a role in the global gas markets via LNG exports with Asia as its prime destination, as multiple producers work through regulatory approvals and engineering and design processes to build facilities on its West Coast, officials said at an industry conference in Vancouver, British Columbia.

"[Canada's] West Coast is emerging rapidly as a global export hub and in the past few months things have moved at a higher pace," Stewart Muir, CEO of Resource Works said May 9 at the Canada Gas & LNG Exhibition and Conference.

"2023 can potentially be a turning point for Canada's West Coast," Muir said, noting it is not just LNG but also incremental volumes of LPG that will be exported to Asia.

The Dutch trading firm Vopak is planning to increase LPG loadings for Japan from the Prince Rupert port along the Canadian Pacific Coast in British Columbia, Muir said.

Resources Works is a Vancouver-based not-for-profit agency working on the development of natural resources.

Global LNG demand is expected to grow 49 Bcf/d to 80 Bcf/d between now and 2050, providing ample opportunities for Canadian producers to sign long-term offtake deals with Asian buyers in particular, Andy Mah, member of the board of director of Advantage Oil & Gas, said at the same event.

Advantage is part of the Rockies LNG, which along with Texas-based Western LNG and the First Nation British Columbia-based Nisga'a Nation, in late 2022 received a conditional 40-year export license from the Canada Energy Regulator for a planned grassroot facility in British Columbia – called Ksi Lisims – to export of 12 million mt/year of low-carbon LNG to Asian markets.

"This is our time and what is compelling is the low upstream costs," Mah said. "With F&D [finding and development] costs of C$1.45 [$1.06]/MMBtu in the Montney and C$1.70/MMBtu in the Duvernay in the WCSB, we can compete with the world's leading natural gas producers of Saudi Arabia at C$1.06/MMBtu; Iran at C$1.60/MMBtu and Qatar at C$1.93/MMBtu."

Carbon intensity, less sailing time

Besides cost advantage in the feedstock gas price, proposed Canadian LNG producers are also razor focused on reducing carbon intensity to the "lowest level", Paul Sullivan, a senior vice president with global engineering and construction firm Worley, said at the conference.

"The low carbon intensity is an advantage as we have it as near perfect to net zero as is possible," Sullivan said, adding the planned LNG liquefactions trains will rely on renewable power to be supplied by BC Hydro.

An initiative by Canadian Pacific Coast producers to export lowest-carbon intensity LNG to Asian buyers is gaining traction with the Vancouver-based Woodfibre LNG unveiling designs in late-March for what it claimed will have the 'lowest emissions globally' for its planned 2.1 million mt/year LNG facility to be built at Squamish in British Columbia.

The company has already designed a facility with annual emissions of 83,374 mt/year of carbon dioxide equivalent and a carbon intensity of 0.04 mt of CO2e for each mt of LNG produced, it said in a statement then, noting Woodfibre's emissions level with be "well below" the provincial government benchmark of 0.16 mt of CO2e.

"We will start construction in September 2023 with production to start in 2027," Woodfibre LNG CEO Christine Kennedy said at the conference.

Separately, Woodfibre is also on track and "close" to signing an additional 0.450 million mt/year offtake deal with BP and also about to enter the market to finance its planned LNG facility, Kennedy told S&P Global Commodity Insights on the sidelines of the conference.

BP already has a deal to buy 1.5 million mt/year from Woodfibre and the additional volume will bolster their position in the Asia-Pacific region to supply to customers.

Canada's drive to produce the lowest carbon-intensity LNG may be a unique selling point as buyers – particularly in Europe – plan new regulations, Worley's Sullivan said.

The verdict is still out and its is still early days, Woodfibre's Kennedy said.

"So far, it hasn't attracted a premium, but it will come," Kennedy said.

Another advantage for Western Canadian producers targeting Asia buyers – when compared with their US counterparts – is the lesser sailing time, Sullivan said.

"Delivery time for cargoes are seven to nine days for Western Canadian producers. While for those on the US Gulf Coast it is 25 to 27 days even while navigating through the Panama Canal," he said.

LNG in containers

Port Edward LNG is targeting to take advantage of this reduced sailing time with its small-sized LNG plant of capacity 300,000 mt/year in British Columbia, President Chris Hilliard said at the same event.

"We will use containers to move LNG to markets in Asia to displace coal and diesel," Hilliard said. "We are close to financing the $400 million facility and will move forward quickly."