Canadian producers and local government officials expressed optimism that the country's LNG industry would overcome regulatory, environmental and economic challenges to boost natural gas takeaway capacity from the western part of the country within five or six years.
Industry experts at CERAWeek by IHS Markit in Houston observed that market access is perhaps the biggest obstacle facing the oil and gas industry in Western Canada, which enjoys rich supply basins much like the big U.S. shale plays but has trouble realizing its growth potential because of insufficient pipeline infrastructure.
On the LNG front, the region offers a much shorter route to Asia than the U.S. Gulf Coast, but it has so far been unable to get an export terminal up and running. Strong opposition from environmental groups and landowners, as well as difficulty securing enough long-term commitments to finance the projects, have scuttled past efforts.
"Now the delays are waiting on economics to justify the large investments in LNG facilities, and even the pipelines to the coast," said Marty Proctor, president and CEO of Seven Generations Energy, an independent Canadian producer, on March 6. "I strongly believe they will happen."
Industry leaders in Western Canada are eyeing the 2023-2024 time frame for an LNG export terminal possibly to start up there, with new pipeline infrastructure in place to feed gas to the facility. Alberta Minister of Energy Margaret McCuaig-Boyd said a Canadian delegation was in Asia recently to talk to potential customers for Canadian gas and LNG.
"Certainly, when we were in Asia, we heard how important LNG is to the Asian market," McCuaig-Boyd said. "To get that LNG built on the coast and those lines to it are pretty critical."
LNG Canada, a joint venture of Shell Canada Energy Ltd., PetroChina Co. Ltd., South Korea's KOGAS Canada Ltd. and Japan's Mitsubishi Corp., has proposed to build an LNG export terminal in Kitimat, British Columbia. The project had been scheduled to receive a final investment decision in late 2016, but the decision was postponed due to market conditions. The project's website said the partners are committed to making a final investment decision "when these conditions improve and the project has demonstrated that it remains cost competitive against other investment opportunities."
Speakers said too much money is being left on the table through inaction.
"This isn't going to happen overnight," Proctor said. "This is going to be a thoughtful process over time."
