Canada Unwilling to Invest in New LNG Export Projects

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Though exports are widely expected to be strong this year, Canada's federal government says it has no interest in subsidizing liquefied natural gas (LNG).

The first phase of an LNG export facility in Kitimat, British Columbia, is close to completion. Operator LNG Canada, a consortium led by Shell plc (NYSE:SHEL) (London, England), said the facility represents the start of an entire new industry in Canada, which is looking to break a North American deadlock by tapping the economies of Asia and possibly Europe.

LNG Canada will have two liquefaction trains and boast a capacity of 14 million metric tons of LNG per year at its peak. With the first phase of operations expected to begin during the second half of the year, LNG Canada added the facility represents the largest private investment in the nation's history at about US$30 billion.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project and Plant databases can learn more about the Kitimat project from a detailed project report and plant profile.

Canada has relied on the North American market almost exclusively for its exports. That's about to change with the various LNG projects in the works, but Energy Minister Jonathan Wilkinson said those developments will have to continue without the government's help.

"We are not interested in investing in LNG facilities," he told broadcaster CTV. "That's the role of the private sector."

Wilkinson added the government is not interested in "inefficient fossil fuel subsidies." Prime Minister Justin Trudeau already has set targets for a net-zero economy that includes tight emission protocols for LNG.

The U.S., the world leader in LNG exports, has paused permits for new facilities while it weighs the environmental footprint of sector infrastructure. A recent report from energy consultant group Wood Mackenzie finds the U.S. LNG sector is highly polluting, particularly in methane, a potent greenhouse gas with far more warming potential than carbon dioxide (CO2).

"With a range of 800 to 1,400 kilograms CO2 equivalent per tonne of LNG, the U.S. has some of the world's highest-emitting projects, with upstream reservoir type and pipeline distance to LNG plants adding to their high methane intensity," said Massimo Di Odoardo, a vice president of gas and LNG research at Wood Mackenzie.

Analysts attribute the emissions to the use of pneumatic devices and compressors deployed during production in the shale patch.

Nevertheless, both for Canadian energy companies and for energy security, LNG remains an important global commodity. Mostly European nations have looked to LNG to take up Russia's market share lost to sanctions imposed in response to its invasion of Ukraine.

Wilkinson's comments followed an exclusive conversation between CTV and Greek Prime Minister Kyriakos Mitsotakis, who said his nation would gladly take Canadian LNG, if it were available.

"We are a big entry point for LNG, not just for the Greek market, but also for the Balkans, for Eastern Europe," he said. "Theoretically, we could even supply Ukraine."

LNG considerations are underway for New Brunswick.

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