Despite the rise of “Buy American” policy, the CEO of Canada’s biggest company says there are many opportunities to improve Canada’s sluggish economy by supporting the United States.

Near the top of the list for RBC boss Dave McKay is energy – and not just the multi-billion-dollar trade between Canada and the U.S. The value of Canada’s resources to the U.S. stretches far beyond North America’s borders.

“Canada has to get in sync and create value for our largest trading partner,” McKay told a Canadian Club of Toronto gathering on Sept. 10.

Security, he said, is one of America’s biggest concerns.

“Energy security is a big part of overall security…As we think about these power structures changing, the U.S. needs us to supply Asia with energy. That allows the United States to feed energy to Europe.”

He said that for Canada, that includes oil exports through the new Trans Mountain pipeline expansion and natural gas on LNG carriers.

“Particularly Asia wants our LNG. They need it. It’s cleaner than what they’re using today, the amount of coal being burned…We can’t keep second-guessing ourselves,” McKay said.

Asia’s demand for oil and gas is projected to rise substantially over the coming decades, according to the latest outlook from the U.S. Energy Information Administration (EIA).

The EIA projects that the region’s natural gas use will increase by 55 per cent between 2022 and 2050, while oil demand will increase by 44 per cent.

With completion of the Trans Mountain expansion in May, Canada’s first major oil exports to Asia are now underway. Customers for the 590,000 barrels per day of new export capacity have already come from China, India, Japan and South Korea.

Canada’s long-awaited first LNG exports are also on the horizon, with first shipments from the LNG Canada terminal that could come earlier than expected, before year-end.

According to the Canada Energy Regulator, LNG exports from the coast of British Columbia could rise from virtually nothing today to about six billion cubic feet per day by 2029. That’s nearly as much as natural gas as B.C. currently produces, CER data shows.

But the federal government’s proposed oil and gas emissions cap could threaten this future by reducing production.

Analysis by Deloitte found that meeting the cap obligation in 2030 would result in the loss of about 625,000 barrels of oil per day and 2.2 billion cubic feet of natural gas per day.

This could wipe out significant sales to customers in the United States and Asia, without reducing demand or consumption.

McKay said the “massive complexity” around climate rules around the world and the lack of a cohesive path forward is slowing progress to reduce emissions.

Canada has opportunities to advance, from conventional energy to critical minerals and cleantech innovation, he said.

“We have to continue to leverage our resources…We can lead in clean tech, but in the meantime, there is an opportunity to get more carbon out of the economy sooner,” he said.

“We are in a race. Our planet is heating, and therefore we have to accept there can be transitionary energy sources.”

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Momentum is building for the long-awaited start-up of Canada’s first liquefied natural gas (LNG) export project.

Shipments from the LNG Canada terminal at Kitimat, B.C. may now start earlier than expected, later this year rather than mid-2025, according to Martin King, Canadian energy specialist with Houston-based RBN Energy.

“LNG Canada appears to be on the cusp of its testing phase and is likely to be exporting some cargoes of LNG before the end of this year,” King wrote recently.

He made the prediction after a senior executive with Shell, the project’s lead owner, said it could deliver its first cargo earlier than previously planned, in the wake of two key milestones.

Fluor reported in July it had completed the final weld on the first production train while Petronas, which holds a 25 per cent stake in LNG Canada, announced it would add three LNG vessels to its North American fleet, doubling its size.

A longtime industry insider sees the $18 billion LNG Canada terminal as a game changer.

“This is decades in the making. Canada has been trying to get its LNG business up and running since the 1970s but it has been sidetracked for one reason or another,” says Calgary-based consultant Racim Gribaa, who has worked in the industry for more than 25 years.

“This project is perfectly placed to take advantage of an awesome opportunity given the demand for LNG worldwide is growing exponentially.”

Map courtesy RBN Energy

The project, which will use the Coastal GasLink pipeline, completed in November 2023, to bring gas from northeastern British Columbia to the Kitimat terminal for processing and shipping, will have capacity to produce up to 14 million tonnes per year in its first phase.

While that’s a fraction of the 404 million tonnes of global demand in 2023, Gribaa says Asian buyers view LNG Canada as secure supplier in part due to its geography.

“The closest point to Asia is Canada’s west coast, so you have the shortest shipping route, which makes for optimal transportation costs. The traders and LNG industry see it as valuable for that reason,” says Gribaa, who previously worked in LNG trade in Qatar, one of the world’s largest exporters.

And the project is coming online at a time when worldwide demand is surging.

“The worldwide demand has effectively doubled every decade since 1990, when it was 50 MPTA. We are now closing in on 500 MPTA and that is accelerating,” Gribaa says.

“The world will need 10 LNG Canadas in 10 years and 100 more LNG Canadas in the next 30 years.”

The project has plans for a second phase that would double production to 28 million tonnes per year. Based on demand, Gribaa says “the question isn’t if it will go forward, it’s when the consortium will announce the expansion.”

World LNG demand growth will be particularly strong in Asia, where Shell’s four LNG Canada partners – Petronas (25 per cent), PetroChina (15 per cent), Mitsubishi (15 per cent) and Korea Gas Corporation (five per cent) – are headquartered.

“Each of these markets has historical demand for LNG and that demand will continue to grow in the coming decades,” he says, adding that LNG in Asia can be used for power generation and heavy industry, and to reduce air pollution from coal-fired power.

Overall, generating electricity in China with LNG from Canada rather than coal could reduce emissions by up to 62 per cent, according to a 2020 study published in the Journal for Cleaner Production.

A 2022 study by Wood Mackenzie found that growing Canada’s LNG industry could reduce net emissions in Asia by 188 million tonnes per year through 2050.

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With the recent completions of the Trans Mountain expansion and Coastal GasLink pipelines, and the looming completion of LNG Canada within the next year, there are few major energy projects with the green light for one of the world’s largest and most responsible energy producers.

Which leaves a lingering question: In a world that has put a premium on energy security, what’s next for Canada?

Heather Exner-Pirot, a senior fellow and director of the natural resources, energy and environment program at the Macdonald-Laurier Institute, said Natural Resources Canada’s major projects inventory “has been in a pretty sharp decline since 2015, which is concerning.”

“It’s not just oil and gas but also mining, also electricity . . . It’s the overall context for investment in Canada,” said Exner-Pirot, who is also a special adviser to the Business Council of Canada.

“When we look at BC, we see TMX, Coastal GasLink, very soon LNG Canada will be finishing up. That’s probably in the order of $100 billion of investment that that province will lose.

“So you do start to think about what happens next. But there are some things on the horizon. I think that’s part of it. Other LNG projects where maybe it wasn’t politically popular, it wasn’t a social licence, and maybe the labour force was also constrained, and now is opening opportunities.”

A recent analysis conducted by Exner-Pirot found that between 2015 and 2023, the number of energy and natural resource major projects completed in Canada dropped by 37 per cent. And those that managed to be completed often faced significant delays and cost overruns.

One notable project Exner-Pirot expects to fill the void is Ksi Lisims LNG, which is being developed on the northwest coast of Canada to export low-carbon LNG to markets in Asia. The project represents a unique alliance between the Nisga’a Nation, Rockies LNG and Western LNG.

Ksi Lisims LNG is a proposed floating LNG export facility located on a site owned by the Nisga’a Nation near the community of Gingolx in British Columbia.

The project will have capacity to produce 12 million tonnes of LNG per year, destined for markets in the Pacific basin, primarily in Asia where demand for cleaner fuels to replace coal continues to grow.

As well, the second phase of the LNG Canada export terminal in Kitimat, B.C. shows increasing signs of moving forward, which would roughly double its annual production capacity from 14 million tonnes to 26 million tonnes, Exner-Pirot added.

While nearby, Cedar LNG, the world’s first Indigenous-owned LNG export facility, is closing in on the finish line with all permits in place and early construction underway. When completed, the facility will produce up to three million tonnes of LNG annually, which will be able to reach customers in Asia, and beyond.

According to the International Energy Agency, the world is on track to use more oil in 2024 than last year’s record-setting mark. Demand for both oil and natural gas is projected to see gradual growth through 2050, based on the most likely global scenario.

Kevin Birn, chief analyst for Canadian oil markets at S&P Global, said despite the Trans Mountain expansion increasing Canada’s oil export capacity by 590,000 barrels per day, conversations have already begun around the need for more infrastructure to export oil from western Canada.

“The Trans Mountain pipeline, although it’s critical and adds the single largest uplift in oil capacity in one swoop, we see production continue to grow, which puts pressures on that egress system,” he said.

Birn said Canada remains a major global player on the supply side, being the world’s fourth-largest producer of oil and fifth-largest producer of natural gas.

“This is a really important period for Canada. These megaprojects, they’re generational. These are a once-in-a-generation kind of thing,” Birn said.

“For Canada’s entire history of being an oil and gas producer, it’s been almost solely reliant on one single export market, which is the United States. That’s been beneficial, but it’s also caused problems for Canada in that reliance from time to time.

“This is the first time Canada will enter the global marketplace as a global player, so it is an incredibly important change for the industry.”

Exner-Pirot said Canada has the ability to become a major exporter on the energy front globally, at a time when demand is accelerating.

“We have open water from B.C. to our allies in Asia . . . It’s a straight line from Canada to its allies. This is a tremendous advantage,” she said, noting the growth of data centres and AI is expected to see demand for reliable energy soar.

“We are seeing growing electricity demand after decades of plateauing because our fridges got more energy efficient and our washers and dryers got more energy efficient. Now we’re starting to see for the first time in a long time more electricity demand even in developed countries. These are all drivers.”

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Worldwide concerns about energy security have put a renewed focus on the international liquefied natural gas (LNG) industry. The global demand for LNG is expected to increase over the next few decades.

Global demand growth will be driven primarily by Asian markets where the need for LNG is expected to increase from 277 million tonnes (MT) in 2025 to 509 MT by 2050 (see Figure 1). By 2050 the demand for LNG in Europe will be 83 MT and in Africa 20 MT. In South America too, demand will increase – from 13 MT in 2025 to 31 MT in 2050.

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

In North America (Canada, Mexico, and United States) a number of LNG projects that are either under construction or in the planning stages will benefit from the rise in global LNG demand.

North American LNG production is expected to grow from 112 MT in 2025 to over 255 MT by 2050 (see Figure 2). In Canada, the LNG projects under construction or in the planning stages include LNG Canada Phases 1 & 2, Woodfibre LNG, Cedar LNG, the Tilbury LNG expansion, and Ksi Lisims LNG. Canada’s LNG production is expected to grow from just 2 MT in 2025 to over 43 MT by 2050. In the United States production is projected to increase from 108 MT in 2025 to 210 MT in 2050.

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

This CEC Fact Sheet uses Rystad Energy’s Gas and LNG Markets Solution¹ to benchmark the cost competitiveness of LNG projects that are under construction and proposed in Canada compared to other LNG projects under construction and planned elsewhere in North America. (Note that the content of this report does not represent the views of Rystad Energy.)

The LNG cost competitiveness benchmarking analysis used the following performance metrics:

• LNG plant free-on-board (FOB) cost break-even;
• Total LNG plant cost (for delivery into Asia and Europe).

The objective of this LNG cost competitiveness benchmarking is to compare the competitiveness of Canadian LNG projects against those of major competitors in the United States and Mexico. The selection of other North American LNG facilities for the benchmark comparison with Canadian LNG projects (LNG Canada, the Tilbury LNG Expansion, Woodfibre LNG, Cedar LNG, and Ksi Lisims LNG) is based on the rationale that virtually all Canadian LNG plants are under construction or in the planning stage and that they compare well with other North American LNG plants that are also under construction or are being planned between 2023 and 2050. Further, to assess the cost competitiveness of the various LNG projects more accurately, we chose only North American LNG facilities with sufficient economic data to enable such a comparison. We compared the cost competitiveness of LNG coming from these other North American projects with LNG coming from Canada that is intended to be delivered to markets in Asia and Europe.

1. Rystad Energy is an independent energy research company providing data, analytics, and consultancy services to clients around the globe. Its Gas and LNG Markets Solution provides an overview of LNG markets worldwide. The Solution covers the entire value chain associated with gas and LNG production, country and sector-level demand, and LNG trade flows, infrastructure, economics, costs, and contracts through 2050. It allows for the evaluation of the entire LNG market infrastructure, including future planned projects, as well as the benchmarking of costs for LNG projects (Rystad Energy, 2024).

Comparison of LNG project FOB cost break-even (full cycle)

Figure 3 provides a comparison of the free-on-board (FOB) cost break-even for LNG facilities under construction or being planned in North America. FOB break-even costs include upstream and midstream costs for LNG excluding transportation costs (shipping) as seen from the current year. Break-even prices assume a discount rate of 10 percent and represent the point at which the net present value for an LNG project over a 20- to 30-year period becomes positive, including the payment of capital and operating costs, inclusive of taxes.

Among the selected group of North American LNG projects are Canadian LNG projects with an FOB break-even at the lower end of the range (US$7.18 per thousand cubic feet (kcf)) to those at the higher end (US$8.64 per thousand cubic feet (kcf)).

LNG projects in the United States tend to settle in the middle of the pack, with FOB break-even between US$6.44 per kcf and US$8.37 per kcf.

Mexico LNG projects have the widest variation in costs among the selected group of projects, ranging from US$6.94 per kcf to US$9.44 per kcf (see Figure 3).

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

Total costs by project for LNG delivery to Asia and Europe

The total cost by LNG plant includes FOB cost break-even, transportation costs, and the regasification tariff. Figure 4 compares total project costs for LNG destined for Asia from selected North American LNG facilities.

Canadian LNG projects are very cost competitive, and those with Asia as their intended market tend to cluster at the lower end of the scale. The costs vary by project, but range between US$8.10 per kcf and US$9.56 per kcf, making Canadian LNG projects among the lowest cost projects in North America.

The costs for Mexico’s LNG projects with Asia as the intended destination for their product tend to cluster in the middle of the pack. Costs among U.S. LNG facilities that plan to send their product to Asia tend to sit at the higher end of the scale, at between US$8.90 and US$10.80 per kcf.

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

Figure 5 compares total project costs for LNG to be delivered to Europe from select North American LNG facilities.

Costs from U.S. LNG facilities show the widest variation for this market at between US$7.48 per kcf and US$9.42 per kcf, but the majority of U.S. LNG facilities tend to cluster at the lower end of the cost scale, between US$7.48 per kcf and US$8.61 per kcf (see Figure 5).

Canadian projects that intend to deliver LNG to Europe show a variety of costs that tend to cluster at the middle to higher end of the spectrum, ranging from US$9.60 per kcf to and US$11.06 per kcf.

The costs of Mexico’s projects that are aimed at delivering LNG to Europe tend to cluster in the middle of the spectrum (US$9.11 per kcf to US$10.61 per kcf).

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

Conclusion

LNG markets are complex. Each project is unique and presents its own challenges. The future of Canadian LNG projects depends upon the overall demand and supply in the global LNG market. As the demand for LNG increases in the next decades, the world will be searching for energy security.

The lower liquefaction and shipping costs coupled with the lower cost of the natural gas itself in Western Canada translate into lower prices for Canadian LNG, particularly that destined for Asian markets. Those advantages will help make Canadian LNG very competitive and attractive to markets worldwide.

References (as of March 23, 2024)

Rystad Energy (2024), Gas & LNG Markets Solution <https://bit.ly/3Q6RorN>.

Creative Commons Copyright

Research and data from the Canadian Energy Centre (CEC) is available for public usage under Creative Commons copyright terms with attribution to the CEC. Attribution and specific restrictions on usage including non-commercial use only and no changes to material should follow guidelines enunciated by Creative Commons here: Attribution-NonCommercial-NoDerivs CC BY-NC-ND.

As Canada’s first LNG export terminal prepares for start-up, British Columbia is preparing for an influx of new revenues that will help fund government programs.  

With the LNG Canada project online – expected by mid-2025 – the province expects proceeds from natural gas development will more than double.  

The anticipated production of LNG by the middle of this decade boosts the province’s financial outlook, the government said in its Budget 2024.  

For LNG Canada CEO Jason Klein, the coming start-up is “the launch of an entirely new Canadian industry.”  

It will enable Canada’s first large-scale exports of natural gas to somewhere other than the United States.  

LNG Canada site construction activities, Kitimat, June 2023. Photo courtesy LNG Canada

Shipments will primarily go to Asia, where demand is expected to increase by more than 50 per cent over the next three decades, according to the U.S. Energy Information Administration.  

While it’s a little over one year before the first LNG carrier will set sail through the Douglas Channel to the ocean, Klein noted the benefits are already being felt.  

“More than 30,000 Canadians have worked on our project to date, with almost 9,000 Canadians employed at our Kitimat site in January this year alone,” he said.  

“The cumulative value of our project’s contracts and subcontracts to local, Indigenous and other businesses in B.C. has already exceeded $4.7 billion and includes more than $3.8 billion to Indigenous-owned and local area businesses.” 

Natural gas royalties paid to the province, which help pay for public services and facilities such as health care, hospitals, education and schools, are expected to rise substantially. 

This year, the B.C. government expects $684 million in natural gas royalties, according to its latest annual budget. In 2027, once LNG Canada is operational, this is forecast to surge to $1.4 billion.  

Workers at the LNG Canada project site. Photo courtesy LNG Canada

Globally, LNG is playing an increasingly important role in energy supply, with demand set to continue growing beyond 2040, according to Shell’s latest industry outlook.  

China is likely to dominate rising LNG demand as the country’s industries look to cut carbon emissions by switching from coal to gas.  

Once operational, LNG Canada will demonstrate the low-emissions advantage of Canada’s LNG supply.  

“We’ve designed a project with the lowest carbon intensity of any large-scale LNG export facility operating today,” Klein said.  

“[It will have] emissions that are 35 per cent lower than the world’s best performing facilities and 60 per cent lower than the global weighted average.” 

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Canada’s emerging liquefied natural gas (LNG) industry has an opportunity to become a key supplier for energy-hungry countries in Asia and beyond following the U.S. pause on new or pending LNG export approvals, industry watchers say. 

With much of the world looking for alternatives to Russian natural gas following its invasion of Ukraine in 2022, the U.S. emerged as the number one global exporter of LNG. According to the International Energy Agency, the U.S. accounted for 80 per cent of additional supply in 2023. 

But with the U.S. putting its LNG industry on pause, the timing could be good for Canada. 

The recent completion of the Coastal Gaslink pipeline along with progress on Canada’s first LNG export projects are bringing Canada closer to becoming a key global supplier. 

An opportunity to showcase clean LNG 

As the LNG Canada terminal moves into its final stages of construction, Kitimat, B.C. will become the gateway for exports from Canada. 

For First Nations LNG Alliance CEO Karen Ogen, this means Canada, which has so far missed the global LNG boom, will have another chance at becoming a player.  

“I think this is an opportunity for us to showcase our clean LNG and I think we can do it through the various projects [underway].” Ogen said. 

Those projects, which include LNG Canada and Woodfibre LNG that are under construction, along with the proposed Cedar LNG and Ksi Lisims LNG terminals, will operate with an emissions intensity less than half that of the global average.  

Cedar LNG, headed by the Haisla First Nation, will operate at less than one-third of the global average. 

Ogen said these projects will create significant prosperity, not just for Canada and B.C. but for Indigenous peoples as well. 

“It’ll help boost our Canadian economy, it’ll help B.C.’s economy, and most specifically it will help the Indigenous people and our economy. If we’re the most disadvantaged population living in poverty, then this should help our people get out of poverty.” she said. 

“Everyone wins if Canada can get into the game.” 

Reduced LNG supply could increase reliance on coal 

Racim Gribaa, founder and president of Global LNG Consulting Inc., said a potential decrease in LNG exports to international markets, particularly in Asia, may heighten dependence on coal, thereby escalating global emissions. 

“If [importers] can’t get U.S. LNG, they would be left with very few viable alternatives including coal. And if they burn coal, that’s twice as much emissions. Coal is cheaper and reliable, but emits twice as much carbon. Countries in Asia such as China, with over 1,140 operational coal plants, are building new coal plants every week both in Asia and abroad,” Gribaa said. 

Canada has a significant geographical advantage to supply LNG to Asia that can reduce associated transportation emissions by up to 60 per cent, he said.  

Export terminals in B.C. are about half the distance to Asia compared to terminals on the U.S. Gulf Coast. 

“The distance between Canada and the key market is a huge advantage, where we are the same distance to Asia as Australia,” Gribaa said. 

“Monetizing natural gas in Canada through LNG exports not only will help reduce global emissions but it also will enhance health and economic well being of Canadians future generations.” 

Establishing Canada’s LNG credibility 

The starting point will be LNG Canada in 2025, which will allow Canada to export LNG on international scale, Gribaa said. It will help establish Canada’s credibility as a supplier, just as the U.S. pauses new development.  

Once that credibility is established, Canadian LNG could become a bigger player on the global scale. 

“Canada’s abundant natural gas reserves empower the nation to produce and export decades of dependable, cost-effective, and environmentally-friendly LNG to global markets, leveraging direct marine routes unaffected by constraints like the Panama or Suez Canals, the Strait of Hormuz, or having to navigate around the Cape of Good Hope,” Gribaa said.  

“Canada stands poised to secure market share for years to come, irrespective of whether the U.S. temporarily halts or reconsiders its involvement.” 

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It’s going to be a big year for Canadian energy, with major milestones anticipated that will transform Canada from a supplier with a single customer (the United States) to a global player.  

Global demand for oil and gas is expected to stay strong in the decades ahead as the world works to reduce emissions, still supplying nearly half of energy needs in 2050, according to the International Energy Agency.  

Activity in 2024 promises to highlight Canada’s position as a supplier of choice with a leading approach to reducing emissions and engaging Indigenous communities.  

Here are five things to watch.  

5. Start-Up Activities for LNG Canada 

Construction of the LNG Canada export terminal is now more than 90 per cent complete. Photo courtesy LNG Canada

Against the backdrop of surging liquefied natural gas (LNG) demand – Asia’s consumption hit a record 26.6 million tonnes in December – Canada’s first LNG export terminal is preparing for start-up. 

LNG Canada will have among the world’s lowest emissions for LNG supply, at 0.15 tonnes of CO2 equivalent per tonne of LNG, less than half the global average.  

This year, the terminal at Kitimat, B.C. will test and fine-tune equipment and the process of producing LNG will begin, the company says.  

The start-up program will take more than one year to complete.  

Moving into the final stages at LNG Canada follows the recent completion of the Coastal GasLink Pipeline, connecting natural gas supply from northeast B.C.  

4. Progress Toward Oil Sands Net Zero 

The Pathways Alliance has extensive work underway on the environmental program for its proposed CCS project, involving 135 experts ranging from aquatic and wildlife biologists to archeologists and paleontologists who have spent more than 1,600 hours in the field working to minimize environmental disturbance. Photo courtesy Pathways Alliance

Major regulatory applications are expected in 2024 for one of the world’s largest proposed carbon capture and storage (CCS) networks, located in Canada’s oil sands.  

The project would connect CO2 captured at an initial 14 oil sands facilities by pipeline to a shared hub for storage deep underground.  

It is the foundation of the plan by the Pathways Alliance – companies representing 95 per cent of oil sands production – to reduce emissions from operations by nearly one third by 2030 on the way to net zero by 2050. 

Pathways has said that after regulatory approvals are complete, CO2 injection and storage could begin by late 2026.

3. Growth in Indigenous Ownership

Eva Clayton, back left, President of the Nisga’a Lisims Government (joint venture owner of the proposed Ksi Lisims LNG project), Crystal Smith, back right, Haisla Nation Chief Councillor (joint venture owner of proposed Cedar LNG project), and Karen Ogen, front right, CEO of the First Nations LNG Alliance pose for a photograph on the HaiSea Wamis zero-emission tugboat outside the LNG2023 conference, in Vancouver, B.C., Monday, July 10, 2023. CP Images photo

The rising tide of Indigenous ownership in Canadian energy is likely to continue growing in 2024.  

From LNG terminals to oil and gas pipelines, natural gas-fired power plants and CCS projects to reduce emissions, more Indigenous communities are taking on a leadership role. 

Since 2022, more than 75 First Nations and Métis communities in Alberta and British Columbia have agreed to ownership stakes in energy projects including the Coastal GasLink pipeline and major oil sands transportation networks.   

Indigenous loan guarantee programs like those offered by the Alberta Indigenous Opportunities Corporation (AIOC) are helping communities invest.  

So far, the AIOC has underwritten more than $500 million in loan guarantees. This year it has $3 billion of support available, up from $2 billion in 2023.  

Details of a proposed national loan guarantee program to help facilitate Indigenous equity ownership in major resource projects are also expected in the federal budget this spring.

2. Green Light for Cedar LNG 

Rendering courtesy Cedar LNG

Owners of the world’s first Indigenous-led LNG project – a floating terminal at Kitimat, B.C. –plan to make the final decision to proceed within the next three months.  

Cedar LNG, owned jointly by the Haisla Nation and Pembina Pipeline Corporation, would have capacity to export three million tonnes of LNG per year, primarily to Asian markets.  

With emissions intensity of 0.08 tonnes of CO2 equivalent per tonne of LNG, it would be one of the lowest carbon footprint LNG projects in the world.   

In early January, the partners reached the critical milestone of selecting the primary contractors to engineer, build and deliver the floating LNG unit.  

A final investment decision is now expected in the first quarter of 2024. 

1. Completion of the Trans Mountain Pipeline Expansion 

Worker at Trans Mountain’s Edmonton terminal. Photo courtesy Trans Mountain Corporation

After more than 12 years in the making, Canada’s first large-scale access to growing global oil markets is now weeks away from completion. 

The existing Trans Mountain pipeline system from Edmonton, Alberta to Burnaby, B.C. runs consistently at maximum capacity with producers seeking more export space than is available.  

The expansion will increase service by about 600,000 barrels per day, bringing more Canadian oil to customers around the world, primarily on the U.S. west coast and Asia.  

After the recent resolution of a regulatory delay, Trans Mountain can now proceed with the last two per cent of construction.  

The company anticipates oil will flow on the expanded line before the end of March.  

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The massive Montney natural gas play in Alberta and B.C. is growing in importance as world liquefied natural gas (LNG) demand surges and Canada nears completion of its first LNG export project.  

The Montney – which rivals the Marcellus, the largest natural gas play in the U.S., for available resources – has seen more than $16 billion worth of ownership deals in the last two years, according to Evaluate Energy.  

But the play is still in its early innings, say analysts with RBC Capital Markets.  

That’s good news for LNG, where the world needs more supply over the long term. 

“LNG is in greater demand than ever before and continues to drive economic growth and enhance energy security across the world,” said Joseph McMonigle, secretary general of the International Energy Forum (IEF). 

Based in Riyadh, Saudi Arabia, the IEF represents energy ministers from 72 producing and consuming nations including Canada, the United States, China, India, Germany and the United Kingdom.  

After reaching a record 390 million tonnes in 2022, world LNG demand is expected to grow by another 25 percent to 500 million tonnes annually in five years, according to a new IEF report. 

While Canada currently ships a small amount of LNG overseas by shipping container, it has yet to export any large quantities by LNG ocean carriers. This will change with the completion of the $18 billion first phase of the LNG Canada project, expected by 2025.  

The recently completed Coastal GasLink pipeline will carry natural gas from the Montney play to the terminal.  

Coastal GasLink will result in a step change in how natural gas is produced, shipped and priced in western Canada, RBC said.  

Its initial capacity of 2.1 billion cubic feet per day can be increased to 5 billion cubic feet per day with additional compression facilities along the route. And through the less-than-a-kilometer long Cedar Link connector, Coastal GasLink would feed the proposed Cedar LNG project, led by the Haisla Nation.  

Montney gas will also supply the Woodfibre LNG project and is planned to feed the proposed Ksi Lisims LNG project, led by the Nisga’a Nation.  

The Montney now provides roughly half of Canada’s existing natural gas production, or about 10 billion cubic feet per day, RBC said.  

Analysts predict that by 2030, roughly two thirds of all natural gas wells in western Canada will target the Montney play, producing about 18 billion cubic feet per day by the end of this decade.  

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