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A tanker at the LNG Canada facility in Kitimat, B.C., in 2025. A new study says expanding Canada’s liquefied natural gas exports could generate significant investments and economic growth.ETHAN CAIRNS/The Canadian Press
Meeting Canada’s liquefied natural gas export targets could stimulate nearly $1-trillion of investment across the fuel’s value chain and contribute $888-billion to GDP through 2050, according to a new report.
Prime Minister Mark Carney has said that Canada’s total LNG exports could reach up to 100 million tonnes annually by 2040. The government’s ambition for scaling up the sector would make it the world’s third-largest exporter while also contributing significant reductions to global carbon emissions, said the study by S&P Global Energy, released Thursday.
However, time is a pressing factor to meet this target, with various regulatory and competitive hurdles still standing in Canada’s path, and a dearth of projects awaiting final investment decisions.
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Canada has “been in a tough spot economically,” falling far short of where it could be in the world market given its competitive strengths of significant natural resources and geographic position, Daniel Yergin, renowned author and vice-chairman of S&P Global, said in an interview.
The study examined Canada’s opportunities around LNG and challenges that have stymied the sector from reaching its full potential. Those include cost uncertainty, lengthy permitting times, policy instability and associated infrastructure constraints, such as power capacity and transmission.
Addressing those issues quickly and effectively could present a trillion-dollar investment boon and support nearly a quarter million jobs annually across the entire LNG value chain in Canada over the next 25 years, the study concluded, including the natural gas liquids (NGL) sector, gas production and pipeline construction.
The world is going to need more LNG, said Kevin Birn, S&P’s chief Canadian energy analyst. Given the crises in both the oil and gas markets this year caused largely by the war in Iran, Canada has a lot to offer, he said, though the country has to now focus on execution.
“But the opportunity is real if Canada wants to chase it,” he said. “Governments will set the table, but industry will have to step into the void as well.”
Canada holds some of the most prolific and low-cost gas plays in North America. The study found that various coastal access points provide secure and accessible routes to key demand centres that are free of geopolitical chokepoints, with a resource base that is more than sufficient to meet more than a half century of domestic demand and LNG exports.
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The liquids-rich nature of Canadian gas wells provides a particularly powerful economic advantage; natural gas liquids such as ethane, propane, butane and condensate represent 24 per cent of a typical gas well’s production, but account for up to half of its economic value.
Mr. Yergin, known for his book The Prize, which charts the history of the global energy industry, called NGLs a “hidden bounty” in Canada’s resource endowment. Their scale and value are often overlooked, even though they’re used in home heating, chemicals production and enabling heavy oil sands crude to move through pipelines to refineries or for export, he said.
A 2027 global oil and gas outlook from ratings agency Morningstar DBRS, released Wednesday, said Western Canadian natural gas supply and demand fundamentals remain weaker than those in the U.S.
The forecast expects that the benchmark price for Western Canadian gas “will likely remain volatile and periodically fall well below our full-year assumption, particularly during shoulder seasons or periods of pipeline maintenance.”
Over the medium term, it said, additional export capacity – including Cedar LNG and the planned expansion of LNG Canada – should progressively improve Western Canadian Pacific market access and support regional pricing.