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Canadian LNG Industry

By Aaron Bambrick, Michael Page Oil & Gas Managing Consultant in Canada

With the growing need for sustainable energy sources across developing nations Canada is looking to developing its vast west coast gas reserves to supply a multitude of proposed LNG projects along the Western Coast line of British Columbia.

Currently the numbers are significant with a total of 19 Proposed LNG Plants being submitted and these are fed by 6 different gas transmission pipelines and these are being facilitated by a total of 33 different project partners across the projects.

The current plan from the provisional B.C. Government is to have three of these plants commence operation by 2020 however they are facing significant issues in getting the project groups to sign off on FID for the various projects for a number of key reasons.

With the recent dip in oil prices and the fact that current LNG price structures are tied to the oil benchmark companies are far less willing to finance mega-projects such as the greenfield LNG plants in B.C. while they face an uncertain future in regards to pricing. This being said recent price slides are only part of the story for the Canadian LNG industry, many of the lead companies involved in the projects have sighted uncertain proposed tax structures along with continued pressure from community and environmental interest groups have meant that the overall approval process is taking far longer than anticipated and companies such as PETRONAS and their project partners are not going willing to sign off until there is greater certainty over the parameters from governing bodies.

Long considered to be the lead project – PETRONAS and their North West LNG project are also reviewing a range of project costs with the view to having those reduced given the current climate of the Oil industry in western Canada.

With continued strong demand and very attractive long-term forecasts for LNG across Asia coupled with the falling Canadian Dollar, Canada is well placed to capitalize. Given this increased demand and Canada’s abundance of accessible gas reserves, stable economic & political platform along with a well-established hydrocarbons industry serviced by a highly skilled workforce. With this said the industry will need to move soon as Australia and U.S. is looking to take a greater hold on the LNG market in the coming years and will have the first mover advantage given the forecast that Australia will be the world’s largest LNG exporter over taking Qatar by 2020. 

 

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