Varcoe: Canada in neutral as U.S. and Qatar seal LNG deals with Europe

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Like a child with their face pressed against the toy store window, Canada seems poised to watch — and wait — as other countries forge ahead with bold plans to export more liquefied natural gas to the world.

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The United States announced an agreement on Wednesday to significantly increase the amount of LNG shipped to the United Kingdom next year, while QatarEnergy recently entered into a long-term agreement to sell up to two million tons of LNG to Germany annually. starting in 2026.

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In Canada it is crickets from Ottawa.

“We’ve actually become our own biggest obstacle to growing and being a global energy superpower, simply because we naively think that our vision of providing energy to the world is smarter than what people are asking for,” says Michael Belenkie, CEO. from Advantage Energy, a Calgary-based natural gas producer.

“It’s painful to watch.”

Alberta Energy Minister Peter Guthrie, who will lead a trade mission to Germany next month to discuss energy security and LNG, is also angry that this country could miss out on helping to meet the energy needs of Europe and Asia.

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“Germany, they’re coming to Canada, they’re asking us for LNG supplies, and Trudeau is saying there’s no business case for this,” Guthrie said Friday.

“It’s just mind boggling.”

The spotlight on LNG markets has intensified in the wake of Russia’s invasion of Ukraine and the energy crisis affecting Europe. EU countries are striving to shift away from Russian energy.

The White House announced on Wednesday that it will work with industry players to ensure that at least nine to 10 billion cubic meters of LNG are shipped from US export terminals to the UK over the next year, more than double last year’s levels.

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In late November, state-owned QatarEnergy and joint venture partner ConocoPhillips signed two agreements to ship LNG to Germany, part of a 15-year supply agreement.

European LNG imports have hit record highs this year, while benchmark prices on the continent closed at US$41.73 per million British thermal units earlier this week, according to Rystad Energy.

The energy consultant recently forecast that total LNG investment will rise to US$42 billion in 2024, up 55 percent from this year’s level. Global demand for gas is expected to increase by 13 percent by the end of this decade.

South of the border, the US has become a major LNG powerhouse in less than a decade.

It should also be a critical moment for Canada to help, to see new projects get the green light, to build on the country’s natural advantages, such as abundant gas reserves in the Montney Formation and a shorter shipping time to Asian markets from British Columbia coast than from American terminals.

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Yet this country is still unable to export any LNG. While one major project is under construction in BC, there is room for much, much more to be done.

“This is a lost opportunity for Canada. There is a need in the world. There is a void caused by the fact that Russian gas is not going to be consumed in Europe – and there is an opportunity to fill that void,” said Jackie Forrest, executive director of ARC Energy Research Institute.

“If it’s not going to be us, it will be others, as we can see. So Canada loses.”

The Shell-backed LNG Canada development at Kitimat, BC, is now being built to ship supplies to Asia; partners in the consortium are considering a second phase.

One other project, the smaller $5.1 billion Woodfibre LNG development near Squamish, BC, goes into full construction next year.

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The Haisla Nation’s Cedar LNG development, and the proposed Ksi Lisims LNG project in BC – an alliance between Nisga’a Nation, Western LNG and a group of Canadian gas producers (including Advantage Energy) – progress.

Yet there is a clear lack of support from an ambivalent federal government to see the sector grow significantly and send gas abroad, which could displace coal that uses higher emissions in other countries to generate electricity.

“There is a huge opportunity for Canada,” Forrest said. “The problem is that we don’t have a lot of projects moving forward and that’s because it’s kind of uncertain — the regulatory process (and) whether Canada is OK with increasing the emissions associated with LNG domestically.”

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Comments in October by federal Finance Minister Chrystia Freeland that Canada should speed up energy and mining projects to help our allies heat their homes and produce electric vehicles fueled some hope in the industry about a pending attitude shift.

Guthrie, who will travel to Germany and Poland with Premier Danielle Smith and Finance Minister Travis Toews in mid-January to discuss energy security and potential partnerships, hopes Ottawa is ready to recognize that more LNG projects are needed.

Former TransCanada Corp. CEO Hal Kvisle, who co-chaired a natural gas advisory panel for the province, noted that some Canadian petroleum producers are moving gas to the U.S. for eventual export. The expansion of America’s LNG sector is also driving up gas prices across North America.

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However, Kvisle believes that it matters if Canada cannot develop its own LNG industry that connects the Western Canadian sedimentary basin to global markets.

“We continue to produce the gas today, we just produce it in discount markets rather than producing it in a premium market,” he said. “Why would we want to put our producers in a position where they have to sell at a discount?”

Even if a new LNG project went through the entire regulatory process – at great cost and a long timeline – and received the necessary approvals, there are no guarantees that politicians will let it go ahead.

And so we wait.

“We ended up in a place where I feel that the rest of the world is laughing at us a bit,” said Belenkie.

“These are things we can do if we have a government that will show some leadership.”

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com