The world wants LNG and Canada has it in abundance
The World Cup is proving to be a successful tournament, despite its rather odd choice of venue. While much of the criticism levelled against Qatar is warranted, there are areas in which Qatar thrives. Canada could learn a lesson or two from it. The most blindingly obvious is the current case for liquefied natural gas (LNG) as an export product and the world’s long-term desire for it.
In the past two weeks alone, Qatar has announced long-term LNG deals with China and Germany. The Germany deal will be for 2-million tonnes of LNG per year, while the China contract will be for approximately 4-million tonnes annually.
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To put that in perspective, that is almost half the capacity the LNG Canada facility in British Columbia will be able to handle once it comes online in 2025. Nearly half of our export capacity could go to just two countries.
The world wants LNG and Canada has it in abundance. Canada produces enough natural gas to produce roughly 120-million tonnes of LNG annually, but it is locked inside North America and thus often sells for lower prices.
The Americans have noticed what’s going on and are pressing ahead. They are increasing their export capacity by nearly 50 per cent by 2026, in order to take advantage of the global demand for gas.
The infrastructure required for Canada to match our American or Qatari counterparts will take time to build. We need pipelines to tidewater and more LNG plants. If started today, it would likely take three to five years to build new pipelines.
Our attitude towards these challenges, however, has been defeatist and fanciful. We are either convinced that any large infrastructure is too complicated to build, or have offered non-existent chimeras like hydrogen farms in Newfoundland in response to problems that need solutions much more quickly.
The Trans Mountain Pipeline expansion is informative in this regard. Originally slated to be finished by 2019, court challenges, protests and government inertia have resulted in continual delays. The project is still under construction and is not expected to be completed until late 2023.
It is no stretch of the imagination to see that were this an LNG pipeline project, we would already be missing out on huge potential contracts. Nor is it a stretch to look at projects the government mothballed in 2018 and understand that we are marching headlong into a situation where, in 2026 (when we host the World Cup), we will once again be looking back and wondering why Canada didn’t move to take advantage of such a massive economic opportunity in 2022.
The numbers we are talking about are huge. To put it in perspective, if Germany’s contract with Qatar were given to Canada instead, it would put around $400 million per year into federal and provincial coffers. Last year, British Columbia received $632 million from the oil and gas industry via royalties and land sales, and that’s before we’ve even started exporting LNG from the West Coast. Over the last 10 years, Alberta has raked in $66 billion from its more fully developed oil and gas projects.
In British Columbia, as in Canada generally, we have a critical shortage of health-care professionals. LNG royalties could fill that funding gap in less than a year. Our failure to take advantage of this worldwide demand is a catastrophic policy failure that is dramatically impacting the lives of Canadians.
Canada’s national soccer team will sadly leave Qatar earlier than hoped this time around. They leave a tournament hosted by a country that is a world leader in energy and is courted by global powers, despite its appalling human rights record.
Yet despite its mistreatment of migrant workers, women and homosexuals, among others, the world community is happy to look the other way because Qatar has oil and gas. Well, so does Canada, and if our professed concern for the rights of minorities and marginalized groups is anything more than a performative act, we should assert ourselves as a more appealing and reliable business partner.
There is currently no larger opportunity for that than getting serious about our LNG future and taking the necessary steps to be a leading player by the time we welcome the footballing world four years from now.
National Post
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