As LNG offers loom, Canada must tackle larger projects

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It's a major export project that seems like a natural fit for Canada.

Take a natural resource that is stuck in the North American market and find a way to transport it to consumers around the world, where it will fetch a premium price.

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By the end of June, Calgary-based AltaGas and its partner Royal Vopak are expected to make a final investment decision on the proposed Ridley Island energy export facility near Prince Rupert.

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If approved, the West Coast terminal could export up to 60,000 barrels per day of liquefied petroleum gases (propane and butane) from Western Canada to customers in Asia.

The $1 billion project is under development at a site managed by the Prince Rupert Port Authority.

Most importantly, it has key federal and provincial approvals after five years of environmental preparation and review.

“This is a game-changer for us because with the dock we can expand our export capacity there by 10 times,” AltaGas CEO Vern Yu said in an interview.

“The key that we've found is that we've had a lot of community support for Prince Rupert, we've had a lot of support with First Nations. . . and because it's a site-specific project, opposition is more difficult to shut down than a pipeline.”

It has been difficult to get support to build other large projects in Canada.

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Think of the failed proposals of the last decade: Northern Gateway, Eastern Energy, Energy Saguenay or Frontier Oil Field.

Forward-looking energy projects, such as the Trans-Mountain expansion, have gone over budget due to delays.

The challenge of completing major projects across the country extends to other industries, including transmission lines, power generation and mining, said Heather Exner-Pirot, director of natural resources, energy and the environment at the MacDonald-Laurier Institute.

One certainty in the approval process is that “projects will be difficult to implement in Canada,” he said.

“I would say it's a competitive regulatory process. The process in Canada is now that we're looking for reasons to say no to projects.”

More projects and big decisions are coming for Canada on the LNG front.

After years of debate and frustration — there were 24 separate developments at one point in the past decade — only one major project is under construction.

LNG Canada is expected to start operations within a year, while the smaller Woodfibre LNG is also moving forward.

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Federal support for more LNG projects has been tepid at best, given the increased emissions that come with new gas development and export facilities and growing climate concerns.

Supporters of the project point out that Canadian gas exports could displace more emitting energy sources, such as coal, which is used to generate electricity in other countries.

Canada has a lot of potential for LNG expansion and the world needs supercooled natural gas, Rystad Energy vice president Emily McClain said Thursday.

Speaking at the Rystad Conference in Calgary, McClain predicted Canada's LNG export capacity will grow to six billion cubic feet per day (bcf) by 2035.

Significant growth will come from the launch of LNG Canada – and the upcoming second phase – completion of Woodfibre, along with the proposed Cedar LNG, Ksi Lisims and Tilbury LNG developments off the coast of BC.

Most of these projects still require a final investment decision.

“As we know in Canada, LNG projects have faced significant regulatory hurdles, there have been many cancellations, project cancellations, but we see a lot of opportunity in Canada,” McClain told the audience.

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To its advantage, Canada has abundant reserves of cheap gas and can offer shorter delivery times for LNG shipments to Asia than terminals on the US Gulf Coast.

“In Canada, we're seeing a lot of momentum right now,” McClain said in an interview.

“Is the risk still there?” Absolutely.”

The total value of natural resource projects in Canada, including energy, forestry and mining, under development or planned fell to $573 billion last year from $711 billion nine years ago, noted Exner-Pirot, special adviser to the Business Council. Canada.

Not all projects were stopped.

In Alberta, Edmonton-based Air Products is building a $1.6 billion net hydrogen energy complex, and Dow's $9 billion net zero petrochemical project is moving forward.

Federal Finance Minister Chrystia Freeland and Natural Resources Minister Jonathan Wilkinson also spoke about the need to fast-track essential projects such as critical minerals and clean electricity.

“We have a problem. That's especially the case around these linear projects that span multiple jurisdictions,” said Jackie Forrest, executive director of the ARC Energy Research Institute.

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“Another big problem is uncertainty for investors. The approval process for these projects will be longer. . . the greater the risk.”

At AltaGas, Yu estimates that Canada currently produces about 350,000 barrels of propane and butane, which it needs to export. This will increase in the coming years if more drilling is done to fill the planned LNG projects in Western Canada.

“We can add $4 to $10 per barrel in value to customers by bringing them into the premium market. Additional barrels of propane and butane in Canada should be exported,” he said.

“We are having very good, robust discussions with our customers and there seems to be strong commercial interest to make it happen.”

Chris Varco is a columnist for the Calgary Herald.

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