The \u0027political case\u0027 not the \u0027business case\u0027 against LNG is costing Canada billions in GDP. Read on
The visit also opened more wounds with Alberta, as the prime minister scoffed there is no “business case” for LNG exports to Germany — a comment that surprised many participants at the Canadian Energy Executive Association Forum held in Banff last Thursday. If anyone can judge whether LNG will be profitable or not, it’s an oil and gas industry willing to invest billions of dollars in it.
LNG is a big business that can generate billions of dollars of GDP for a country. Each ton of exported LNG is worth, according to this week’s spot prices, US$830 when sold to Japan and US$1,800 when sold to the European Union. For Australia, LNG exports add up to over AU$50 billion, almost 2.5 per cent of the country’s GDP.
So, what have we achieved in Canada? A big fat zero. We do have one plant being built by LNG Canada in Kitimat, B.C. with capacity to export 14 million tons a year starting in 2025. But that’s a far cry from the many LNG proposals that have fallen by the wayside in the past 15 years. Natural Resources Canada reports that 13 west coast and five east coast proposals have been made over the years totalling 216 million tons.
Not all proposals would have gone ahead but some certainly would have if not for the federal and Quebec governments discouragement of resource development. Petronas, for example, withdrew its $23 billion B.C. project in 2017 because of low gas prices and high political risk. Prices have recovered but even so no large replacement projects are being constructed. In 2021, Quebec rejected the $14 billion Saguenay LNG terminal that would have exported Alberta natural gas.
To be fair, the federal government did step in to promote the TMX expansion pipeline when B.C. tried to block it. In fact, as many at the Banff conference suggested, the federal government has an inconsistent approach to the oil and gas industry. Some projects its encourages: TMX, the development of blue hydrogen, an investment tax credit for carbon capture and sequestration and Newfoundland and Labrador’s offshore oil.
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