Canada is seeking to be an LNG exporter. Canada’s moving LNG target presents some obstacles that need to be overcome before this can happen. The county is a major natural gas producer is developing massive reserves of unconventional natural gas through new technologies. These new extraction methods and a robust approach to risks taken by exploration companies have increased the recoverable supply of natural gas in Canada and the United States. With these increased natural gas reserves, the United States, Canada’s traditional export market, has less appetite for Canada’s abundant energy exports.
Canada’s export push on LNG is driven both by increasing market demand and the increased global price vis a vis the North American market price and the global price spread. Another major factor in the negotiation of LNG supply contracts is the security for supply for purchasers of LNG often used in electrical power generation by power utilities. Given the high infrastructure costs, most LNG is sold under long-term supply contracts with fixed prices over the long-term.
In potential export markets, there is a great deal of interest in using LNG as a marine fuel for vessels engaged in domestic trade in Canada and the United States. LNG is considered a clean fuel and has much lower air emission footprint and provides a means of complying with national and international marine environmental air emissions. The challenge remains the lack of refueling facilities. BC Ferries one of the world’s largest ferry operators has announced the construction of new LNG-fuelled ferries. Also, there is an increasing interest in using LNG as a fuel in remote locations in Canada for municipal and commercial use as an electrical power generation source
This new sector has the opportunity to create some marine design challenges and opportunities. Any export from continental North America would involve the liquefaction of the natural gas to LNG at a marine terminal and carry in dedicated LNG carriers. Presently, Canada has no existing marine natural gas export facilities and does not export LNG by sea. K. Joseph Spears and Marcel LaRoche in this October 2014 Maritime Technology articleprovide marine design professionals with an overview of this dynamic and changing opportunity in Canada’s LNG sector that is being impacted by a variety of global factors at this early phase of project development.
As of October 2014, there is no final investment decision made on any of the proposed 16 LNG projects in Canada. For further perspective on the topic see the September 24, 2014, Financial Post’s Live Chat – Crunch Time on the Coasts: Canada’s LNG Prospects where Darryl Anderson, Managing Director, Wave Point Consulting was a panelist.
To say the LNG market is in a state of flux and change is an understatement. Predicting the future of Canada’s LNG projects is very much a moving target with each project having many moving parts and components and approval to bring natural gas from remote interior gas fields to tidewater liquefaction plants. Contact members of the Wave Point Consulting team for insights and commentary on the prospects in the face of Canada’s moving LNG target.