​Brexit brings opportunity for Canadian LNG As U.K. investors pivot

U.K. Prime Minister Boris Johnson celebrates election night on December 14, 2019. Image: Boris Johnson/Twitter

Investors and companies in the U.K. are concerned with uncertainty caused by Brexit, says Shawn Tupper, and they are looking at business redirection as Britain leaves the European Union — an opportunity for Canadian LNG.

“They don’t know the outcome, nobody does, and it really is kind of up in the air, but they know they’re going to have to pivot and they know their relationship with the continent is going to have to change, and they need to find new partners,” Natural Resource Canada’s associate deputy minister told this week’s Calgary event highlighting the recent Tokyo and London gatherings held on behalf of Alberta’s government to discuss the scope of Canadian LNG growth.

“We need to ensure that as they turn around, they turn all the way around and don’t focus too far to the south. We need to make sure we’re there and that we have smooth pathways to allow the U.K economy to be as smooth in its shift away from Brexit as it can. We need to be ready and we need to be good partners.”

According to Tupper, who attended these events, the British show much interest in eastern Canadian LNG, as well as elsewhere in Canada, and the ability of industry and government to talk as a cohesive team to promote this country’s investment opportunities is imperative to success with the U.K.

“For me, one of the fundamental things we need to make sure we’re paying attention to is where are the ‘rocks on the road’ post-Brexit, and how do we get those ‘rocks’ off the ‘road’ to make sure British investment is coming here.”

A “Team Canada” approach is key not only when appealing to European investors for Canadian LNG, he said, but to Asian ones as well, as was evidenced during the event in Japan, where representatives from B.C., as well as the feds and, of course, Alberta strongly showed support for the industry.

“We had a very clear shoulder-to-shoulder, arm-to-arm approach to every single meeting we went through all week long, and that was very much noticed by our friends in Japan, and I think it had a very strong impact.”

He added: “Having us all on the same panels and being able to talk about our collective endeavour and present a common front in terms of getting Canadian product to the world is an effective model. We should continue to do it.”

Likewise, when it comes to Canadian LNG exports, Alberta Associate Natural Gas Minister Dale Nally suggested his province is on the “same page” as other provincial and federal partners, and he “can’t stress enough the importance of demonstrating a united front” when it comes to promoting Canada’s energy industry.

“Our government has been working closely with the B.C. government to advance projects such as the second phase of the LNG Canada project, as well as the Coastal GasLink pipeline. We’re also examining our options when it comes to other LNG development opportunities in B.C. and on Canada’s East Coast.

“My department has been in discussions with Nova Scotia, New Brunswick and Québec on ideas to advance such projects as Pieridae and Énergie Saguenay, including supporting pipeline construction and competitive coolant costs to move our gas more effectively to those markets.”

He added: “We are committed to ensuring that energy projects continue moving forward, as the economic future of our province and our country depends on it.”

Unfortunately, noted Gregory John, there is political rhetoric currently from Western Canada that is a reaction to legitimate frustrations, but is also disuniting and ultimately does not serve the energy sector.

“We have heard some things about Brexit, but there’s another exit here that is really hurting the work being done in this room. This phenomenon called ‘Wexit’ is truly hurting foreign direct investment opportunities, and I think we need to take a look at some of the other alternatives that keeps us as part of a national picture.”

He added: “[Wexit] is borne out of frustration. Over the 12 years I’ve been involved in energy, it has been my generation that has never really been able to put a project into service.”

Survey says: O&G appeals less to today’s youth

The degree to which young people — commonly referred to as ‘Millennials’ and ‘Gen Z’ — view the oil and gas sector as offering career prospects is “pretty stark,” according to a 2017 EY survey cited by Zsolt Vigh.

“Sixty-two per cent of Gen Zers stated that a career in oil and gas is either unappealing or very unappealing,” the project engineer and Canadian energy advocate told the Canadian LNG event. “Even with respect to the older [youth] generation, the 20- to- 35-year-old Millennial-aged individuals, that number was still quite high.

“Driving force behind this trend is ultimately the younger generation’s concern around climate change. In a recent Gallup poll in the U.S. (and I imagine the results are quite similar to the Canadian context), 70 per cent of respondents aged 18 to 34 were either worried or very worried about climate change and its long-term impacts.”

If the oil and gas industry is to alter its perception with the younger generations, he said, then it must clearly articulate how its core business ties in with helping advance society’s needs and problems, especially with how it relates to climate change and pollution. Vigh suggested this ultimately translates into the importance of LNG.

He added: “LNG exports and their emissions offset potential with respect to coal are very large. They rank up there with respect to the carbon pricing and clean fuel standards that were rolled out by the Canadian government. However, it’s important we not only address the domestic policies and meet those.

“It’s imperative we also look beyond our borders to see how we can really help the national community lower emissions, really framing the industry around this in terms of our ability to achieve long-term emission cuts on an international scale, and making that a core part of the business driver of these projects will be essential to really attracting towards youth.”

Fortunately, noted Nally, Canadian LNG projects are currently being designed to be the lowest-emitting facilities in the world, and on that front Alberta’s energy sector is well ahead of the curve internationally.

“In fact, this week at COP25 — the UN’s climate change conference — Alberta’s world-leading methane policies and efforts are being case studied for the whole world,” he said. “Our industry continually improves its performance through technology and innovation in order to produce more efficient extraction methods.”

Deidra Garyk, Canadian energy advocate, said advocating on behalf of the energy sector is important for those who support it, and she offered various suggestions in this regard to the Calgary crowd on Wednesday.

“Be proud to support Canadian LNG. Write letters to the editor. Challenge perceptions. Challenge misinformation. Attend pro-energy events. Speak to media. Talk to your elected representatives. And for industry executives, tell your companies’ stories and encourage your staff to tell your stories.”

She added: “I can’t predict the future, and so I don’t know for certain what the workforce of 2035 is going to look like. But I do know now we need to get the conversation about LNG right.”

More LNG facilities needed beyond LNG Canada: Kist

While LNG Canada should come online sometime in the 2024-25 timeframe, Greg Kist believes Canada needs at least another large export facility to “start to move the needle” in terms of natural gas prices for WCSB producers, and projects such as Woodfibre LNG or Cedar LNG might not be enough.

“There might not be a whole lot of new gas or new export necessary to move that needle, but I would suggest we at least need to get another large-scale project moving off the West Coast to start to have that impact on the basin in large part,” said the Rockies LNG Partners president and chief executive officer. “But having said that, you see clearly a very large reserve base. The producers will produce into that.”

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