Gas exporters see growing support for East Coast plant in Canada

Example of a natural gas plant Source: iStock

Canada’s natural gas companies say there’s growing domestic support for new energy infrastructure to facilitate exports to Europe, even as the country pursues aggressive climate-change targets. 

Tim Egan, president of the Canadian Gas Association, said he believes the public is beginning to recognize that boosting exports to countries like Germany is the most significant way Canada will be able to help counteract Russia’s aggression against Ukraine. He cited recent polling that shows widespread approval for a shift in policy.

“I think Canadians are seeing what’s going on in Europe and are saying, ‘Look, there must be way we can help,’” Egan said by phone.

The energy crisis has given a boost to Canada’s fossil-fuel sector, which had been hemmed in for years by slumping prices and tightening environmental restrictions. 

Prime Minister Justin Trudeau’s government is attempting to balance exporting more energy to help supply world markets while still making progress on decarbonizing production. Trudeau has targeted a 42 per cent cut to oil and gas emissions by 2030.

While a major exporter of natural gas, Canada currently lacks a liquefied natural gas terminal that could directly supply allied nations across the Atlantic Ocean. 

Boosting Production

A public opinion survey conducted in April by Leger Marketing Inc. for the gas association found 58 per cent of respondents supported exports of LNG from the east coast, compared to 17 per cent opposed and the remainder unsure. When Europe and the Ukraine war were specifically mentioned, support rose to 63 per cent, according to the online poll.

The same proportion, 58 per cent, also said they would back the construction of new east coast terminals to export gas, with 21% in opposition. That includes 63 per cent support in Atlantic Canada, where any such facility would likely be located.

In the short term, Canada has pledged to increase its exports to the US to help indirectly free up supplies to Europe, aiming to boost shipments by the equivalent of 100,000 barrels per day by the end of the year.

There are other new developments being considered that could allow Canada to ship directly to Europe, but will face more environmental scrutiny and opposition.

Natural Resources Minister Jonathan Wilkinson has already pointed to one project that could be in operation by 2025. It would see Spain’s Repsol SA convert an existing LNG import facility in New Brunswick into an export terminal. Most of the infrastructure is already in place, meaning it may not need an extensive regulatory process, the minister said. 

However, Repsol currently uses the terminal to supply gas to the US, and it’s unclear if the company is prepared to make the switch. Supplying the terminal with gas from Western Canada would also require the existing pipeline network to be expanded, which could be politically difficult.

Other longer-term projects have been floated, but they would be new facilities and would require lengthy environmental assessments. Proposals include one in Nova Scotia by Pieridae Energy Ltd., one in Quebec by GNL Quebec Inc., and another in Canada’s easternmost province by LNG Newfoundland and Labrador Ltd.

Egan – whose association represents Canadian distributors of natural gas – said he’s heard plenty of interest in access to Canadian gas in his own conversations with diplomats from European countries.

“I’ve met with roughly half of them,” Egan said. “The overwhelming response is: Please try to do more, and more quickly. It’s the Europeans who are very blunt about this.”

Trudeau is scheduled to be in Germany later this month for a Group of Seven leaders summit, where European energy security is expected to be a top agenda item. 

Merchandise trade data released Tuesday shows Canada had C$21.8 billion ($17.3 billion) in natural gas exports over the last 12 months through April – almost double pre-pandemic levels, and the highest since 2009.

© 2022 Bloomberg L.P.

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