Canada ‘missing the boat’ on other LNG export opportunities, warn E&P executives

Canada’s energy industry and the regulators overseeing it must get serious quickly if the country is to be a player in the global natural gas market, a panel of exploration and development executives said this week. production (E&P) at a conference in Vancouver, British Columbia. (BEFORE CHRIST).

Countries around the world are scrambling for additional supplies of liquefied natural gas (LNG), especially after Russia invaded Ukraine. Competition has intensified and prices have risen.

“We always seem, quite literally, to miss the boat on this opportunity,” Peyto Exploration and Development Corp. CEO Darren Gee said Tuesday at the Canada Gas & LNG Expo and Conference.

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The industry wants to better capitalize on the country’s prolific natural gas resources, particularly near proposed export projects in the Western Canada Sedimentary Basin (WCSB) of British Columbia and Alberta. According to the government, 18 LNG export facilities have been proposed in Canada, primarily in British Columbia. The LNG Canada project led by Shell plc north of Vancouver is the only one under construction.

“The problem with Canadian LNG projects is that we are on our own path,” Gee said. “We take too long, there is too much bureaucracy, there is too much regulation, we miss the pricing window, we have cost overruns and the economic advantage we should have is lost along the way. “

Peyto’s CEO and others who joined him on the panel noted how quickly the United States has built LNG export infrastructure. They lamented that Canada must now compete with dominant players along the Gulf Coast for buyers.

The first LNG exports left the Lower 48 in 2016. US export capacity is expected to reach 13.9 Bcf/d by the end of this year and exceed 16 Bcf/d in 2024 when the eighth US terminal is commissioned. in service.

“If we didn’t politicize this and do our best to leverage our resources – we have vast resources here in the WCSB – we could help the world,” said Dave Humphreys, executive vice president of Birchcliff Energy Ltd. Birchcliff operates in the Montney Shale. “All we have to do is work with government, regulators, and just tick the boxes and work with stakeholders to get these facilities built.”

Canadian exports via the United States

LNG projects in Canada have progressed so slowly that producers are now committing to supply natural gas to Gulf Coast projects. The main producers Tourmaline Oil Corp. and Arc Resources Ltd. signed deals with Cheniere Energy Inc. to capture the rise in foreign benchmarks in Japan-Korea marker-related deals.

“As Canadians, we want to keep this resource in Canada and export from Canada,” Gee said. “The last thing we should be doing is paying the United States a very high fee to go through all of their infrastructure to get it on a boat.” Peyto operates in the WCBS near LNG Canada and other proposed export terminals in British Columbia.

Advantage Energy Ltd. CEO Mike Belenkie’s company also works in Montney. He said there is a lack of delivery capacity to supply export projects in Western Canada. More pipelines need to be built to bring natural gas to shore if additional projects are to be built, he said.

Gee added that E&Ps have ramped up production in the past without pipelines to get more gas to market, and prices have crashed as a result. “We’re very timid to do it again as an industry until the release is built in front of us,” which is getting harder and harder.

Panelists highlighted cost overruns and delays for the Coastal GasLink system that would supply LNG Canada, which is 60% complete.

Gee said the industry now faces a host of challenges that threaten LNG projects and upstream suppliers. Labor and equipment shortages, as well as lack of capital investment in recent years, make it difficult to ramp up operations. While the economy in the oil and gas sector is strong, Gee said “we’re on the edge of rigs and people.”

Indigenous partnerships are also proving essential to export development on both sides of the country. In British Columbia, Woodfibre LNG, Cedar LNG and Ksi Lisims LNG benefit from the cooperation or equity participation of First Nations. Such agreements have been crucial for LNG Canada and the Coastal GasLink pipeline, which have been a model for other projects to make final investment decisions, panelists agreed.

CEO Jim Boucher of the Saa Dene Group of Companies, which works to build more inclusive economies around the world, said it’s critical that these types of relationships continue if the LNG export industry expects to thrive in Canada.

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