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Canada could become LNG world leader, but government needs new roadmap, says TC Energy CEO
TC Energy Corp. chief executive Francois Poirier believes Canada could become the world’s largest exporter of liquefied natural gas (LNG) to Asia, but only if Canadian governments adopt a new roadmap to allow it to happen.
“To realize this vision, federal and provincial governments must adopt a new political roadmap,” he told a packed room of business executives at the Canadian Club in Toronto on Thursday, adding there should be “four drivers: the political will, the management capability, policy consistency and a Team Canada approach to rebrand Canada as a place to invest.”
Poirier said expanded LNG shipments to Asia could displace coal use there while also diversifying the Canadian economy away from the United States.
Canada has long shipped LNG into the U.S., but recent investments in liquefaction facilities along British Columbia’s coast could soon allow shipments to Asia.
Analysts say LNG — which is gas that has been chilled so it can be transported more easily — will fetch far higher margins in Asia, where multiple countries, including China, Vietnam, Japan and South Korea, could all potentially be buyers.
TC Energy Corp. chief executive Francois Poirier said federal and provincial governments must adopt a new political roadmap.
Calgary-based TC Energy stands to benefit as much as any other company since it owns the 670-kilometre Coastal GasLink pipeline that delivers natural gas from the B.C. interior to coastal liquefaction facilities in Kitimat, B.C., that would allow it to be shipped across the Pacific Ocean.
The pipeline is already built and permitted, so LNG shipments, on a heretofore unprecedented scale in Canada, of around two billion cubic feet per day, could begin this summer when the first of two liquefaction facilities comes online. A second, smaller facility is expected to be online around 2028.
But TC Energy could also double or triple the amount of gas shipped through its Coastal GasLink pipeline by installing compressors — a project it has dubbed Phase 2.
Poirier said energy projects in other countries move forward far faster than in Canada. For example, the Southeast Gateway Project, a 700-kilometre pipeline in Mexico that TC Energy completed with a Mexican utility, took less than three years.
He also said Germany built regasification facilities in 10 months after Russia invaded Ukraine, something TC Energy has studied in order to learn from it. He called it a matter of “political will” to build large-scale projects on a compressed timeline.
Poirier compared the LNG opportunity Canada has to the TransCanada Pipeline, which was built in the 1950s to carry natural gas from as far west as Alberta to as far east as Quebec.
“Consider this: the TransCanada Pipeline was built in just two years,” he said. “Yet, today, projects can take over a decade to come to fruition or even make it to final investment decisions. By the time permits are approved, someone else has likely seized the market and opportunities are lost.”
Some analysts have said that Phase 2 of Coastal GasLink — which TC Energy has not yet confirmed it will build or how much it would cost — could serve as a bellwether for the investability of other future energy projects because it offers some familiar benefits and trade-offs. By Poirier’s calculation, LNG shipments could add as much as $75 billion annually to Canada’s gross domestic product.
He also said LNG could reduce global emissions by displacing coal use in Asian economies.
Poirier said Asian consumption of coal increased 20 per cent over the past decade, and that displacing 10 per cent of that region’s coal consumption would offset 340 megatonnes of carbon emissions annually — about half of Canada’s annual emissions.
“By Canadian standards, this is a fairly easy project to accomplish,” Ian Archer, associate director, North America Natural Gas at S&P Global Inc., said.
Despite global climate goals, he said demand for LNG continues to grow, mostly in Asia.
Archer said Canadian LNG shipments would displace some coal use in Asia, but it wouldn’t be on a one-to-one basis, where every ounce of gas eliminates some coal use. Instead, some LNG shipments would fill new demands for energy from growing economies, whether that’s India or another country.
However, expanding LNG shipments by building compressors along the pipeline could revive conflicts in Indigenous communities in B.C. that opposed construction of Coastal GasLink in the first place.
In 2020 and 2021, while the pipeline was being constructed through approximately 190 kilometres of unceded Wetʼsuwetʼen First Nation territory, a series of protests and blockades disrupted construction.
Ultimately, Coastal GasLink reached 20 benefit agreements with Indigenous groups along the pipeline route, including four of the five Wet’suwet’en Indian Act bands, but the Hereditary Chiefs, represented by the Office of the Wet’suwet’en, still opposed the project.
“There was a lot of fierce local Indigenous opposition,” Archer said, “And they’d have to go right back into this” to build the compressors for Phase II.
In addition, there could be federal and provincial barriers since installing compressors and expanding gas deliveries would increase the project’s overall emissions.
Until now, Canada’s efforts to fight climate change have focused on reducing emissions within the country, but Poirier called for a policy change towards a more holistic view that would account for reductions elsewhere in the world that occur because of a Canadian project.
“Climate change is a global phenomenon,” he said. “Greenhouse gases don’t stop at borders.”
Whether TC Energy announces a decision to move forward on Coastal GasLink Phase 2 may depend on whether LNG Canada expands its liquefaction facility in Kitimat. LNG Canada is a consortium of Canadian subsidiaries of foreign-owned energy companies, including Shell PLC, Petronas Chemicals Group Bhd, PetroChina Co. Ltd. and others.
Poirier said U.S. tariffs have fostered a positive national sentiment towards nation-building through projects such as pipelines, but that may not last. To be the largest LNG producer in the world, Canada would have to top the U.S., Australia and other countries with similar goals, he added.
“We chose to have a serious policy discussion in the middle of an election campaign,” Poirier said. “Our ask is that you hold each party accountable with the details of how they will achieve their goals so we can all make informed policy decisions.”
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