(Deborah Yedlin serves as the president and CEO of the Calgary Chamber of Commerce, which she joined in July 2021.) It’s one thing to hear about the size of Canada’s natural gas reserves, but it’s another thing entirely when the economic opportunity is comprehensively quantified. That’s effectively what a just-released study by S&P Global entitled Nation Building Through LNG: Benefits of Accelerating Development has done. The study, undertaken with the support of the Calgary Chamber of Commerce, illustrates the benefit to Canada’s economy from increasing natural gas production for the purpose of feeding greater Liquefied Natural Gas (LNG) export capacity, as well as processing the associated natural gas liquids for domestic use and export. The numbers are eye-popping. The value of boosting natural gas production to feed Canada’s LNG-ambitious growth while also monetizing the associated natural gas liquids is estimated by S&P Global to be $1 trillion. It’s an opportunity that leverages the tremendous resource in the Montney play, the profound shifts in global energy systems and fits with the Build Canada Strong Act and Bill C-39, and the federal government’s stated imperative of ensuring Canada’s long-term economic sovereignty. In fact, Canada could become one of the world’s top three LNG suppliers by 2045, which would not only be significant for Canada’s economy but would also contribute to geopolitical stability as countries seek to secure new sources of supply from stable jurisdictions with short transit times and trade routes that are safe and secure. While our geography sometimes works against us, in the global LNG world, we have an advantage. The federal government has a goal of increasing LNG exports to 36 million tonnes per year (MMtpa) by 2030—and 100 MMtpa by 2050. While one could say the latter falls into the stretch goal category, we live in the shadow of more than 10 cancelled projects that would have seen exports close to reaching 100 MMtpa by now. As it stands, we are currently exporting 14 MMtpa from LNG Canada Phase I, with projects on the books that will put us within striking distance of 50 MMtpa. Ironically, it’s the same as what one company, Cheniere, is currently exporting off the US Gulf Coast. Cheniere exported its first cargo off the U.S. Gulf Coast in 2016, with the loading of that first tanker live-streamed at the annual CERAWeek energy conference in Houston. The Canadians in attendance—myself included—were gutted because we had let an opportunity slip through our fingers. At this year’s conference last March, Cheniere’s CEO said the company was aiming to double its exports to 100 MMtpa. In other words, Canada is a country chasing one company that has been exporting LNG for just a decade. The S&P Global study gives the goal of 100MMtpa a whiff of reality, assuming we can continue to move forward—quickly. We aren’t the only country wanting to increase production, attract capital and be part of the 176 MMtpa on the global development horizon. Nor are we the cheapest jurisdiction or the fastest to permit. These are real obstacles that need to be addressed if we are to reach the 100 MMtpa export goal. Where we have made progress is with Indigenous communities and how projects are now approached. By respecting community engagement and established practices, there is also opportunity for meaningful economic participation through the various financial structures that have been developed and continue to evolve. But the LNG export potential is not the entire story. Our natural gas bounty, with 375 trillion cubic feet of reserves that can be produced at prices below $3 per MMBtu (U.S.), and only eight per cent on production, also comes with tremendous upside for the Natural Gas Liquids (NGLs) and Liquefied Petroleum Gases (LPGs) produced alongside natural gas. In fact, it’s the liquids—according to the S&P study—that currently account for 49 per cent of the value of our natural gas production but represent 24 per cent of what’s produced where there is significant upside. That was a big factor in the $22 billion paid by Shell when it bought ARC Resources earlier this year. Those liquids are important—and could contribute as much as $130 billion to the Canadian economy by 2050. Most Canadians aren’t aware we are already making significant inroads into Asian markets, with Calgary-based company AltaGas supplying Japan with 11 per cent of its propane needs, 14 per cent of South Korea’s propane and liquids demand and having a six per cent share of China’s propane market. More NGLs and LPGs—and egress—would see that number go up significantly. Beyond that, LPGs are critical inputs for the global petrochemical industry. Peter Lougheed saw this opportunity in the 1970s—to add value to our natural gas production. This led to the Joffre petrochemical plant being approved in 1975, setting Alberta, and NOVA Chemicals, on a track to being a major producer of ethylene and polyethylene—the building blocks for products we use everywhere, every day. But the LPGs are an important link to the oil sands. For Alberta to increase oilsands production to fill the Pacific Link pipeline, the South Bow Prairie Connector, the expansion of capacity on the TransMountain pipeline and the Enbridge mainline, we need to significantly increase natural gas production from the current 19 billion cubic feet per day (bcf/d) and add natural gas pipeline infrastructure. And we need diluent. For barrels that are not upgraded to synthetic crude, diluent allows for the oilsands to flow through the pipeline. Consider that the diluent needs today—at 900,000 barrels per day—are met via a mix of domestic supply and imports from the U.S. The S&P study shows 120,000 barrels of condensate would be produced at the 100 MMtpa threshold and support 425,000 barrels of oilsands production—close to half the capacity of the proposed Pacific Link project. Fundamentally, the S&P study is both a signal to investors and a call to action. It’s a signal to investors of the magnitude of the investment opportunity in Canada, as the suppliers once considered safe and reliable—both oil and natural gas—are neither; the result of two ongoing conflicts that have fundamentally reshaped the world’s energy systems for both oil and natural gas. The call to action is that we don’t have the luxury of time. Other countries are competing for the same investment dollars to develop LNG projects, and Canada can’t wait. The next steps will require courage, determination and collaboration on a different level. We must address the irritants that hold us back and compromise our competitiveness—despite our rich resource endowment—and accept that it won’t be perfect. Fundamentally, we must approach the opportunities before us in a comprehensive, not siloed, manner—understanding that each commodity is important to the other. While there is significant upside in growing our LNG exports—the benefits accrue across the value chain and extend to the goal of doubling oilsands production in Alberta. The world needs our energy—in all forms—and the S&P study shows what Canada could leave on the table if we don’t get out of our own way and seize this generational opportunity. It’s not often you get a mulligan—and Canada can’t afford to let this one go to waste.
