Report Says Canada Must Spend $50 Billion To Compete On LNG

July 2012, Vol. 239 No. 7

Canada must speed development of liquefied natural gas export projects to compete with emerging international players also vying to supply growing Asian economies, Ernst & Young stated in a report that puts the cost for infrastructure needed over the next decade at $50 billion.

“We really don’t think Canada has a choice here,” said Lance Mortlock, senior manager at Ernst & Young’s oil and gas advisory practice. “The opportunity window will be open for a finite period of time.”

Low natural gas prices across North America are forecast for years to come, eroding Canada’s primary market south of the border, which means moving quickly on gas exports across the Pacific is critical, Mortlock said. Ernst & Young predicts Canada could have 1.6 Bcf/d export capacity in place by 2015, but Mortlock said the figure depends on whether U.S. Gulf Coast LNG proponents and other competitors worldwide move in.

LNG proponents in Canada have yet to lay the hundreds of miles of pipe required to connect trillions of cubic feet of recoverable shale gas in northeastern British Columbia. That would underpin projects to the coast, and construction has not started on any export terminals.

“Those pipelines need to go across pretty sensitive environmental lands, so overcoming those challenges from an environmental perspective and First Nations perspective will be very important,” Mortlock noted.

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