Canada Producers’ Survival Of Low-Cost U.S. Gas Dependent On LNG Exports

LNG Tanker

LNG Tanker

The focus on liquefied natural gas (LNG) exports could curb the Canadian production slump, which has lasted for over a decade, and in retreat from the competition by low-cost U.S. supplies. In the context, the Canadian Energy Research Institute (CERI) predicted that the national total output would reduce by 15% to 15.4 Bcf/d over the next 20 years. The development could see a turnaround with the Pacific coast LNG terminal projects attaining breakthroughs into construction.

CERI highlighted in its report that the Canadian production would decrease out to 2038, and attributed to factors like declining trend of Canadian natural gas exports to the U.S. and the increased imports from the U.S. The current LNG potential is said to be around 5 Bcf/d as per the Canadian Crude Oil and Natural Gas Production, Supply Costs, Economic Impacts and Emissions Outlook (2018-2038). Furthermore, CERI stated that the gas production climbing by 13% to 20.4 Bcf/d as of 2038 was feasible if British Columbia (BC) projects took final investment decisions till 2020.

Meanwhile, a decision on the BC project, the associated Coastal GasLink pipeline, and LNG Canada is looming by lead sponsor Royal Dutch Shell Plc. And, the three gas major uncertainties according to CERI includes the LNG outlook, the future prospects for replacing coal in thermal power stations, and evolving trade across Canada and the U.S. border. Furthermore, the new report highlighted that BC, Alberta, and Saskatchewan deliveries to Ontario and Quebec on TransCanada Corp.’s cross-country Mainline dropped to around 64% to 2.17 Bcf/d in 2017.

Meanwhile, the clearest hope on the Canadian gas industry horizon, LNG exports would bring forth a gas byproduct bonus by augmenting a 43% jump in premium-value. And, CERI observed that U.S. oil and liquids producers would reap an international marketing bonus from refinery imports of discount-priced Canadian bitumen and heavy crude.

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