OTTAWA: Canada must develop its capability to export large volumes of liquefied natural gas from its Pacific Coast if it hopes to offset the recent precipitous drop-off in production in its western gas fields, a Canadian Association of Petroleum Producers analyst said this week.
“We have a huge potential in unconventional gas reserves in the Western Canadian Sedimentary Basin and Canada as a whole, but we’re losing our traditional market,” Stuart Mueller, CAPP natural gas markets analyst, said in an interview Thursday.
In a report that CAPP released earlier this month on the global LNG market and the potential of Canadian LNG exports, the producer group noted that exports of Western Canadian gas to the US have declined 10.4 Bcf/d in 2007 to around 7.4 Bcf/d a decline of about 29%.
To reverse the decline trend, the Canadian gas industry needs to open up new markets for its product and “the global LNG market is likely the market that we need to access,” Mueller said.
Developing an industry to export LNG from the shores of British Columbia will take the cooperation of industry, the Canadian federal and BC provincial and other stakeholders, notably First Nations groups, through whose lands the pipelines connecting gas fields in Alberta and eastern BC to the western coast must run.
About two dozen LNG projects have been proposed to be built in British Columbia, according to the BC Ministry of Gas Development, although to date none of the backers of the proposed projects have made a final investment decision.
The LNG export project that appears to be closest to the FID is Pacific NorthWest LNG, owned by a consortium of companies led by Malaysia-owned Petronas.
Pacific NorthWest LNG, which plans to build a 12 million mt/year (560.40 Bcf/yr) LNG export facility at Lelu Island, in June announced a decision conditional on two government approvals.
Earlier this month, BC’s legislative assembly fulfilled one of those conditions when it passed the Liquefied Natural Gas Agreements bill, granting the provincial government rights to sign individual project development agreements with proponents.
The other condition the project develop had set was for a positive regulatory decision by the Canadian Environmental Assessment Agency, which has not been granted to date.
Mueller said each LNG project developer would proceed along the timeline that makes the most sense for their particular project.
Both Canadian federal and BC provincial officials have been doing a good job of establishing a regulatory framework to promote the development of a new LNG export industry, he said.
The other significant way in which officials are working to establish the industry is to promulgate rules that ensure regulatory certainty, Mueller said.
Government officials and LNG project developers also need to continue to work with First Nations groups, to ensure that these groups cooperate in the development of an LNG exporting industry and share in its benefits, Mueller said.
Mueller pointed to the Douglas Channel LNG project, a barge-based floating LNG facility proposed to be built near Kitimat, BC, as a prime example of cooperation between LNG project developers and First Nations groups.
