OTTAWA: A new report says the prospects of Canada exporting liquefied natural gas have “darkened” because of slowing demand and a surge in competing supply.
The report by the International Energy Agency says Canada won’t have any LNG export projects online by 2020, which would go against British Columbia’s goal of having three LNG plants in operation by that time.
“Prospects for LNG projects have deteriorated and no plant is expected to be operational over the time horizon of this report,” the IEA said in its report released.
Most of Canada’s proposed LNG projects are in BC. and still need approval from First Nations and the federal government.
The B.C. projects are facing higher costs than competitors because of the remote location of the proposed terminals and the distance between them and gas fields.
Canada is competing with LNG projects in the United States that are being built on existing gas infrastructure, which reduces capital costs and makes it easier to secure permits.
Gas markets are changing quickly as more supply comes online, the report says.
“Global LNG balances are easing fast,” it says. “Throughout 2014, markets’ concerns have shifted from how demand can be met to how supply can be absorbed.”
While Canada’s LNG exports are reliant on strong Asian demand, conventional gas sales are also struggling to compete with low-cost gas production from U.S. shale gas.
The report says deferrals are likely for several large projects in Canada if oil and gas prices don’t recover.
