Canada’s sole liquefied natural gas (LNG) facility commenced operations last year, presenting the nation with a chance to enhance its LNG sector and emerge as a leading global natural gas exporter, as outlined in a recent report.
Nevertheless, several obstacles must be addressed, including a protracted permitting procedure and a shortage of proposed initiatives from the private sector.
The federal government is targeting the expansion of LNG exports to over 100 million tonnes annually.
At present, there is one active facility with a production capacity of 14 million tonnes per year.
Achieving the federal objective could lead to considerable economic benefits, as highlighted in the report released on Thursday by S&P Global, which estimates nearly 250,000 jobs per year and close to $1 trillion in investments in the natural gas sector by 2050.
“If Canada can resolve its permitting and cost challenges, it can significantly contribute to the global LNG market, which would undoubtedly benefit the Canadian economy and help diversify it, reducing dependence on its neighbor to the south,” remarked Daniel Yergin, vice-chairman of S&P Global, during an interview with CBC News.
Western Canada possesses abundant natural gas reserves, which can be extracted at some of the lowest costs found in North America.
However, the construction of pipelines to transport gas from Alberta and northeastern B.C. to the West Coast has proven to be a complicated and costly endeavor.
The Coastal GasLink project, initiated by TC Energy and partially owned by local First Nations, has encountered numerous delays and budget overruns. The initiative has faced opposition from various Indigenous groups and environmental advocates, with the pipeline traversing approximately 625 lakes, rivers, creeks, wetlands, and streams in northern B.C.
Some analysts believe that Canada may never attain the status of an LNG-exporting powerhouse due to the significant challenges associated with developing and building energy infrastructure. Additionally, there is stiff competition from numerous other nations eager to attract LNG investments, including the United States.
According to the S&P report, Canada’s permitting process takes 27 months longer than that of Texas, and the cost of building pipelines is 160 percent higher.
In response, the federal government has proposed new legislation intended to expedite regulatory reviews.
Currently, LNG Canada is the only operational LNG export facility in the nation, although six additional facilities are either under construction or in the planning stages. Together, they are expected to produce just over 50 million tonnes of LNG annually.
S&P Global vice-chairman Daniel Yergin appears on stage at CERAWeek in Houston on March 10, 2025. Yergin says Canada has many advantages and hurdles to grow its LNG sector. (Kaylee Greenlee/Reuters)
Yergin noted that a well-kept secret in the global energy market is the scale of Canada’s oil and natural gas reserves, coupled with its geographic advantage of a relatively short shipping distance to Asia.
“Asian markets are keen on sourcing LNG from Canada,” Yergin stated, along with other nations worldwide, particularly in light of this year’s Middle Eastern conflicts disrupting the global natural gas supply. Europe faces rising concerns regarding the high costs of gas for heating homes as winter approaches.
“There is a strong demand for diversification. There is a belief that building security and resilience into your energy systems is essential. A diversified energy portfolio is necessary, and it would be advantageous to have resources that are not reliant on narrow transit routes. All these factors highlight the advantages Canada currently possesses,” he added.
According to Yergin, Prime Minister Mark Carney holds significant credibility on the global stage, but investors will seek tangible evidence of permitting reforms, as extended delays can result in substantial costs for companies.
The demand for natural gas is anticipated to rise in the coming decades, driven by factors such as population growth and the increased power requirements from AI data centers and air conditioning systems.
S&P Global reports that Canadian LNG has a greenhouse gas intensity that is 55 percent lower compared to similar projects in other nations.