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CTV News
2 days ago
- Business
- CTV News
Here's how Canada's LNG exports could make your heating bill go up
The LNG Canada industrial energy project is seen under construction in Kitimat, B.C., on Wednesday, Sept. 28, 2022. THE CANADIAN PRESS/Darryl Dyck Flames as high as a 30-storey building, ships nearly as long as the Eiffel Tower is tall, $40 billion dollars. Everything about LNG Canada is big — including its promises. Often referred to as the largest private investment in Canadian history, the megaproject connects B.C. shale gas reserves near the Alberta border to marine shipping routes on the northwest coast. More than a decade after the project was first approved, Canada's liquefied natural gas (LNG) sector is finally up and running: LNG Canada sent its first shipment to Asia on June 30. As exports start flowing overseas from the Kitimat, B.C., facility, two more liquefaction plants are under construction — Woodfibre LNG and Cedar LNG. Another, Ksi Lisims LNG, could be approved any day. The promise around all this industrial buildout has always been prosperity, but whether the industry can deliver, and for how long, is up for debate. 'An oversupply of LNG is widely expected, potentially starting as early as next year, with a massive wave of new projects coming online around the world, especially in the U.S. and Qatar,' Steven Haig, a policy advisor with the International Institute for Sustainable Development, told The Narwhal. 'When it comes to the economic benefits of LNG, Canada is really late to the party — and that party is almost over.' Haig and his colleagues recently penned a deep dive into the risks of locking in more LNG infrastructure, reporting that Canadian exports are unlikely to achieve 'energy security for importers or economic resilience for exporters.' 'What we explain in our analysis is that we are very likely moving into a period of oversupply with lower prices — and those lower prices may well be below what projects need to break even,' Haig told The Narwhal. 'If they run at a loss for too long, then they can become stranded assets, with economic implications for the people who work for these facilities or for communities that might become economically associated with them.' 'Higher domestic prices for Canadian consumers' are a possibility As Canadian LNG — the liquid form of natural gas, which is mostly composed of methane and in B.C. is extracted primarily through fracking — starts making its way into international markets, British Columbians and Albertans could also see a spike in their heating bills, according to Deloitte Canada. As the Financial Post recently reported, domestic natural gas prices could jump up by 60 per cent this year, and climb even higher next year. Haig said if the price a company can get from exporting LNG is higher than it can get selling natural gas domestically, prices in places like B.C. and Alberta will go up. This happened in Australia, where domestic prices tripled as Russia's 2022 invasion of Ukraine sent shockwaves through the supply chain. 'LNG links regional gas markets together in the global LNG market,' Haig explained. 'So a local supply disruption in one place can lead to skyrocketing LNG prices elsewhere.' 'When those high prices are in effect, then it can become more profitable for a gas producer in Canada, for example, to export that gas to the international LNG market than to use that gas in Canada's domestic gas market.' That, he said, can lead to higher domestic prices for Canadian consumers. LNG Canada is now operating its first phase, which will produce up to 14 million tonnes of supercooled gas per year. It's already approved and permitted to double production. Teresa Waddington, LNG Canada's vice-president of corporate relations, told The Narwhal earlier this month that talks are underway about whether or not to go ahead with the expansion. She said a final decision depends on a number of factors including 'overall competitiveness [and] affordability.' LNG Canada did not respond to new questions from The Narwhal by publication time. When the international consortium of oil and gas companies behind LNG Canada (Shell, Petronas, Korea Gas, PetroChina and Mitsubishi) first started courting Canada to develop an LNG export industry in B.C. in the early 2010s, they said it would boost the economy locally, provincially and federally. With recent trade threats from the U.S. government, that narrative is gaining traction again and politicians like B.C. Premier David Eby and Prime Minister Mark Carney are celebrating the sector as an economic saviour. Haig cautioned the narrative should be taken with a grain of salt. 'We're seeing this big push towards LNG expansion to diversify Canada's exports beyond the United States, but these are multi-billion dollar and multi-decade projects,' he explained. 'Their long-term viability is a serious concern as global markets shift towards cleaner and more reliable energy sources, like renewables. Investing in LNG as a supposed transition fuel in the meantime would be a long, costly detour.' 'It's not too late': Canada can reduce economic and climate risks by putting the brakes on LNG exports, expert says Alongside promises of prosperity, LNG Canada and other proponents of the sector maintain the gas is a so-called 'bridge' or transition fuel — a climate solution. The argument goes like this: burning gas to generate power is less harmful than burning coal, and B.C. exports will help countries like China substantially reduce their reliance on the 'dirtier' fossil fuel. The first part is the subject of much debate, especially when the entire lifecycle of LNG is taken into consideration. The second — that Canadian LNG will displace coal — Haig said simply isn't true. 'Coal is cheap, renewables are cheap and LNG is not,' he said. 'If we look at China's power sector, for example, it's renewables — not LNG imports — that are eating into coal's market share. This is mostly because renewables are cheaper than LNG and because LNG requires expensive new infrastructure, such as re-gasification plants and pipelines, to connect consumers with supply.' China, while still responsible for about one third of the world's greenhouse gas emissions, is outpacing the rest of the world by leaps and bounds in building renewables. In May this year, the country added the equivalent of 100 solar panels per second. As the Guardian reported in June, 'China's installed solar photovoltaic capacity has now surpassed 1,000 gigawatts for the first time, equivalent to half of the world's total installed solar capacity.' Haig said Canada is at a crossroads as it decides whether or not to approve more LNG projects, but added, 'it's not too late.' 'LNG exports can delay investments in renewables and generally increase global fossil fuel use, increasing global greenhouse gas emissions,' he said. 'Doubling down on LNG projects would likely expose Canadians to more risk and volatility, not less.' By Matt Simmons, Local Journalism Initiative Reporter, The Narwhal
Yahoo
09-07-2025
- Business
- Yahoo
Canada's gas market 'about to turn the corner,' say analysts eyeing up to 7 years of excess demand
Canada's battered natural gas market is 'about to turn the corner' into a new era of higher prices, according to BMO Capital Markets veteran commodities analyst Randy Ollenberger. He and his peers see new LNG export projects spurring higher prices for Canadian producers for years to come as demand outstrips supply. The first delivery of liquefied natural gas (LNG) produced at the LNG Canada terminal near Kitimat, B.C. left port for a storage and regasification terminal in Incheon, South Korea last week. Prior to this, Canada's only export market has been the United States via pipeline. The Shell PLC-led (SHEL) joint venture provides long-awaited access to higher prices for Canadian gas in Asia. 'Long-suffering Canadian gas companies (and investors) are poised to benefit from several structural changes, including: the start-up of LNG Canada, declining production in several major U.S. basins, and growing demand from AI and data centres,' Ollenberger wrote in a recent note to clients. '[The] Canadian gas market [is] about to turn the corner.' The first phase of LNG Canada will export from two processing units with a total capacity of 14 million tonnes per annum (mtpa). A second phase under consideration would double that. Meanwhile, two additional projects in Canada have reached their final investment decision: Cedar LNG and Woodfibre LNG. A new analysis by Deloitte Canada published on Monday estimates Canada will not fill the demand created by current LNG export projects for four to seven years. 'This likely will mean the strengthening of the AECO benchmark, enabling Canadian producers to achieve more favourable value for their gas,' Deloitte Canada researchers led by energy, resources and industrials partner Andrew Botterill wrote in the report. 'In this period where production is growing to meet demand, natural gas prices should see a narrowing of the differential relative to Henry Hub that lasts for multiple years once exports ramp up from LNG Canada.' Canada is the world's fifth-largest producer of natural gas, and the fourth-largest global exporter. Producers faced tough times in 2024 as prices fell to their lowest levels in more than 40 years. According to Statistics Canada, higher production and storage, coupled with weaker-than-expected winter demand, caused prices to plummet in the second half of the year. Deloitte Canada sees AECO prices averaging $2.20 per million BTUs in 2025, up from $1.39 in 2024. In 2026, the firm says AECO prices are expected to average $3.45, before plateauing at $3.50 until 2032. 'We're bullish on natural gas,' Bay Street fund manager Eric Nuttall wrote in his firm's recently released 2025 mid-year outlook. The partner and senior portfolio manager at Toronto-based Nine Point Partners says 75 per cent of his firm's oil and gas fund has been allocated to natural gas investments since the end of May. 'We expect natural gas prices to strengthen to between $4 and $5 over the coming year, and as Canada increases its LNG capacity, we think the current discount on Canadian natural gas should fall from about $2 today to between $1.10 and $1.30,' Nuttall added. 'This poses a big opportunity for Canadian companies.' LNG has been touted as a 'bridge' or 'transition' fuel to replace coal power in emerging economies. With new export-focused capacity ramping up around the world from the United States to Qatar, observers including the International Energy Agency have raised concerns about a glut of supply hitting the market. While Deloitte Canada estimates four to seven years of excess demand when LNG Canada is fully operational, other analysts have floated shorter timeframes. 'We believe this will significantly impact the current Western Canadian gas balance, and estimate it will take around two years for supply to catch up with demand,' Ollenberger wrote. Last month, TD Cowen analyst Tristan Margot called for the global LNG market to flip to oversupplied conditions after winter 2026. 'Our analysts see the incremental demand for WCSB natural gas from LNG Canada Phase 1 to be largely filled in real time,' he wrote in a June 12 research report. 'This dynamic is likely to result in continued weakness in natural gas prices through year-end,' Margot added. 'This is likely to dampen the optimism that LNG Canada Phase 1 startup is the inflection point to historically weak WCSB gas pricing. However, with producer supply-restraint in 2026+, we see a path to continued basin growth and stronger WCSB natural gas pricing.' Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist. Download the Yahoo Finance app, available for Apple and Android. Sign in to access your portfolio
Yahoo
08-07-2025
- Business
- Yahoo
Canada's gas market 'about to turn the corner,' say analysts eyeing up to 7 years of excess demand
Canada's battered natural gas market is 'about to turn the corner' into a new era of higher prices, according to BMO Capital Markets veteran commodities analyst Randy Ollenberger. He and his peers see new LNG export projects spurring higher prices for Canadian producers for years to come as demand outstrips supply. The first delivery of liquefied natural gas (LNG) produced at the LNG Canada terminal near Kitimat, B.C. left port for a storage and regasification terminal in Incheon, South Korea on Monday. Prior to this, Canada's only export market has been the United States via pipeline. The Shell PLC-led (SHEL) joint venture provides long-awaited access to higher prices for Canadian gas in Asia. 'Long-suffering Canadian gas companies (and investors) are poised to benefit from several structural changes, including: the start-up of LNG Canada, declining production in several major U.S. basins, and growing demand from AI and data centres,' Ollenberger wrote in a recent note to clients. '[The] Canadian gas market [is] about to turn the corner.' The first phase of LNG Canada will export from two processing units with a total capacity of 14 million tonnes per annum (mtpa). A second phase under consideration would double that. Meanwhile, two additional projects in Canada have reached their final investment decision: Cedar LNG and Woodfibre LNG. A new analysis by Deloitte Canada published on Monday estimates Canada will not fill the demand created by current LNG export projects for four to seven years. 'This likely will mean the strengthening of the AECO benchmark, enabling Canadian producers to achieve more favourable value for their gas,' Deloitte Canada researchers led by energy, resources and industrials partner Andrew Botterill wrote in the report. 'In this period where production is growing to meet demand, natural gas prices should see a narrowing of the differential relative to Henry Hub that lasts for multiple years once exports ramp up from LNG Canada.' Canada is the world's fifth-largest producer of natural gas, and the fourth-largest global exporter. Producers faced tough times in 2024 as prices fell to their lowest levels in more than 40 years. According to Statistics Canada, higher production and storage, coupled with weaker-than-expected winter demand, caused prices to plummet in the second half of the year. Deloitte Canada sees AECO prices averaging $2.20 per thousand cubic feet in 2025, up from $1.39 in 2024. In 2026, the firm says AECO prices are expected to average $3.45, before plateauing at $3.50 until 2032. 'We're bullish on natural gas,' Bay Street fund manager Eric Nuttall wrote in his firm's recently released 2025 mid-year outlook. The partner and senior portfolio manager at Toronto-based Nine Point Partners says 75 per cent of his firm's oil and gas fund has been allocated to natural gas investments since the end of May. 'We expect natural gas prices to strengthen to between $4 and $5 over the coming year, and as Canada increases its LNG capacity, we think the current discount on Canadian natural gas should fall from about $2 today to between $1.10 and $1.30,' Nuttall added. 'This poses a big opportunity for Canadian companies.' LNG has been touted as a 'bridge' or 'transition' fuel to replace coal power in emerging economies. With new export-focused capacity ramping up around the world from the United States to Qatar, observers including the International Energy Agency have raised concerns about a glut of supply hitting the market. While Deloitte Canada estimates four to seven years of excess demand when LNG Canada is fully operational, other analysts have floated shorter timeframes. 'We believe this will significantly impact the current Western Canadian gas balance, and estimate it will take around two years for supply to catch up with demand,' Ollenberger wrote. Last month, TD Cowen analyst Tristan Margot called for the global LNG market to flip to oversupplied conditions after winter 2026. 'Our analysts see the incremental demand for WCSB natural gas from LNG Canada Phase 1 to be largely filled in real time,' he wrote in a June 12 research report. 'This dynamic is likely to result in continued weakness in natural gas prices through year-end,' Margot added. 'This is likely to dampen the optimism that LNG Canada Phase 1 startup is the inflection point to historically weak WCSB gas pricing. However, with producer supply-restraint in 2026+, we see a path to continued basin growth and stronger WCSB natural gas pricing.' Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist. Download the Yahoo Finance app, available for Apple and Android.
CTV News
07-07-2025
- Business
- CTV News
Alberta natural gas expected to see a bump next year thanks to LNG exports: Deloitte
A tanker loaded with the first cargo of Canadian liquefied natural gas departs from Kitimat, B.C. THE CANADIAN PRESS/Handout LNG Canada (Mandatory Credit) CALGARY — A new report from advisory firm Deloitte is forecasting a big jump in Alberta natural gas prices next year, with the country's first West Coast export facility now up and running. The Alberta benchmark AECO price is expected to average $2.20 per one million British thermal units (mmBTU) in the second half of this year and then rise to an average of $3.50 per mmBTU in 2026. It averaged $1.36 per mmBTU last year. By the end of the forecast in 2032, the average AECO price is expected to hit $4 per mmBTU. Alberta producers now have an outlet for their gas to markets beyond the United States with LNG Canada shipping its first cargo of ultra-chilled gas across the Pacific to Asia from Kitimat, B.C., last week. Deloitte partner Andrew Botterill says that will give producers the confidence they need to invest in new drilling, while consumers who use natural gas to heat their homes can expect to see their bills go up. 'It's really an opportunity for producers to get to get volumes into another sales point, which dramatically changes things,' he said. For many years, Albertans have enjoyed relatively cheap natural gas. 'Things do look stronger now than they have in the past, but we're also right in the middle of the summer when the natural gas pricing is at its low,' he said. 'Through the remainder of this year and into next year, our natural gas price is going to be higher and it's going to cost more to put through our furnaces.' Based on current levels of drilling and capital spending, Deloitte predicts Canadian producers will not fill demand from current LNG export projects operating or in the works for four two seven years, meaning Alberta pricing should remain strong for the foreseeable future. For oil, Deloitte is predicting West Texas Intermediate, the main U.S. crude benchmark, to average US$72 a barrel in the second half of this year, dipping to US$67.30 next year and rising to US$74.65 by 2032. Botterill said Canadian companies can manage that price range well, especially since they benefit from a strong U.S. dollar. The price discount for western Canadian heavy crude has also narrowed thanks to the startup last year of the Trans Mountain pipeline expansion to the Vancouver area, through which meaningful volumes can be sold in Asia. 'While the price isn't as robust ... Canadian companies are managing quite well, but they're being cautious on where they deploy capital and not spending too much too quickly.' This report by The Canadian Press was first published July 7, 2025. Lauren Krugel, The Canadian Press
Reuters
07-07-2025
- Business
- Reuters
Petronas ships its first LNG cargo to Japan from its new facility in Canada
KUALA LUMPUR, July 7 (Reuters) - Malaysia's state energy firm Petronas on Monday said it has successfully shipped its first liquefied natural gas (LNG) cargo to Japan from its newly operational LNG facility in Kitimat, Canada. Petronas has a 25% stake in the Kitimat LNG plant in British Columbia on Canada's west coast. The shipment departed for Japan aboard the 174,000-cubic metre Puteri Sejinjang LNG vessel, but the company didn't specify how much LNG it was delivering.
