Business
It’s Time for Canadians to Challenge the American Domination of the LNG Space
From EnergyNow.Ca
By Susan McArthur
Canada is now among the top 10 countries with natural gas reserves. It’s time to take advantage of that
Canadians are starting to understand the Americans ate our breakfast, lunch and dinner when it comes to selling liquefied natural gas (LNG) on the global market while simultaneously undermining our national security.
They are finally waking up to the importance of the urgent request by oil and gas CEOs to all federal party leaders calling for the removal of legislation and regulation impeding and capping the development of our resources.
The LNG story in the United States is one of unprecedented growth, according to a recent Atlantic Council report by Daniel Yergin and Madeline Jowdy. Ten years ago, the U.S. did not export a single tonne of LNG. Today, U.S. exports account for 25 per cent of the global market and have contributed US$400 billion to its gross domestic product (GDP) over the past decade.
The U.S. is now the world’s largest LNG supplier, edging out Qatar and Australia, and according to Yergin and Jowdy, its export market is on track to contribute US$1.3 trillion to U.S. GDP by 2040 and create an average of 500,000 jobs annually.
Last week, Alberta announced a sixfold increase in its proven natural gas reserves to 130 trillion cubic feet (tcf). The new figures push Canada into the top 10 countries with natural gas reserves.
Unfortunately, notwithstanding this vast resource, Canada didn’t even make it to the LNG party and the Americans have been laughing all the way to the bank at Canada’s expense. Our decade-long anti-pipeline and natural resource agenda has cost us dearly and Donald Trump’s trade tariffs are a stake to the heart.
As the world grapples with global warming, natural gas is the perfect transition fuel. It generates half the CO2 emissions of coal, provides needed grid backup for intermittent renewable wind and solar power, and it is relatively easy to commission.
Canada has extensive natural gas reserves, but these reserves are less valuable if we can’t get them to offshore markets where countries will pay a premium for energy generation. Canadian gas is abundant, but, given our smaller market, typically trades at a discount to U.S. gas and a massive discount to European and Asian markets.
The capital-intensive nature of LNG facilities requires long-term supply contracts. Generally, 20-year supply contracts with creditworthy counterparties are required to secure the financing required to build gas infrastructure and liquefaction plants.
For example, as part of a larger strategic deal, Houston-based LNG company NextDecade Corp. signed a 20-year offtake agreement to supply 5.4 million tonnes per annum (mtpa) to French multinational TotalEnergies SE.
As the market grows and matures, the spot market is gaining share, but term contracts continue to represent most of the market. This is a problem for Canada as it tries to break into the market, as much of current and future demand is already committed.
More than half the current LNG market demand, or 225 mtpa, is under contract until 2040, according to Shell PLC’s LNG outlook report for 2024. A further 100 mtpa is contracted to 2045. Shell recently revised its LNG market growth forecast upward to 700 mtpa by 2040 and it estimates the LNG supply currently in operation or under construction already accounts for about 525 mtpa, or almost 75 per cent of the estimated market in 2040.
Even if Canada secured 100 per cent of the available market share (impossible), this represents a fraction of the 130 trillion cubic feet of reserves in Alberta and an infinitesimal amount of Canada’s natural gas reserve.
If Canada wants to sell its LNG to the global market, it needs to be at the starting line now. Canada has seven LNG export projects in various stages of development. They are all in British Columbia. The capacity of these export plants is 50 mtpa and the capital cost is estimated to be $110 billion.
After significant delays and cost overruns, our first export facility, LNG Canada’s 14 mtpa Phase 1 in Kitimat, is set to ship its first cargo to Asia later this year. Phase 2, representing a further 14 mtpa, is still awaiting a final investment decision. The Cedar LNG, Ksi Lisims LNG and Woodfibre LNG projects are licensed, at various stages of development and represent a further 17 mtpa.
Canada’s LNG exports today are a drop in the bucket compared to both our potential and the 88 mtpa exported by the U.S. in 2024. We have one project completed and, if history repeats itself and Canada doesn’t get its act together, the runway for the remaining licensed projects will be long, painful and costly.
Financing large capital projects requires predictability with respect to timing and cost. This is also a problem for Canada. As the oil and gas CEOs have pointed out, LNG market players have lost trust in Canada as an investible jurisdiction for these projects.
In the face of Trump’s trade war, Canadians have become pipeline evangelists. Wishful thinking and political talking points won’t be enough if we repeat our decade of own goals on this file. We have literally left billions on the table.
Governments should fast-track all licensed projects, limit special interest distractions and provide the required muscle and financial support to get these projects up and running as soon as possible.
From Churchill, Man., to Quebec to the Maritimes to British Columbia, we should be making plans for LNG terminals and the required pipeline infrastructure to get this valuable and clean resource to market. And Canadians should pray we haven’t totally missed the market.
Susan McArthur is a former venture capital investor, investment banker and current corporate director. She has previously served on a chemical logistics and oil service board.
It finally happened. Canada received a federal budget earlier this month, after more than a year without one. It’s far from a budget that’s great. It’s far from what many expected and distant from what the country needs. But it still passed.
With the budget vote drama now behind us, there may be space for some general observations beyond the details of the concerning deficits and debt. What kind of budget did Canada get?
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For a government that built its political identity on social-program expansion and moralized spending, Budget 2025 arrives wearing borrowed clothing. It speaks in the language of productivity, infrastructure, and capital formation, the diction of grown-up economics, yet keeps the full spending reflex of the Trudeau era. The result feels like a cabinet trying to change its fiscal costume without changing the character inside it. Time will tell, to be fair, but it feels like more rhetoric, and we have seen this same rhetoric before lead to nothing. So, I remain skeptical of what they say and how they say it.
The government insists it has found a new path, one where public investment leads private growth. That sounds bold. However, it is more a rebranding than a reform. It is a shift in vocabulary, not in discipline.
A comparison with past eras makes this clear.
Jean Chrétien and Paul Martin did not flirt with restraint; they executed it. Their budgets were cut deeply, restored credibility, and revived Canada’s fiscal health when it was most needed. The Chrétien years were unsentimental. Political capital was spent so financial capital could return. Ottawa shrank so the country could grow. Budget 2025 tries to invoke their spirit but not their actions. Nothing in this plan resembles the structural surgery of the mid 1990s.
Stephen Harper, by contrast, treated balanced budgets as policy and principle. Even during the global financial crisis, his government used stimulus as a bridge, not a way of life. It cut taxes widely and consistently, limited public service growth, and placed the long-term burden on restraint rather than rhetoric. Budget 2025 nods toward Harper’s focus on productivity and capital assets, yet it rejects the tax relief and spending controls that made his budgets coherent.
Then there is Justin Trudeau, the high tide of redistribution, vacuous identity politics, and deficit-as-virtue posturing. Ottawa expanded into an ideological planner for everything, including housing, climate, childcare, inclusion portfolios, and every new identity category. Much of that ideological scaffolding consisted of mere words, weakening the principle of equality under the law and encouraging the government to referee culture rather than administer policy.
Budget 2025 is the first hint of retreat from that style. The identity program fireworks are dimmer, though they have not disappeared. The social policy boosterism is quieter. Perhaps fiscal gravity has begun to whisper in the prime minister’s ear.
However, one cannot confuse tone for transformation.
Spending is still vast. Deficits grew. The new fiscal anchor, balancing only the operating budget, is weaker than the one it replaced. The budget relies on the hopeful assumption that Ottawa’s capital spending will attract private investment on a scale that economists politely describe as ambitious.
The housing file illustrates the contradiction. The budget announces new funding for the construction of purpose-built rentals and a larger federal role in modular and subsidized housing builds. These are presented as productivity measures, yet they continue the Trudeau-era instinct to centralize housing policy rather than fix the levers that matter. Permitting delays, zoning rigidity, municipal approvals, and labour shortages continue to slow actual construction. Ottawa spends, but the foundations still cure at the same pace.
Defence spending tells the same story. Budget 2025 offers incremental funding and some procurement gestures, but it avoids the core problem: Canada’s procurement system is broken. Delays stretch across decades. Projects become obsolete before contracts are signed. The system cannot buy a ship, an aircraft, or an armoured vehicle without cost overruns and missed timelines. Spending more through this machinery will waste time and money. It adds motion, not capability.
Most importantly, the structural problems remain untouched: no regulatory reform for major projects, no tax competitiveness agenda, no strategy for shrinking a federal bureaucracy that has grown faster than the economy it governs. Ottawa presides over a low-productivity country but insists that a new accounting framework will solve what decades of overregulation and policy clutter have created. More bluster.
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From an Alberta vantage, the pivot is welcome but inadequate. The economy that pays for Confederation, energy, mining, agriculture, and transportation receives more rhetorical respect in Budget 2025, yet the same regulatory thicket that blocks pipelines and mines remains intact. The government praises capital formation but still undermines the key sectors that generate it.
Budget 2025 tries to walk like Chrétien and talk like Harper while spending like Trudeau. That is not a transformation; it is a costume change. The country needed a budget that prioritized growth rooted in tangible assets and real productivity. What it got instead is a rhetorical turn without the courage to cut, streamline, or reform.
Canada does not require a new budgeting vocabulary. It requires a government willing to govern in the best interest of the country.
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I view the recent announcements by the Government of Canada as window dressing, and not addressing the fundamental issue which is that projects are drowning in bureaucratic red tape and regulatory overburden. We don’t need them picking winners and losers, a fool’s errand in my opinion, but rather make it easier to do business within Canada and stop the hemorrhaging of Foreign Direct Investment from this country.
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Changes are afoot—reportedly, carve-outs and tweaks to federal regulations that would help attract investment in a new oil pipeline from Alberta. But any private proponent to come out of this deal will presumably be handpicked to advance through the narrow Bill C-5 window, aided by one-off fixes and exemptions.
That approach can only move us so far. It doesn’t address the underlying problem.
Anyone in the investment world will tell you a patchwork of adjustments is nowhere near enough to unlock the large-scale energy investment this country needs. And from that investor’s perspective, the horizon stretches far beyond a single political cycle. Even if this government promises clarity today in the much-anticipated memorandum of understanding (MOU), who knows whether it will be around by the time any major proposal actually moves forward.
With all of the talk of “nation-building” projects, I have often been asked what my thoughts are about what we must see from the federal government.
The energy sector is the file the feds have to get right. It is by far the largest component of Canadian exports, with oil accounting for $147 billion in 2024 (20 percent of all exports), and energy as a whole accounting for $227 billion of exports (30 percent of all exports).
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Furthermore, we are home to some of the largest resource reserves in the world, including oil (third-largest in proven reserves) and natural gas (ninth-largest). Canada needs to wholeheartedly embrace that. Natural resource exceptionalism is exactly what Canada is, and we should be proud of it.
One of the most important factors that drives investment is commodity prices. But that is set by market forces.
Beyond that, I have always said that the two most important things one considers before looking at a project are the rule of law and regulatory certainty.
The Liberal government has been obtuse when it comes to whether it will continue the West Coast tanker ban (Bill C-48) or lift it to make way for a pipeline. But nobody will propose a pipeline without the regulatory and legal certainty that they will not be seriously hindered should they propose to build one.
Meanwhile, the proposed emissions cap is something that sets an incredibly negative tone, a sentiment that is the most influential factor in ensuring funds flow. Finally, the Impact Assessment Act, often referred to as the “no more pipelines bill” (Bill C-69), has started to blur the lines between provincial and federal authority.
All three are supposedly on the table for tweaks or carve-outs. But that may not be enough.
It is interesting that Norway—a country that built its wealth on oil and natural gas—has adopted the mantra that as long as oil is a part of the global economy, it will be the last producer standing. It does so while marrying conventional energy with lower-carbon standards. We should be more like Norway.
Rather than constantly speaking down to the sector, the Canadian government should embrace the wealth that this represents and adopt a similar narrative.
The sector isn’t looking for handouts. Rather, it is looking for certainty, and a government proud of the work that they do and is willing to say so to Canada and the rest of the world. Foreign direct investment outflows have been a huge issue for Canada, and one of the bigger drags on our economy.
Almost all of the major project announcements Prime Minister Mark Carney has made to date have been about existing projects, often decades in the making, which are not really “additive” to the economy and are reflective of the regulatory overburden that industry faces en masse.
I have always said governments are about setting the rules of the game, while it is up to businesses to decide whether they wish to participate or to pick up the ball and look elsewhere.
Capital is mobile and will pursue the best risk-adjusted returns it can find. But the flow of capital from our country proves that Canada is viewed as just too risky for investors.
The government’s job is not to try to pick winners and losers. History has shown that governments are horrible at that. Rather, it should create a risk-appropriate environment with stable and capital-attractive rules in place, and then get out of the way and see where the chips fall.
Link to The Hub article: Large-scale energy investments remain a pipe dream
Formerly the head of institutional equity research at FirstEnergy Capital Corp and ATB Capital Markets. I have been involved in the energy sector in either the sell side or corporately for over 25 years
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