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Canadian Energy Centre

New deal with global gas giant Shell shows Canada is on the map for LNG: specialist

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A worker at Shell’s Hazira LNG import terminal, about 250 kilometers from Mumbai, India. Photo courtesy Shell

From the Canadian Energy Centre

By Deborah Jaremko

‘This is a signal that the LNG demand is viable beyond 2050’

A new 20-year deal by global energy giant Shell to purchase liquefied natural gas (LNG) from British Columbia is a sign Canada is becoming a player in global LNG markets, says an industry specialist. 

Shell has agreed to buy two million tonnes of LNG per year from the proposed Ksi Lisims LNG project located near the Alaska border, which could start operating in 2028.  

“Canada is on the map now for LNG. This is a signal that the LNG demand is viable beyond 2050,” says Racim Gribaa, president of Calgary-based Global LNG Consulting. 

Gribaa has worked in energy for more than two decades, engaging with governments and industry on LNG developments around the world including Malaysia, the United States, Canada and Qatar. 

Long-term LNG deals like the one struck by Ksi Lisims and Shell are hard to come by, he says, and are a sign that so-called LNG “portfolio players” trust the ability of Canada’s natural gas industry to deliver. 

A portfolio player like Shell buys LNG from various suppliers and distributes it to buyers around the world – versus a buyer that purchases LNG solely for its own use.  

“When portfolio players buy LNG, it’s not necessarily for a specific country. They can sell it anywhere they want,” Gribaa says. 

“Canada’s west coast can enable them to sell cargo to efficiently meet demand in Asia without having to ship it all the way from farther locations. Instead of them shipping cargo from the Middle East, Europe, or from the U.S. thereby avoiding longer journeys around the Cape or going through the Strait of Hormuz or Panama Canal, instead they just send it straight from Canada to where they need it to go. It’s economically and logistically beneficial for them.” 

Driven by expanding economies in Asia, world LNG trade has increased by more than 200 per cent since 2000, reaching 401 million tonnes in 2022, according to the International Gas Union.    

Global natural gas use is rising, driving increased demand for LNG. The U.S. Energy Information Administration’s latest outlook projects natural gas consumption will rise to 197 quadrillion BTU in 2050, up from 153 quadrillion BTU in 2022. 

In addition to the deal with Ksi Lisims owners including the Nisga’a Nation, Shell is also lead owner of the LNG Canada project, which is nearing completion at Kitimat, B.C.  

The terminal will have capacity of 14 million tonnes per year when it starts up in 2025. The buyers of the exports from LNG Canada are its owners, including Shell and Petronas.  

Shell’s decision to purchase LNG from Ksi Lisims could ensure it has plentiful supply available regardless of the timeline of the second phase of LNG Canada, Gribaa says. 

For a portfolio player, having options is valuable. We have enough demand globally to meet both Ksi Lisims LNG and LNG Canada phase 2, especially as coal is gradually faded out from Asia’s power mix,” he says.  

The only viable solution is to replace it with natural gas through LNG, as well as renewables, so the demand is forecast to be strong for several decades to come.”  

Growing Canada’s LNG exports to Asia could reduce emissions by 188 million tonnes per year, or the annual equivalent of taking all internal combustion engine vehicles off Canadian roads, according to a 2022 study by Wood Mackenzie. 

Down the coast from LNG Canada at Squamish, B.C. another major portfolio player is leaning on Canadian LNG.  

BP Gas Marketing is the foundational customer for the Woodfibre LNG project, where early construction is underway 

Over a 15-year period, BP will purchase 1.95 million tonnes of the project’s 2.1 million tonne per year LNG capacity, and the remaining 0.15 million tonnes per year “on a flexible basis.”  

“When you have such commercial commitments inked, it provides a future perspective on supply and demand, and perhaps most importantly it asserts the importance of Canada’s role in providing the world with a clean, affordable and secure long term LNG supply,” Gribaa says.  

Alberta

Canada’s advantage as the world’s demand for plastic continues to grow

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From the Canadian Energy Centre

By Will Gibson

‘The demand for plastics reflects how essential they are in our lives’

From the clothes on your back to the containers for household products to the pipes and insulation in your home, plastics are interwoven into the fabric of day-to-day life for most Canadians.

And that reliance is projected to grow both in Canada and around the world in the next three decades

The Global Plastics Outlook, published by the Paris-based Organization for Economic Co-operation and Development (OECD), forecasts the use of plastics globally will nearly triple by 2060, driven by economic and population growth.  

The use of plastics is projected to double in OECD countries like Canada, the United States and European nations, but the largest increases will take place in Asia and Africa. 

“The demand for plastics reflects how essential they are in our lives, whether it is packaging, textiles, building materials or medical equipment,” says Christa Seaman, vice-president, plastics with the Chemical Industry Association of Canada (CIAC), which represents Canada’s plastics producers.  

She says as countries look to meet climate and sustainability goals, demand for plastic will grow. 

“Plastics in the market today demonstrate their value to our society. Plastics are used to make critical components for solar panels and wind turbines. But they also can play a role in reducing weight in transportation or in ensuring goods that are transported have less weight in their packaging or in their products.” 

Canada produces about $35 billion worth of plastic resin and plastic products per year, or over five per cent of Canadian manufacturing sales, according to a 2019 report published by the federal government.  

Seaman says Canadian plastic producers have competitive advantages that position them to grow as demand rises at home and abroad. In Alberta, a key opportunity is the abundant supply of natural gas used to make plastic resin.  

“As industry and consumer expectations shift for production to reduce emissions, Canada, and particularly Alberta, are extremely well placed to meet increased demand thanks to its supply of low-carbon feedstock. Going forward, production with less emissions is going to be important for companies,” Seaman says.  

“You can see that with Dow Chemical’s decision to spend $8.8 billion on a net zero facility in Alberta.” 

While modern life would not be possible without plastics, the CIAC says there needs to be better post-use management of plastic products including advanced recycling, or a so-called “circular economy” where plastics are seen as a resource or feedstock for new products, not a waste. 

Some companies have already started making significant investments to generate recyclable plastics.  

For example, Inter Pipeline Ltd.’s $4.3 billion Heartland Petrochemical Complex near Edmonton started operating in 2023. It produces a recyclable plastic called polypropylene from propane, with 65 per cent lower emissions than the global average thanks to the facility’s integrated design. 

Achieving a circular economy – where 90 per cent of post-consumer plastic waste is diverted or recycled – would benefit Canada’s economy, according to the CIAC.  

Deloitte study, commissioned by Environment & Climate Change Canada, estimated diverting or reusing 90 per cent of post-consumer plastic waste by 2030 will save $500 million annually while creating 42,000 direct and indirect jobs. It would also cut Canada’s annual CO2 emissions by 1.8 megatonnes.  

Right now, about 85 per cent of plastics end up in Canada’s landfills. To reach the 90 per cent diversion rate, Seaman says Canada must improve its infrastructure to collect and process the plastic waste currently being landfilled. 

But she also says the industry rather than municipalities need to take responsibility for recycling plastic waste.  

“This concept is referred to as extended producer responsibility. Municipalities have the responsibility for managing recycling within a waste management system. Given the competing costs and priorities, they don’t have the incentive to invest into recycling infrastructure when landfill space was the most cost-effective solution for them,” she says.  

“Putting that responsibility on the producers who put the products on the market makes the most sense…The industry is adapting, and we hope government policy will recognize this opportunity for Canada to meet our climate goals while growing our economy.” 

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Business

Decarbonization deal opens new chapter in Alberta-Japan relationship

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From the Canadian Energy Centre

By Will Gibson

Agreement represents a homecoming for JAPEX, which first started work in the Alberta oil sands in 1978

new agreement that will see Japan Petroleum Exploration Company (JAPEX) invest in decarbonization opportunities in Alberta made history while also being rooted in the past, in the eyes of Gary Mar. 

JAPEX is seeking to develop projects in carbon capture and storage (CCS), hydrogen and bioenergy. It’s part of the company’s JAPEX2050 strategy toward carbon neutrality. 

“This new endeavour is a great opportunity that demonstrates the world is changing but the relationships endure,” says Mar, the province’s former trade envoy to Asia and the current CEO of the Canada West Foundation 

“Alberta’s very first international office was opened in Tokyo in 1981. And we have built a tremendous soft infrastructure that includes partnerships between a dozen Alberta and Japanese universities.” 

For JAPEX, the agreement represents something of a homecoming for the company that first started work in the Alberta oil sands in 1978 and operated one of the first in situ (or drilled) oil projects for nearly two decades before selling its stake in 2018. 

We are now aiming to come back to Alberta and contribute to its decarbonization,” JAPEX president of overseas business Tomomi Yamada said in a statement.  

Mar says the memorandum of understanding signed this March between JAPEX and the crown corporation Invest Alberta stems from a strong relationship built over decades.  

“You cant be considered a reliable partner for a new venture if you havent been a reliable partner for decades in the past,” says Mar.  

Economies change and worlds needs change but strong relationships are important factor in whom you do business with.” 

Alberta’s established CCS infrastructure has already attracted new investment, including Air Products’ $1.6-billion net zero hydrogen complex and Dow Chemicals’ $8.8-billion net zero petrochemical complex 

Mar sees JAPEX’s deal with Invest Alberta opening a whole new market of potential carbon neutral investors in the Pacific Rim. 

“When other countries who are partners in the Trans-Pacific Partnership (TPP) see JAPEX invest in this decarbonization opportunities and net zero projects in Alberta, it will send a very clear signal to others in the TPP about the potential,” Mar says.  

“This deal may come from the decades-long relationship between Alberta and Japan but can also serve as a signpost for decades to come.” 

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