Energy
Ukraine war proves value of LNG Canada, CEO tells global gas conference in Vancouver
Delegates are silhouetted before the start of the LNG 2023 conference, in Vancouver, B.C., Monday, July 10, 2023. THE CANADIAN PRESS/Darryl Dyck
Vancouver
Volatility in the supply and price of natural gas worldwide since Russia’s invasion of Ukraine shows the value of the LNG Canada project as a source of “affordable, reliable” and “responsibly produced” liquefied natural gas, the project’s CEO said.
“I can’t think of any country better placed to supply Asia with exactly that than Canada,” said Jason Klein of LNG Canada, the massive export facility currently under construction in Kitimat, B.C.
Klein said the $40-billion project is close to 85-per-cent complete and will aim to compete globally, not only on price but also its environmental and social track record.
Klein made the comments at the opening of the LNG 2023 conference in Vancouver, an event that was originally scheduled for last year in the Russian city of St. Petersburg before being moved to B.C. because of the war in Ukraine.
That situation, Klein said, may be the best example of the value of Canadian energy and its stability on the world stage.
“I think it’s an amazing opportunity to reflect on the fact that the very act that causes us to be in Vancouver today is the same one that’s upending global energy markets,” Klein said.
The LNG 2023 conference runs until Thursday, drawing multinational energy corporations such as energy giants Petronas, BP and ConocoPhillips, as well as government representatives from key producing countries such as Qatar. The conference is held every three years.
Organizers said the discussion at the conference would be centred around economic consequences of market upheaval. The disappearance of Russia, the world’s largest natural gas exporter, from Western supply chains was at the forefront of several conference panels.
Experts said that while Europe took the brunt of losing Russian gas supplies, Asia also suffered, because European buyers pushed up the prices for liquefied natural gas globally, and many countries struggled to secure supply.
Sarah Bairstow, president and chief commercial officer for U.S. LNG producer Mexico Pacific, said that was why the industry should keep its attention on Asia — which she described as the “demand engine” for the commodity.
“What we’ve seen as a result of the last 12-15 months is Asia-Pacific buyers … they know they need baseline gas supply not only for their own generation, but also for their own energy transition goals,” Bairstow told the conference. “And they are really seeking to get ahead of the curve of Europe.”
Canadian organizers of the conference said that, in addition to stability, First Nations economic reconciliation is a major part of what the sector wants to present to the global natural gas industry.
First Nations LNG Alliance chair Crystal Smith told the conference that more extensive Indigenous community involvement is on the way in projects such as the planned Cedar LNG facility in Kitimat.
“I think about where our community was even 10 years ago in regards to our participation in our economies,” Smith said of Haisla Nation’s ownership of the project.
“We essentially sat on the sidelines and watched everybody in our territory and surrounding area proper … to now, I can’t help but smile and get absolutely emotional at being majority owners of Cedar LNG.”
This report by The Canadian Press was first published July 10, 2023.
From the Canadian Energy Centre
By Will Gibson
Alberta oil sands projects poised to grow on lower costs, strong reserves
As geopolitical uncertainty ripples through global energy markets, a new report says Alberta’s oil sands sector is positioned to grow thanks to its lower costs.
Enverus Intelligence Research’s annual Oil Sands Play Fundamentals forecasts producers will boost output by 400,000 barrels per day (bbls/d) by the end of this decade through expansions of current operations.
“Existing oil sands projects deliver some of the lowest-breakeven oil in North America at WTI prices lower than $50 U.S. dollars,” said Trevor Rix, a director with the Calgary-based research firm, a subsidiary of Enverus which is headquartered in Texas with operations in Europe and Asia.
Alberta’s oil sands currently produce about 3.4 million bbls/d. Individual companies have disclosed combined proven reserves of about 30 billion barrels, or more than 20 years of current production.
A recent sector-wide reserves analysis by McDaniel & Associates found the oil sands holds about 167 billion barrels of reserves, compared to about 20 billion barrels in Texas.
While trade tensions and sustained oil price declines may marginally slow oil sands growth in the short term, most projects have already had significant capital invested and can withstand some volatility.
Cenovus Energy’s Christina Lake oil sands project. Photo courtesy Cenovus Energy
“While it takes a large amount of out-of-pocket capital to start an oil sands operation, they are very cost effective after that initial investment,” said veteran S&P Global analyst Kevin Birn.
“Optimization,” where companies tweak existing operations for more efficient output, has dominated oil sands growth for the past eight years, he said. These efforts have also resulted in lower cost structures.
“That’s largely shielded the oil sands from some of the inflationary costs we’ve seen in other upstream production,” Birn said.
Added pipeline capacity through expansion of the Trans Mountain system and Enbridge’s Mainline have added an incentive to expand production, Rix said.
The increased production will also spur growth in regions of western Canada, including the Montney and Duvernay, which Enverus analysts previously highlighted as increasingly crucial to meet rising worldwide energy demand.
“Increased oil sands production will see demand increase for condensate, which is used as diluent to ship bitumen by pipeline, which has positive implications for growth in drilling in liquids-rich regions such as the Montney and Duvernay,” Rix said.
“If Ottawa had it’s way Albertans would be left to freeze in the dark”
The ineffective federal net-zero electricity regulations will not reduce emissions or benefit Albertans but will increase costs and lead to supply shortages.
The risk of power outages during a hot summer or the depths of harsh winter cold snaps, are not unrealistic outcomes if these regulations are implemented. According to the Alberta Electric System Operator’s analysis, the regulations in question would make Alberta’s electricity system more than 100 times less reliable than the province’s supply adequacy standard. Albertans expect their electricity to remain affordable and reliable, but implementation of these regulations could increase costs by a staggering 35 per cent.
Canada’s constitution is clear. Provinces have exclusive jurisdiction over the development, conservation and management of sites and facilities in the province for the generation and production of electrical energy. That is why Alberta’s government is referring the constitutionality of the federal government’s recent net-zero electricity regulations to the Court of Appeal of Alberta.
“The federal government refused to work collaboratively or listen to Canadians while developing these regulations. The results are ineffective, unachievable and irresponsible, and place Albertans’ livelihoods – and more importantly, lives – at significant risk. Our government will not accept unconstitutional net-zero regulations that leave Albertans vulnerable to blackouts in the middle of summer and winter when they need electricity the most.”
“The introduction of the Clean Electricity Regulations in Alberta by the federal government is another example of dangerous federal overreach. These regulations will create unpredictable power outages in the months when Albertans need reliable energy the most. They will also cause power prices to soar in Alberta, which will hit our vulnerable the hardest.”
Finalized in December 2024, the federal electricity regulations impose strict carbon limits on fossil fuel power, in an attempt to force a net-zero grid, an unachievable target given current technology and infrastructure. The reliance on unproven technologies makes it almost impossible to operate natural gas plants without costly upgrades, threatening investment, grid reliability, and Alberta’s energy security.
“Ottawa’s electricity regulations will leave Albertans in the dark. They aren’t about reducing emissions – they are unconstitutional, ideological activist policies based on standards that can’t be met and technology that doesn’t exist. It will drive away investment and punish businesses, provinces and families for using natural gas for reliable, dispatchable power. We will not put families at risk from safety and affordability impacts – rationing power during the coldest days of the year – and we will continue to stand up for Albertans.”
“Albertans depend on electricity to provide for their families, power their businesses and pursue their dreams. The federal government’s Clean Electricity Regulations threaten both the affordability and reliability of our power grid, and we will not stand by as these regulations put the well-being of Albertans at risk.”
Related information
- Conference Board of Canada socio-economic Impacts of Canada’s 2030 Emissions Reduction Plan – (April 2025)
- Alberta Electric System Operator’s position on Canadian Energy Regulations
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