Energy
Will Coastal GasLink Do for Natural Gas What TMX Did For Oil?
From Resource Works
New pipelines already proving their worth
It may have taken a decade, but Canada’s Asia Pacific Gateway now has two new pipelines providing egress for Canadian oil and natural gas to Asia. They are already adding billions to the Canadian economy. TMX alone has added $13 billion to the Alberta economy just in its first year of operation, according to one economist.
One year after Alberta crude started sailing to Asia via an expanded Trans Mountain pipeline and export terminal in Burnaby, Canadian natural gas is also now making its way to Asia, via the Coastal GasLink pipeline and LNG Canada export terminal in Kitimat. On June 30, the first LNG carrier loaded with liquefied Canadian natural gas left Kitimat. To date, half a dozen LNG carriers have loaded up in Kitimat. LNG Canada expects to load one LNG carrier every two days.
In the past, lumber and metallurgical coal have been B.C.’s two most valuable export commodities. By 2026, I wager natural gas will surpass both commodities to become B.C.’s most valuable export. It’s a little too early to tell just what kind of uplift LNG exports will give to B.C. and Alberta’s oil and gas sector, but if TMX is any indicator, it should be substantial. The economics math here is pretty simple. In 2024, half of the natural gas produced in Canada was sold to the U.S. at a price of $2.50 per gigajoule ($2.63 per MMBtu), according to the Canadian Energy Regulator.
The Japan-Korea Marker for LNG prices in Asia, by contrast, is about $15 per MMBtu. So Canadian natural gas sold in Asia is currently worth about six times more than pipeline exports to the U.S. Like Alberta crude oil, Canadian natural gas producers have been selling natural gas at a steep discount to the U.S. For oil, the differential has narrowed, thanks to the Trans Mountain pipeline expansion, according to Charles St-Arnaud, senior economist for Alberta Central. St-Arnaud estimates the price differential between Alberta and American oil has narrowed by about US$8 per barrel, since TMX was commissioned. He estimates this narrower spread has increased revenues by US$9 billion ($13 billion Canadian). “This means that the reduction in the oil discount has boosted oil revenues by about 10 per cent,” St-Arnaud concludes. St-Arnaud estimates this will boost revenues to the Alberta government by $5.3 billion.
The $40 billion question now is whether the Coastal GasLink pipeline and LNG Canada export terminal will provide the same economic uplift for B.C. that TMX has for Alberta. The B.C. government is banking on it. Budget 2025 projects natural gas royalties will double — from $576 million in 2024-25 to $920 million in 2025-26, and $1.2 billion in 2026-27. Heather Exner-Pirot, director of energy, natural resources and environment for the Macdonald-Laurier Institute, notes that even the Globe and Mail‘s editorial board has recently raised flags over B.C.’s massive $208 billion debt and worsening debt-to-GDP ratio. The taxes and royalties from LNG exports will provide important new revenues for B.C. “Your best hope for digging out some of that hole is natural gas exports,” she said.
There is currently such an over-supply of natural gas in Western Canada right now that it may take a while before we start seeing the kind of lift to B.C. gas that TMX gave to Alberta oil. Jackie Forrest, executive director of ARC Energy Research Institute, recently noted that, in 2024, Canadian natural gas sold for “about one-half of the U.S. price — effectively giving it away.” She estimates that, even if Canadian natural gas prices rise just $1 per gigajoule, as a result of new access to tidewater, “producers would gain an additional $7 billion per year.” “And this doesn’t even factor in the additional growth in gas and liquids production that new export terminals can unlock.”
In a recent ARC Energy Research Institute podcast with Mark Fitzgerald, CEO of Petronas Canada — LNG Canada’s second largest shareholder — estimated LNG Canada exports will be worth $2 billion a year to the B.C. economy. “Over the life of the project or the planning cycle that we use, that’s almost ($90 billion) in cumulative government revenue just to the government of British Columbia,” Fitzgerald said. He added: “That development, LNG Canada 1, with the upstream will create more than 100,000 jobs potentially annually across British Columbia.”
That’s just phase 1. The current output of LNG Canada — 14 million tonnes per annum (MTPA) — would double, if the LNG Canada partners sanction a phase 2 expansion. The construction of the Coastal GasLink pipeline facilitated two LNG export projects — LNG Canada and Cedar LNG. But we need another natural gas pipeline to fully exploit our abundant natural gas resources and get full value for them. The next large project in the queue is Ksi Lisims LNG and the associated Prince Rupert Gas Transmission (PRGT) pipeline. This project would add another 12 MPTA of export capacity, not to mention tens of thousands of jobs.
In 2020, the Conference Board of Canada projected Canadian LNG exports could increase Canada’s GDP by $11 billion per year, generate $2 billion a year in additional taxes and royalties, and create 100,000 additional jobs. Had we listened to the critics, who said there would be no market in Asia for Canadian oil and natural gas, and had we not built TMX and CGL, we would still be hostage to a single customer, the U.S., for our oil and gas. We would have foregone tens of billions of dollars in investments, revenue and jobs.
We will certainly hear the same arguments against PRGT and Ksi Lisims that we heard against CGL And LNG Canada. Let’s ignore them this time around, shall we?
From the Daily Caller News Foundation
By Audrey Streb
“In line with President Donald Trump’s Energy Dominance Agenda, Interior is putting an immediate stop to these costly failures to deliver a stronger energy future and lower costs for American families. Like President Trump said, ‘the days of stupidity are over in the USA!’”
The Daily Caller News Foundation learned on Friday that the Department of the Interior (DOI) is immediately halting all activity on a massive offshore wind project.
The Bureau of Ocean Energy Management (BOEM) under the DOI is halting activity on the “Revolution Wind” project off the coast of Rhode Island and Connecticut in line with President Donald Trump’s energy goals to boost reliable energy resources and lower costs for Americans, the agency told the DCNF. The Trump administration has dealt a series of recent blows to the wind industry, with the DOI ending “preferential treatment” for what it considers to be foreign-controlled and unreliable energy sources and moving to terminate the massive Lava Ridge Wind Project in southern Idaho that the Biden administration approved just weeks before Trump’s return to office.
“Americans deserve energy that is affordable, reliable, and built to last — not experimental and expensive wind projects that are proven failures,” DOI deputy press secretary Aubrie Spady told the DCNF. “In line with President Donald Trump’s Energy Dominance Agenda, Interior is putting an immediate stop to these costly failures to deliver a stronger energy future and lower costs for American families. Like President Trump said, ‘the days of stupidity are over in the USA!’”
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The Biden administration approved the construction plan for Revolution Wind in 2023, which is located on the federally-owned Outer Continental Shelf. While former President Joe Biden pushed for wind and solar technology throughout his term by greenlighting billions in subsidies, loans and grants, the Trump administration has shifted its focus to conventional and reliable energy sources and taken action to crackdown on federal support for the green energy technology the Biden administration favored.
Trump signed an executive order directing the DOI to “revise any identified regulations, guidance, policies, and practices as appropriate and consistent with applicable law to eliminate any such preferences for wind and solar facilities” on July 7. Trump campaigned against Biden’s push for green energy and has continued to rail against Biden’s climate agenda, writing on Truth Social Wednesday that “any State that has built and relied on WINDMILLS and SOLAR for power are seeing RECORD BREAKING INCREASES IN ELECTRICITY AND ENERGY COSTS. THE SCAM OF THE CENTURY! We will not approve wind or farmer destroying Solar. The days of stupidity are over in the USA!!! MAGA.”
The agency introduced an additional permitting roadblock for green energy projects on public lands on Aug. 1., and a few days later, Interior Secretary Doug Burgum wrote on X that wind projects “are known to kill eagles” and that his agency would enforce the Bald and Golden Eagle Protection Act to protect eagles. The Trump administration also pulled a permit for a massive pending New Jersey offshore wind project in March.
The wind industry has come under fire in recent years, as multiple beaches closed in 2024 after a broken wind turbine shed debris into the ocean off the coast of Nantucket and protests surged due to concerns about high-voltage cables running through neighborhoods in 2023. Environmentalists also raised concerns over the energy technology after dolphins washed up along the East Coast in 2023.
Some fishermen have also voiced opposition to offshore wind projects, arguing that their industry cannot survive alongside offshore wind farms.
From Energy Now
By Jeff Lawson
After touring Cenovus operations in China and Indonesia, Jeff Lawson reflects on Asia’s energy reality and what it means for Canada.
My recent trip to our operations in China and Indonesia was an incredibly valuable chance to see world energy trends up close.
Witnessing the dynamism and ambition of our teams in those countries was inspiring, and I am grateful to our kind hosts. But I couldn’t escape the stark contrast with the situation at home.
I should have returned feeling optimistic, but instead I came back feeling down. At the end of the day, seeing what other places in the world are doing only highlights one difficult truth: As an economic force, Canada is missing in action.
What most enriched my visit was meeting our own people. In China, our teams are incredibly happy working in the energy industry. They are motivated, because they see the purpose in their work every day, delivering the foundational products that lift communities out of poverty.
That same clarity of purpose is evident in the market itself.
In Indonesia our local production is fully consumed in-country. Overall, they face declining natural gas reserves, and with a growing population the need for imports is critical. There is a desire for Canadian supply. We just need to get it there.
From a global perspective, the LNG we are now finally shipping is still a drop in the bucket. For Canada, however, it represents a massive and vital step forward.
Meeting Asia’s demand for natural gas can become an even greater opportunity if we choose.
Thinking about natural gas demand throughout the world, we receive $12/Mcf for our natural gas in China. We only receive $1-2/Mcf in Canada (pundits will say that is optimistic), even though we have abundant Canadian supply. Our limitations are infrastructure and offtake facilities.
It’s a competitive world. Markets around the world desire what we provide, whether that’s oil and gas, minerals, or agriculture.
Yet, here at home, some people seem unable to grasp this.
The Trans Mountain Expansion Project took a decade and more than $35 billion to build.
We still face a host of policies that box our energy industry in. It’s the Emissions Cap that creates fundamental uncertainty. It’s the North Coast tanker ban that limits our market reach. It’s the cumulative weight of policies like the methane regulations and industrial carbon tax that makes it nearly impossible to allocate capital with confidence.
And the world now sees Canada as a difficult and unpredictable place to do business. Investor capital is mobile, and it will flow to jurisdictions that provide clarity and predictability.
There are fewer burdens and lower costs involved in moving our product south to the United States, and the U.S. is a key consumer of our energy products. But while that path is easier, and existing pipelines can be expanded, it is not a long-term strategy for national strength if egress remains constrained.
Over-reliance on a single customer leaves us vulnerable, as we have learned within the last year. If Canada wants to become stronger and truly diversify for the long-run, we have to drive to tidewater.
Recent messages from political leaders have been correct, but the action hasn’t yet followed.
This isn’t about slowly moving impediments out of the way; this is about deeper, more effective change that enables us to compete, backed by genuine federal-provincial alignment.
How we decide to compete with the rest of the world, or not, is up to us. As the saying goes, “Do or do not, there is no try.” Saying we’re trying is not getting us there.
Jeff Lawson is Executive Vice-President, Corporate Development & Chief Sustainability Officer at Cenovus Energy.
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