• 2 minutes California to ban gasoline for lawn mowers, chain saws, leaf blowers, off road equipment, etc.
  • 6 minutes China and India are both needing more coal and prices are now extremely high. They need maximum fossil fuel.
  • 11 minutes Europeans and Americans are beginning to see the results of depending on renewables.
  • 1 day The Climate Scare Stories Began With Far Left Ideology Per GreenPeace Co-Founder
  • 3 hours Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 1 day Putin and Xi have decided not to attend the Climate Summit in Glasgow
  • 1 day Biden Sets Target Of 50% EV Share In U.S. Car Sales In 2030
  • 10 hours US intel warns China could dominate advanced technologies By NOMAAN MERCHANT October 22, 2021
  • 1 day "The Hidden Story About California's Container Ship Backlog" via Corbett Report
  • 21 hours Storage of gas cylinders
  • 3 days Two Good and Plausible Ideas about Saving Water and Redirecting it to Where it is Needed.
What ADNOC’s IPO Successes Mean For Middle East Oil

What ADNOC’s IPO Successes Mean For Middle East Oil

ADNOC’s recent drilling unit IPO…

The 2021 Oil Price Rally Is Far From Over

The 2021 Oil Price Rally Is Far From Over

It appears that the current…

Oil Prices Will Remain High For Years To Come

Oil Prices Will Remain High For Years To Come

Massive underinvestment and multi-year supply…

Tim Daiss

Tim Daiss

I'm an oil markets analyst, journalist and author that has been working out of the Asia-Pacific region for 12 years. I’ve covered oil, energy markets…

More Info

Premium Content

Canada’s LNG Dream Just Turned Into A Nightmare

Just when it looked like Canada’s fledgling LNG sector was finally getting off the ground after Royal Dutch Shell and its partners gave the green light for the $40 billion LNG Canada facility in October on British Columbia’s (BC) coast, putting it on track to becoming the country’s first liquefied natural gas (LNG) export terminal, news broke on Thursday that U.S. oil major Exxon Mobil had withdrawn its environmental assessment application for a $25-billion LNG export facility on the BC coast it proposed in 2015.

Exxon was planning to build the terminal with Calgary-based firm Imperial Oil in the Prince Rupert area on BC’s north coast. Media in Canada said the apparent shelving of the WCC LNG project is the latest blow to the country’s West Coast LNG export industry which at one time featured about 20 proposals but has resulted in only one firm commitment to build.

Exxon spokeswoman Julie King did not give a reason why the company withdrew its support for the project. "We remain committed to our Canada operations and to ensuring the safe and reliable delivery of oil and gas to our customers," she wrote in a brief email. Exxon Mobil and Imperial continuously evaluate their portfolios to identify opportunities to invest, restructure or divest assets to strengthen their competitive position and provide the highest return to shareholders, she said. Earlier this year, Imperial took a write-down of $289 million on its northern BC Horn River shale gas development, a 50-50 venture with Exxon that was once expected to become a major supply source for B.C.'s LNG industry.

Conceding to U.S. LNG dominance

Going forward, Exxon’s recent withdraw throws more doubt on Canada’s ability to challenge the U.S. for market share in the Asia-Pacific region, which represents 72 percent of all global LNG demand with that demand projected to increase to 75 percent amid China’s increased gas and LNG usage as the country tries to reach a government mandate of 10 percent natural gas usage for power generation by 2020, with further earmarks set for 2030.

Moreover, the window for Canada to become a major LNG export player has already closed as the US pushes through with its so-called second wave of LNG project development.  Since early 2018, a second wave of projects set to bring 10 million tons per annum (mtpa) more to the market under binding sales and purchase agreements (SPAs) have reached the starting blocks. Related: Interest Rate Hike Hits Oil Hard

At the end of August, the US Federal Energy Regulation Commission (FERC) announced regulatory timelines for 12 LNG projects. Kristy Kramer, director of America's gas research, at global natural resources consultancy Wood Mackenzie, said in September that “the increase in SPAs is remarkable. In the period since the first wave of U.S. LNG projects and late 2017, just 2 mtpa had been locked in. This means that as well as the six developments that are through the regulatory process, 11 more should receive their final order from FERC by mid-to-late 2019.”

Not only will the U.S. have a plethora of LNG projects operational, but US natural gas pipeline infrastructure is the most developed in the world, while much of the gas pipeline infrastructure needed in Canada will still have to be built if more projects are green-lighted. This dynamic plus an easier regulatory review process in the U.S., will continue to see Canada at a distinct disadvantage against its U.S. LNG competitors. Most of the second wave of U.S. LNG projects will become operational by the middle of the next decade, a period which has been forested to see global LNG markets move away from the current oversupply scenario that has persisted for a number of years to a possible shortage of the super-cooled fuel amid increased demand not only from China, but Southeast Asia (including the Philippines, Vietnam, and Thailand), South Asia (India, Pakistan, and Bangladesh), but also in Europe as a number of countries move away from over-reliance on Russian piped natural gas and in parts of the Middle East and elsewhere.

By Tim Daiss for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • Paulo on December 22 2018 said:
    Canada is not a dependable source. The Canadian government and the people oppose wealth creation. Gas pipelines won't be built in Canada. They can drill it but they cannot move it.
  • Chris on December 24 2018 said:
    Your statement "The Canadian government and the people oppose wealth creation" is only half correct. Yes, Canadian government is opposed, because our PM is influenced the US Enviro lobby paid for by US billionaires, who want to choke the competition from Canada. He is not running the country on behalf of all Canadians. However the change is coming, Canadian people are slowly waking up, and realizing that we cannot afford this federal government.

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News