Last year marked the commencement of operations for Canada’s sole liquefied natural gas (LNG) facility, yet a recent report suggests the nation has the potential to expand this sector and emerge as a leading natural gas exporter globally.
However, several challenges remain, including a prolonged permitting process and a scarcity of initiatives proposed by the private sector.
The federal government has set its sights on increasing LNG exports to over 100 million tonnes annually.
At present, there is one active facility with an annual capacity of 14 million tonnes.
Achieving the federal target could lead to substantial economic benefits, as outlined in a report by S&P Global released on Thursday, predicting nearly 250,000 jobs created each year and close to $1 trillion in investments in the natural gas sector by 2050.
“If Canada can resolve its permitting and cost challenges, it can significantly contribute to the global LNG market, which would be advantageous for the Canadian economy, helping to diversify it and reduce dependency on its southern neighbor,” stated Daniel Yergin, vice-chairman of S&P Global, in an interview with CBC News.
Western Canada possesses abundant natural gas resources, which can be extracted at some of the lowest costs across North America.
Nonetheless, the construction of pipelines to transport gas from Alberta and northeast British Columbia to the West Coast has proven to be a complicated and costly endeavor.
The Coastal GasLink initiative, developed by TC Energy and partly owned by local First Nations, has encountered multiple delays and budget overruns. Various Indigenous groups and environmental activists opposed the project, which spans approximately 625 lakes, rivers, creeks, wetlands, and streams in northern British Columbia.
Some analysts believe Canada may never achieve superpower status in LNG exports due to the significant challenges associated with developing and constructing energy infrastructure. Additionally, there is stiff competition from numerous other nations seeking to attract LNG investments, including the United States.
According to the S&P report, Canada’s permitting process has taken 27 months longer than that of Texas, and the costs of building pipelines are 160 percent higher.
In response, the federal government has proposed new legislation designed to accelerate regulatory reviews.
LNG Canada is currently the only LNG export facility operating in the nation, although six additional projects are either underway or in the planning stages. Collectively, these projects are projected to yield just over 50 million tonnes of LNG annually.
S&P Global vice-chairman Daniel Yergin appears on stage at CERAWeek in Houston on March 10, 2025. Yergin states Canada has numerous advantages and challenges in expanding its LNG sector. (Kaylee Greenlee/Reuters)
Yergin noted that one of the lesser-known facts in the global energy market is the extent of Canada’s oil and natural gas reserves, alongside its geographical edge due to a relatively short shipping route to Asia.
“Asian buyers are seeking LNG from Canada,” Yergin remarked, highlighting global interest, especially in light of the disruptions to the global natural gas market caused by this year’s Middle Eastern conflicts. In Europe, there are rising concerns regarding the high costs of gas for heating homes as winter approaches.
“There is a strong desire for diversification. It is essential to establish security and resilience within the energy system. A diversified portfolio is necessary, and having resources that do not rely on choke points would be advantageous. All of these factors highlight the benefits Canada currently holds,” he stated.
Yergin remarked that Prime Minister Mark Carney commands significant respect on the international stage, but investors will seek clear evidence of permitting reforms, as lengthy approval times can become exceedingly costly for companies.
The demand for natural gas is anticipated to rise in the coming decades, driven by various factors, including the increasing global population and the energy needs of AI data centers and air conditioning systems.
S&P Global indicates that Canadian LNG has 55 percent lower greenhouse gas intensity compared to equivalent projects in other nations.
