By PortalPortuario Editorial Staff/Reuters Agency
@PortalPortuario
They consider that the implementation of LNG Canadathe first export terminal of its type in the country, limit its natural gas supplies for several years and force producers to reduce exports to the United States, where demand for the fuel is record, according to some companies.
Lead by ShellLNG Canada has begun testing its C$40 billion British Columbia terminal ahead of commercial operations set to begin in mid-2025. The terminal will process up to 2 billion cubic feet per day (bcfd), representing 11% of current Canadian gas production.
Like Canada, the United States is building more LNG terminals as it produces more gas than it consumes. However, even as the world’s leading gas producer, the United States does not drill enough to meet both its domestic consumption and growing export demand.
Under this context, Jamie Heard, vice president of capital markets at Tourmaline Oiltold Reuters that “western Canadian producers have historically been able to increase average production by up to 0.5 bcfd year over year, indicating a temporary supply gap for the US and eastern Canadian markets at the start.” of LNG Canada’s entire operations.”
The estimate is based on new capacity, not year-to-year fluctuations due to outages. “In our view, it will take up to four years to satisfy the pull that LNG Canada alone is providing to the market,” Heard said.
Canada exported about 8 bcfd of pipeline gas to the United States in 2023, compared to an average of 7.5 bcfd over the previous five years, according to the United States Energy Information Administration.
ARC ResourcesCanada’s third-largest gas producer, expects periods of lower Canadian exports to the United States when supply and demand don’t match, but those periods are likely to be short-lived as the market rebalances, it said. he CEO Terry Anderson.
“Meeting demand depends on how prices compare between global gas centers and spreads appear to be more volatile,” he added.
ARC will supply gas to the project Cedar LNGone of several on British Columbia’s Pacific coast, which is close to Canada’s vast Montney shale play and has a short shipping distance to Asian markets.
Cedar is expected to receive the final investment decision by mid-year for the construction of a plant that will use 0.4 bcfd of gas after opening in 2028 and Woodfibre LNG will use 0.29 bcfd upon completion in 2027.
LNG Canada, in which the Malaysian Petronas owns 25%, is considering a second phase of 2 bcfd, while Ksi Lisims LNG seeks government approval for what would be the country’s second-largest terminal, demanding an additional 1.7 to 2 bcfd.
“The launch of LNG Canada opens new markets for Canadian gas in addition to the lower 48 states (of the United States). “Any drop in the amount of Canadian gas exports to the United States could have repercussions throughout North America later this decade,” he noted. Eli Rubin, Senior Director Energy Analyst at the consulting firm EBW Analytics Group.
However, in the short term, Rubin said LNG Canada will help eliminate the “tremendous current oversupply of stored gas” in Canada and the United States. After a mild winter, North American gas prices are low and supply is high.
Canada, the world’s fifth-largest gas producer, pumped a record 18.8 bcfd of gas from underground in December, according to the latest data from the Canada Energy Regulator.
“In the long term, overly exuberant drillers could produce too much gas,” the analyst at Wood Mackenzie, Mark Oberstoetteradding that the consultancy forecasts Canadian gas production will reach 25 bcfd by the mid-2030s.
Infrastructure, particularly facilities to process raw natural gas, needs to expand to allow for greater Canadian production. Tourmaline’s Heard said his company and his ARC are expanding processing capacity, but not all of the new plants the industry needs are yet under construction.
“Export pipeline capacity may also be a constraint on production growth, as much of it is fully contracted for the next few years,” said ARC’s Anderson.
Still, the concerns of higher future demand are welcome for an industry currently struggling with surpluses. “Beyond the current season, in which there seems to be an excess of supply, we are facing a quite interesting market,” he stated. Jean-Paul Lachance, CEO of Peyto Exploration and Development.
