.jpg)
4 hours ago
2
Article content
Energy producers in Western Canada and their investors have waited impatiently for LNG Canada’s startup, hoping to see a boost in returns as growing volumes of gas begin making their way to Canada’s West Coast for export — something akin to the uplift in Canadian crude prices that followed the Trans Mountain pipeline expansion (TMX) project — but so far experts say there are few signs that the newly commissioned facility is having a material impact on markets.
Article content
Prices for Western Canada’s natural gas, which trade at a discount to Henry Hub, have been hit hard by a combination of high storage inventories and pipeline flow restrictions that kept the average cash price for AECO, Canada’s primary gas price benchmark, below $1/MMBtu in June.
Article content
“We’re dealing with a market that’s extremely oversaturated and there’s lots of gas available,” Archer said. “Similar to TMX, we do anticipate that there’ll be an impact (from LNG Canada) on prices, but we’re not seeing it yet and we expect it’ll probably take a little bit of time to happen.”
Article content
Despite the near-term price doldrums, Canada’s energy sector has been buoyed by growing anticipation of a structural increase in demand for natural gas across North America, driven by U.S. LNG export capacity nearly doubling by the end of the decade to between 24 and 26 Bcf/d.
Article content
Article content
Canada’s nascent LNG industry could also grow substantially by the end of the decade, from the roughly 2.5 Bcf/d currently under construction or operating, to more than 6 bcf/d if existing projects proceed as planned — including a Phase 2 expansion of LNG Canada which would double the facility’s capacity to 28 mtpa.
Article content
“We expect natural gas prices to strengthen to between $4 and $5 over the coming year, and as Canada increases its LNG capacity, we think the current discount on Canadian natural gas should fall from about $2 today, to between $1.10 to $1.30,” Toronto-based investment firm Ninepoint Partners LP wrote in its 2025 mid-year outlook published last week.
Article content
LNG Canada’s joint-owners — Shell, Malaysian energy giant Petronas, PetroChina, Mitsubishi Corp. and Kogas — are currently deciding whether to green-light Phase 2 and Cooper said the partners are closely watching the facility’s startup.
Article content
“We just want to see all that working: the supply chain, the logistics and how all that works,” Cooper said, adding that the partners will be weighing the cost of expanding the project and the competitiveness of Canadian LNG, as well as other considerations around Canada’s policy environment, concerns over greenhouse gas emissions and input from stakeholders.
Article content
Article content
“So you’ve got one bit, which is (getting) Phase 1 working, and the second bit, which is actually proofing out the economic proposition for Phase 2,” he said.
Article content
A report earlier in June that Petronas was exploring the sale of its Canadian assets — a claim the company has since emphatically denied — may have reignited long-standing concerns in Canada’s energy sector over the potential flight of global investment. But Cooper said all five joint-venture partners in LNG Canada remain “very interested” in the project’s expansion.
Article content
“We continue to work with our five joint venture partners who invested in Phase 1 and we don’t see that changing at the minute.”
Article content
Prime Minister Mark Carney said Monday that Canada “has what the world needs” in a statement responding to news of the first cargo’s departure.
Article content
“With LNG Canada’s first shipment to Asia, Canada is exporting its energy to reliable partners, diversifying trade, and reducing global emissions — all in partnership with Indigenous Peoples,” he said. “By turning aspiration into action, Canada can become the world’s leading energy superpower with the strongest economy in the G7.”
Article content
Article content
English (US)