Connect with us
[bsa_pro_ad_space id=12]

Energy

Canada wallows on LNG sidelines, paralyzed by Ottawa’s onerous regulatory system

Published

7 minute read

From the Frontier Centre for Public Policy

By Lee Harding

Mitsotakis said Greece has built a major facility outside the city of Alexandroupolis to process incoming LNG tankers. He said Greece will pump LNG to the rest of Europe and needs more at home as the country abandons coal.

When it comes to fossil fuels, the world wants what Canada’s got. The problem is, Prime Minister Justin Trudeau doesn’t care.

Fresh proof came with the recent visit of Kyriakos Mitsotakis, the first Greek leader to come to Canada in more than 40 years.

According to the office of the Prime Minister Trudeau, Mitsotakis was simply here to march in Montreal’s Greek Independence Day Parade, discuss “shared interests” and cut the ribbon as Greece purchased Canadian-made firefighting planes.

But, during an interview with CTV, Mitsotakis said his country would “of course” like to start importing Canadian liquified natural gas (LNG).

“We are a big entry point for LNG, not just for the Greek market, but also for the Balkans, for Eastern Europe. Theoretically, we could even supply Ukraine,” said Mitsotakis.

“In principle, yes, we are very interested in obtaining LNG at competitive prices.”

Mitsotakis said Greece has built a major facility outside the city of Alexandroupolis to process incoming LNG tankers. He said Greece will pump LNG to the rest of Europe and needs more at home as the country abandons coal.

Much of Europe’s energy has traditionally come from Russia or Middle Eastern autocracies. More than a decade ago, author Ezra Levant made the case for Canada’s “Ethical Oil” as a better alternative. Canada’s status as a democratic state that respects human rights and extracts oil with a minimal environmental footprint is as good as it gets. Mitsotakis, a Harvard-educated investment banker, understands that quite readily today.

“Canada is a country (for) which we share so many values,” said Mitsotakis. “I think we see eye-to-eye on many of the challenges that we face.”

Still, there was no mention of energy exports in Trudeau’s public comments regarding Mitsotakis, nor in official government communications about the visit.

Mitsotakis can take little consolation that his treatment is not unusual, as true as that may be. In the past 18 months, both the Japanese prime minister and the German chancellor returned home without official assurances that Ottawa was eager to offer bulk quantities of Canadian LNG.

Japanese Prime Minister Fumio Kishida came to Canada in January, 2023 making no secret of his “high expectations” to reach an LNG export agreement with Canada.

In August 2022, German Chancellor Olaf Scholz came to Canada hoping to reach an LNG deal. “Canada is our partner of choice,” Scholz said at the time.

Somehow, Trudeau said at a press conference with the German leader that there was no “business case” for LNG exports to Europe. Instead, he took the chancellor to an empty field in Newfoundland that was the chosen site for a future Canadian facility to export carbon-neutral hydrogen.

That will help Germany a little, but not nearly enough. The country turned to Qatar and signed a 15-year LNG export deal.

Canada is currently the world’s fifth largest producer of natural gas. But, as is the case with oil, facilities to sell it overseas are very limited. Canada has no LNG export facilities currently operating. Any LNG exports to Europe would have to go through a US export terminal.

Kitimat, BC will open a major export facility in early 2025, but plans to build an LNG pipeline to ports on the East Coast have fallen apart due to high costs.

On Monday, Alberta Energy Minister Brian Jean said “onerous” regulatory procedures were more to blame.

“With massive natural gas reserves, Canada can no longer wait on the LNG sidelines, burdened by an onerous regulatory system. Our allies and trading partners need us. We must have more LNG export facilities approved and built,” Jean said in a statement.

Jean is right. Canada has scuttled one opportunity after another during the Trudeau era, first by smothering pipeline development in onerous regulations. The Northern Gateway pipeline was the only one the nation banned, citing environmental concerns off the coast of northern B.C., despite the fact that 50 tankers passed the same waters every day with exports from Alaska.

Other proposals, such as the Energy East pipeline, were held up in red tape until its proponents decided the project wasn’t worth it. A 30,000-page application went for not, as did the hope that refineries in the Maritimes could refine Canadian products instead of those from the Middle East.

The trans mountain pipeline was also bound up until the government bought it, after which its progress still went painfully slowly. Years late and six times over-budget at a cost of $34 billion, the “long delayed” pipeline is finally ready for crude deliveries.

Bill C-69, dubbed by former Alberta Premier Jason Kenney as the “No More Pipelines Act”, was declared unconstitutional by the Supreme Court of Canada last fall. The development is welcome but cannot restore lost time.

Canada remains poorly positioned to capitalize on another historic opportunity–the European thirst for oil as it tries to distance itself from Russia. Unfortunately, this problem seems more convenient to Ottawa than not. The Canadian government seems more interested in having zero carbon emissions even if that means zero economy. Too bad that makes zero sense.

Lee Harding is a Research Fellow at the Frontier Centre for Public Policy

Todayville is a digital media and technology company. We profile unique stories and events in our community. Register and promote your community event for free.

Follow Author

Energy

What does a Trump presidency means for Canadian energy?

Published on

From Resource Works

Heather-Exner Pirot of the Business Council of Canada and the Macdonald-Laurier Institute spoke with Resource Works about the transition to Donald Trump’s energy policy, hopes for Keystone XL’s revival, EVs, and more. 

Do you think it is accurate to say that Trump’s energy policy will be the complete opposite of Joe Biden’s? Or will it be more nuanced than that?

It’s more nuanced than that. US oil and gas production did grow under Biden, as it did under Obama. It’s actually at record levels right now. The US is producing the most oil and gas per day that any nation has ever produced in the history of the world.

That said, the federal government in the US has imposed relatively little control over production. In the absence of restrictive emissions and climate policies that we have in Canada, most of the oil production decisions have been made based on market forces. With prices where they’re at currently, there’s not a lot of shareholder appetite to grow that significantly.

The few areas you can expect change: leasing more federal lands and off shore areas for oil and gas development; rescinding the pause in LNG export permits; eliminating the new methane fee; and removing Biden’s ambitious vehicle fuel efficiency standards, which would subsequently maintain gas demand.

I would say on nuclear energy, there won’t be a reversal, as that file has earned bipartisan support. If anything, a Trump Admin would push regulators to approve SMRs models and projects faster. They want more of all kinds of energy.

Is Keystone XL a dead letter, or is there enough planning and infrastructure still in-place to restart that project?

I haven’t heard any appetite in the private sector to restart that in the short term. I know Alberta is pushing it. I do think it makes sense for North American energy security – energy dominance, as the Trump Admin calls – and I believe there is a market for more Canadian oil in the USA; it makes economic sense. But it’s still looked at as too politically risky for investors.

To have it move forward I think you would need some government support to derisk it. A TMX model, even. And clear evidence of social license and bipartisan support so it can survive the next election on both sides of the border.

Frankly, Northern Gateway is the better project for Canada to restart, under a Conservative government.

Keystone XL was cancelled by Biden prior to the invasion of Ukraine in 2022. Do you think that the reshoring/friendshoring of the energy supply is a far bigger priority now?

It absolutely is a bigger priority. But it’s also a smaller threat. You need to appreciate that North America has become much more energy independent and secure than it has ever been. Both US and Canada are producing at record levels. Combined, we now produce more than the Middle East (41 million boe/d vs 38 million boe/d). And Canada has taken a growing share of US imports (now 60%) even as their import levels have declined.

But there are two risks on the horizon: the first is that oil is a non renewable resource and the US is expected to reach a peak in shale oil production in the next few years. No one wants to go back to the days when OPEC + had dominant market power. I think there will be a lot of demand for Canadian oil to fill the gap left by any decline in US oil production. And Norway’s production is expected to peak imminently as well.

The second is the need from our allies for LNG. Europe is still dependent on Russia for natural gas, energy demand is growing in Asia, and high industrial energy costs are weighing on both. More and cheaper LNG from North America is highly important for the energy security of our allies, and thus the western alliance as it faces a challenge from Russia, China and Iran.

Canada has little choice but to follow the US lead on many issues such as EVs and tariffs on China. Regarding energy policy, does Canada’s relative strength in the oil and gas sector give it a stronger hand when it comes to having an independent energy policy?

I don’t think we want an independent energy policy. I would argue we both benefit from alignment and interdependence. And we’ve built up that interdependence on the infrastructure side over decades: pipelines, refineries, transmission, everything.

That interdependence gives us a stronger hand in other areas of the economy. Any tariffs on Canadian energy would absolutely not be in American’s interests in terms of their energy dominance agenda. Trump wants to drop energy costs, not hike them.

I think we can leverage tariff exemptions in energy to other sectors, such as manufacturing, which is more vulnerable. But you have to make the case for why that makes sense for US, not just Canada. And that’s because we need as much industrial capacity in the west as we can muster to counter China and Russia. America First is fine, but this is not the time for America Alone.

Do you see provinces like Alberta and Saskatchewan being more on-side with the US than the federal government when it comes to energy?

Of course. The North American capital that is threatening their economic interests is not Washington DC; it’s Ottawa.

I think you are seeing some recognition – much belated and fast on the heels of an emissions cap that could shut in over 2 million boe of production! – that what makes Canada important to the United States and in the world is our oil and gas and uranium and critical minerals and agricultural products.

We’ve spent almost a decade constraining those sectors. There is no doubt a Trump Admin will be complicated, but at the very least it’s clarified how important those sectors are to our soft and hard power.

It’s not too late for Canada to flex its muscles on the world stage and use its resources to advance our national interests, and our allies’ interests. In fact, it’s absolutely critical that we do so.

Continue Reading

Energy

What Will Be the Future of the Keystone XL Pipeline Under President Trump?

Published on

From EnergyNow.ca

By Terry Winnitoy, EnergyNow

The Keystone XL Pipeline, proposed in 2008, was designed to transport Canadian crude oil from Alberta to refineries in the United States, specifically to Steele City, Nebraska, and onward to refineries in Illinois and Texas, as well as to an oil pipeline distribution center in Cushing, Oklahoma.

Spanning approximately 1,179 miles and designed to transport up to 830,000 barrels of oil per day, the pipeline promised significant economic and energy security benefits. However, it became a focal point of political and environmental controversy, leading to its eventual cancellation by Presidents Obama and Biden.

Here’s a brief look at its history, the reasons it should have been built, the political dynamics that led to its cancellation and will President-elect Trump revive it?

Why the Keystone XL Pipeline Should Have Been Built

Economic and Job Creation

The pipeline was projected to create thousands of construction jobs and several hundred permanent jobs, providing a significant boost to the economy. It was also expected to stimulate economic activity through the development of related infrastructure and services.

Energy Security

By facilitating the efficient transport of a large volume of oil from a stable and friendly neighboring country, the pipeline would have reduced American dependence on oil imports from more volatile regions, enhancing national energy security.

Environmental Safety

Pipelines are generally safer and more environmentally friendly for transporting oil compared to rail or truck, with lower risks of spills and accidents. The Keystone XL was designed with the latest technology to minimize leaks and environmental impact.

Regulatory Oversight

The project underwent extensive environmental reviews and was subject to strict regulatory standards to ensure it adhered to environmental protection and safety measures.

Political Reasons for Cancellation

Environmental Activism

The pipeline became a symbol for environmentalists who opposed further development of fossil fuel infrastructure. They argued it would contribute to climate change by enabling the extraction and consumption of oil sands, which are more carbon-intensive than other oil sources.

Obama’s Cancellation

President Obama rejected the pipeline in 2015, citing environmental concerns and its potential impact on global climate change. He argued that approving the pipeline would have undercut America’s leadership on climate change.

Trump’s Reversal and Biden’s Final Cancellation

President Trump revived the project in 2017, citing economic benefits and energy security. However, President Biden canceled it again on his first day in office in 2021, fulfilling a campaign promise to prioritize climate change issues and transition towards renewable energy.

Political Symbolism

For both Obama and Biden, the decision to cancel the Keystone XL Pipeline was also a symbolic gesture, demonstrating a commitment to environmental sustainability and a shift away from fossil fuel dependence in line with their administrations’ climate policies.

Will President-Elect Trump Reinstate It?

Currently, there is no definitive answer on whether President-elect Trump will reinstate the Keystone XL Pipeline. His previous administration showed support for the project, citing its potential economic and energy security benefits. However, reinstating the pipeline would require navigating significant political, legal, and environmental challenges that have developed over the years.

It would also depend on the current geopolitical, economic, and environmental priorities at the time of his taking office. The Keystone XL Pipeline’s history is a complex tapestry of economic aspirations, environmental concerns, and political maneuvers.

Its cancellation has been a contentious issue, reflecting the broader national and global debates over energy policy and climate change strategy. Whether it will be reinstated remains a significant question, contingent on a multitude of factors including political will, environmental policies, and market dynamics.

That all said, re-instating its approval might be the perfect “in your face” moment for Trump to Obama and Biden as he begins his second term of presidency. We’ll have to wait and see.

Continue Reading

Trending

X