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Canadian Energy Centre

Mexico leapfrogging Canada on LNG and six other global oil and gas megaprojects

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By Deborah Jaremko of the Canadian Energy Centre Ltd. 

Major investments in countries like the United States, Norway, Qatar and Saudi Arabia are being made to meet world demand

New major oil and gas megaprojects around the world are proceeding amid concern about underinvestment in conventional energy leading to painful supply shortages.  

“The energy future must be secure and affordable, as well as sustainable,” said Daniel Yergin, vice-chairman of S&P Global, earlier this year 

“Adequate investment that avoids shortages and price spikes, and the economic hardship and social turbulence that they bring, is essential to that future.” 

Even if oil and gas demand growth slows, a cumulative $4.9 trillion will be needed between 2023 and 2030 to prevent a supply shortfall, according to a report by the International Energy Forum and S&P Global Commodity Insights.  

Major investments in countries like the United States, Norway, Qatar, Saudi Arabia and Mexico are being made to meet world demand.  

Meanwhile, due to regulatory uncertainty and concerns over proposed policies like an emissions cap for oil and gas production, Canada’s vast resources – produced with among the world’s highest standards for environmental protection and social progress – are being left behind.  

Here’s a look at just a handful of global oil and gas megaprojects, listed in rising order of development cost.  

Mexico: Altamira LNG 

US$1 billion 

New Fortress Energy 

Photo of a midscale LNG plant installed on three fixed jacket offshore platforms. Photo courtesy Fluor/Business Wire

Mexico is leapfrogging over Canada to become an LNG exporter.  

While Canada’s first LNG export project is expected to start operating in 2025, Mexico’s could come online this August – less than 10 months after Mexico’s government finalized a deal with U.S.-based New Fortress Energy to make it happen. 

While relatively small at 1.4 million tonnes of LNG per year (LNG Canada’s first phase will have capacity of 14 million tonnes per year), under Mexico’s agreement the Altamira site is to become an LNG hub.  

New Fortress Energy is to deploy multiple same-sized floating LNG units to produce LNG from natural gas transported through TC Energy’s Sur de Texas-Tuxpan pipeline.  

An existing LNG import terminal at Altamira is also expected to be converted into a 2.8-million-tonne-per-year export facility. 

United States: Willow Oil Project 

US$8 billion 

ConocoPhillips 

ConocoPhillips operations on Alaska’s North Slope. Photo courtesy ConocoPhillips

The U.S. government granted approval this March for the giant Willow oil project on Alaska’s North Slope to proceed.   

The project, owned by ConocoPhillips, is designed to produce 180,000 barrels per day at peak and operate for 30 years. It includes a processing facility, operations centre, and three drilling sites.  

The Willow leases are inside the National Petroleum Reserve – Alaska, which was established in 1923 as an emergency oil supply for the U.S. Navy. It is now administered by the U.S. Bureau of Land Management.  

Willow would occupy about 385 acres (around half the area of Central Park in New York City) in the northeast portion of the 23-million-acre reserve. It is expected to deliver nearly US$9 billion in government revenue, creating about 2,500 jobs during construction and 300 long-term positions.     

ConocoPhillips has yet to make a final investment decision, but is anticipating starting production in 2029, according to the Anchorage Daily News. 

United States: Golden Pass LNG 

US$10 billion 

QatarEnergy, Exxon Mobil 

Storage tanks stand in the evening sun at the Golden Pass LNG Terminal in Sabine Pass, TX, on Thursday, April 14, 2022. Getty Images photo

Golden Pass LNG is one of four natural gas export terminals under construction on the U.S. Gulf Coast as the United States continues to build its platform as an LNG powerhouse.  

With about 90 million tonnes per year of LNG export capacity today, analysts with Wood Mackenzie expect that if current momentum continues, another 190 million tonnes per year could come online by the end of this decade. 

The US$10-billion Golden Pass project owned by QatarEnergy and Exxon Mobil will have three production trains with total export capacity of about 18 million tonnes of LNG per year.  

The U.S. began exporting LNG in 2016 and has since built more LNG capacity than anywhere else in the world, according to the U.S. Energy Information Administration.    

First LNG exports from Golden Pass are planned for 2024. 

Norway: Njord Field Restart 

US$29 billion 

Wintershall Dea, Equinor, Neptune Energy 

Norway Minister of Petroleum and Energy Terje Assland and Equinor vice-president Grete B. Haaland at the official reopening of the Njord field on May 15th, 2023. Photo courtesy Equinor

Norway has officially reopened a major offshore oil and gas field, with the goal to extend its life beyond 2040 and double its total production.  

Nearly US$30 billion in upgrades to the Njord project’s production platform and offloading vessel started in 2016, after nearly 20 years of operations. It was originally only expected to run until 2013, but improvements in recovery technology have opened the door to accessing substantially more resources.  

Production restarted in December 2022, just in time to help address Europe’s energy crisis.  

“With the war in Ukraine, the export of Norwegian oil and gas to Europe has never been more important than now. Reopening Njord contributes to Norway remaining a stable supplier of gas to Europe for many years to come,” Norway’s oil and energy minister Terje Aasland said in a statement. 

The project will drill 10 new wells and tie in two new subsea oil and gas fields, with the work expected to add approximately 250 million barrels of oil equivalent to the European market. Partial electrification of equipment is expected to reduce greenhouse gas emissions.  

Qatar: North Field East LNG expansion  

Qatar Energy, Shell, TotalEnergies, Eni, Exxon Mobil, ConocoPhillips, Sinopec   

US$29 billion 

Qatar Minister of State for Energy Affairs and QatarEnergy CEO Saad Sherida Al-Kaabi tours sites related to the North Field East project in March 2023. Photo courtesy QatarGas

The largest LNG project ever built is underway in Qatar.  

State-owned QatarEnergy’s US$29 billion North Field East Expansion will increase the country’s LNG export capacity to 110 million tonnes per year, from 77 million tonnes per year today. Startup is planned in 2025.   

A planned second phase of the project will further increase capacity to 126 million tonnes per year.  

World LNG demand reached a record 409 million tonnes in 2022, according to data provider Revintiv. It’s expected to rise to over 700 million tonnes by 2040, according to Shell’s most recent industry outlook.   

Saudi Arabia: Jafurah Gas Project 

US$110 billion 

Saudi Aramco 

Worker at the Fadhili Gas Plant in Saudi Arabia. Photo courtesy Saudi Aramco

State-owned Saudi Aramco is moving ahead with development of the massive Jafurah gas project, which it says will help meet growing energy demand and provide feedstock for hydrogen production. 

First gas from the $110-billion project is expected in 2025, rising to reach two billion cubic feet per day by 2030. That’s about one-third the volume of all the natural gas produced in British Columbia. Saudi Aramco produced 10.6 billion cubic feet of natural gas per day in 2022, or more than half the gas produced in Canada.  

Last year the company started construction work on the gas processing facility that is the anchor of the Jafurah project. Aramco is reportedly in talkswith potential partners to back the US$110 billion development.  

Russia: Vostok Oil 

US$170 billion 

Rosneft  

A view of a Rosneft oil rig drilling the first exploration well in the Khatanga Bay as part of the East Taimyr oilfield. Getty Images photo

Russian state-owned oil company Rosneft continues to barrel ahead with the massive Vostok oil project in the country’s arctic, which Rosneft calls the largest investment in the world 

The US$170 billion project will use the Northern Sea Route to export about 600,000 barrels per day by 2024. Production is expected to increase to two million barrels per day after the second phase. For comparison, Canada’s entire oil sands industry produces about three million barrels per day.   

The main problem the energy industry faces is global underinvestment in conventional sources, Rosneft CEO Igor Sechin said earlier this year. He stressed the importance of Vostok’s oil supply for growing Asian economies.   

“Vostok Oil project will provide long-term, reliable, and guaranteed energy supplies,” Sechin said.  

Two new icebreaker vessels recently helped deliver 4,600 tonnes of cargo including oil pipes for the project to the arctic development sites, the Barents Observer reported.   

 

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Alberta

REPORT: Alberta municipalities hit with $37 million carbon tax tab in 2023

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Grande Prairie. Getty Images photo

From the Canadian Energy Centre

By Laura Mitchell

Federal cash grab driving costs for local governments, driving up property taxes

New data shows the painful economic impact of the federal carbon tax on municipalities.

Municipalities in Alberta paid out more than $37 million in federal carbon taxes in 2023, based on a recent survey commissioned by Alberta Municipal Affairs, with data provided to the Canadian Energy Centre.

About $760,000 of that came from the City of Grande Prairie. In a statement, Mayor Jackie Clayton said if the carbon tax were removed, City property taxes could be reduced by 0.6 per cent, providing direct financial relief to residents and businesses in Grande Prairie.”

Conducted in October, the survey asked municipal districts, towns and cities in Alberta to disclose the amount of carbon tax paid out for the heating and electrifying of municipal assets and fuel for fleet vehicles.

With these funds, Alberta municipalities could have hired 7,789 high school students at $15 per hour last year with the amount paid to Ottawa.

The cost on municipalities includes:

Lloydminster: $422,248

Calgary: $1,230,300 (estimate)

Medicine Hat: $876,237

Lethbridge: $1,398,000 (estimate)

Grande Prairie: $757,562

Crowsnest Pass: $71,100

Red Deer: $1,495,945

Bonnyville: $19,484

Hinton: $66,829

Several municipalities also noted substantial indirect costs from the carbon tax, including higher rates from vendors that serve the municipality – like gravel truck drivers and road repair providers – passing increased fuel prices onto local governments.

The rising price for materials and goods like traffic lights, steel, lumber and cement, due to higher transportation costs are also hitting the bottom line for local governments.

The City of Grande Prairie paid out $89 million in goods and services in 2023, and the indirect costs of the carbon tax have had an inflationary impact on those expenses” in addition to the direct costs of the tax.

In her press conference announcing Alberta’s challenge to the federal carbon tax on Oct. 29, 2024, Premier Danielle Smith addressed the pressures the carbon tax places on municipal bottom lines.

In 2023 alone, the City of Calgary could have hired an additional 112 police officers or firefighters for the amount they sent to Ottawa for the carbon tax,” she said.

In a statement issued on Oct. 7, 2024, Ontario Conservative MP Ryan Williams, shadow minister for international trade, said this issue is nationwide.

In Belleville, Ontario, the impact of the carbon tax is particularly notable. The city faces an extra $410,000 annually in costs – a burden that directly translates to an increase of 0.37 per cent on residents’ property tax bills.”

There is no rebate yet provided on retail carbon pricing for towns, cities and counties.

In October, the council in Belleville passed a motion asking the federal government to return in full all carbon taxes paid by municipalities in Canada.

The unaltered reproduction of this content is free of charge with attribution to the Canadian Energy Centre.

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Canadian Energy Centre

Ignoring the global picture and making Canadians poorer: Energy and economic leaders on Ottawa’s oil and gas emissions cap

Published on

From the Canadian Energy Centre

By Deborah Jaremko

The federal government’s draft rules to cap emissions – and by credible analysis, production – from Canada’s oil and gas sector will make Canadians poorer, won’t reduce world emissions, and are a “slap in the face” to Indigenous communities.

That’s the view of several leaders in energy and the economy calling out the negative consequences of Ottawa’s new regulations, which were announced on November 4.

Here’s a selection of what they have to say.

Goldy Hyder, CEO, Business Council of Canada

“At a time when Canada’s economy is stalling, imposing an oil and gas emissions cap will only make Canadians poorer. Strong climate action requires a strong economy. This cap will leave us with neither.”

Deborah Yedlin, CEO, Calgary Chamber of Commerce

“Canada would stand as the only country in the world to move forward with a self-imposed emissions cap.

“Given that our economic growth numbers have been underwhelming–and our per-person productivity lags that of the United States by $20,000, one would expect the government to be more focused on supporting sectors that are critical to economic growth rather than passing legislation that will compromise investment and hamper our growth prospects.

“…If the Canadian government wants to reduce emissions, it should follow the private sector’s lead – and strong track record – and withdraw the emissions cap.”

Stephen Buffalo, CEO, Indian Resources Council of Canada

“Over the past four decades, Canadian governments urged and promoted Indigenous peoples to engage in the natural resource economy. We were anxious to break our dependence on government and, even more, to exercise our treaty and Indigenous rights to build our own economies. We jumped in with far more enthusiasm and commitment than most Canadians appreciate.

“And now, in a bid to make Canada look ecologically virtuous on the world stage, the Liberal government imposed further restrictions on the oil and gas sector. This is happening as Indigenous engagement, employment and equity investment are growing and at a time when our communities have had their first taste of real and sustainable prosperity since the newcomers killed off all the buffalo. Thanks for nothing.”

Trevor Tombe, professor of economics, University of Calgary School of Public Policy

“[The emissions cap] is a wedge issue that’s going to be especially popular in Quebec. And I don’t think the [federal government’s] thinking goes much further than that.”

Kendall Dilling, president, Pathways Alliance

A decrease in Canadian production has no impact on global demand – meaning another country’s oil will simply fill the void and the intended impact of the emissions cap is negated at a global level.

“An emissions cap gives industry less – not more – of the certainty needed to make long-term investments that create jobs, economic growth and tax revenues for all levels of government. It simply makes Canada less competitive.”

Michael Belenkie, CEO, Advantage Energy

“Canada’s emissions profile is not unusual. What’s unusual about Canada and our emissions is we seem to be the only exporting nation of the world that is willing to self-immolate. All we’re doing is we’re shutting ourselves down at our own expense and watching global emissions increase.”

Kevin Krausert, CEO and co-founder, Avatar Innovations

“The emissions cap risks delaying – if not derailing – a whole suite of emissions-reduction technology projects. The reason is simple: it has added yet another layer of uncertainty and complexity on already skinny investment decisions by weakening the most effective mechanism Canada has in place.

“…After nearly 15 years of experimenting in a complicated regulatory system, we’ve finally landed on one of the most globally effective and fungible carbon markets in the world in Alberta, called TIER.

“What the federal emissions cap has done is introduce uncertainty about the future of TIER. That’s because the cap has its own newly created cap-and-trade system. It takes TIER’s 15 years of experience and market knowledge and either duplicates functioning markets or creates a whole new market that may take another 15 years to get right.”

Dennis Darby, CEO, Canadian Manufacturers & Exporters

“The federal government’s announcement of a cap and trade on oil and gas emissions threatens Canada’s energy trade, economic interests, and national unity.

Adam Legge, president, Business Council of Alberta

“The oil and gas emissions cap is a discriminatory and divisive policy proposal—the epitome of bad public policy. It will likely cap Canadian prosperity—billions of dollars and tens of thousands of jobs lost for no benefit, and the burden will be borne largely in one region and one sector.”

Lisa Baiton, CEO, Canadian Association of Petroleum Producers

“The result would be lower production, lower exports, fewer jobs, lower GDP and lower revenues to governments to fund critical infrastructure and social programs on which Canadians rely.”

Statement, Canadian Association of Energy Contractors

“The Trudeau government does not care about Canadian blue-collar, middle-class energy workers who rely on the industry to support their families. It does not care about small, medium and Indigenous energy service businesses that operate in rural and remote communities across Western Canada. And it certainly does not care about supporting our allies who are desperate for oil and gas from sources other than regimes such as Russia or Iran.”

Peter Tertzakian, executive director, ARC Energy Research Institute

“Focusing on a single sector while ignoring others is problematic because each tonne of emissions has the same impact on climate change, regardless of its source. It makes little sense to impose potentially higher economic burdens on one economic sector when you could reduce emissions elsewhere at a lower cost.”

Shannon Joseph, chair, Energy for a Secure Future

“Canada continues to pursue its climate policy in a vacuum, ignoring the big picture of global emissions. This places at risk our international interests, tens of thousands of good paying jobs and important progress on reconciliation.”

Adam Sweet, director for Western Canada, Clean Prosperity

“Layering on a new cap-and-trade system for oil and gas producers adds uncertainty and regulatory complexity that risks undermining investment in emissions reductions just as we’re getting close to landing significant new decarbonization projects here in Alberta.”

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