The development of LNG Canada has the potential to provide long-term benefits for the Canadian natural gas industry.
The rising demand for LNG in Asia presents a significant opportunity for Canadian exports due to their advantages of lower shipping costs and potentially reduced emissions compared to US competitors. Projections indicate a 60% increase in global LNG demand by 2040, primarily fueled by the transition from coal to gas in industrial sectors across China and South Asia for environmental reasons. Canadian projects on the West Coast benefit from shorter shipping routes to Asia, bolstering their competitive edge.
Several projects in Canada are already underway, including LNG Canada in Kitimat with 14 million tons per annum (mtpa) capacity, the Woodfibre LNG terminal near Squamish set to commence production in 2027, and the Cedar LNG project aiming for a late 2028 start. Additionally, the Ksi Lisims LNG project has secured an agreement with Shell and applied for an environmental certificate, while Tilbury LNG plans to expand capacity by 2.5 mtpa. These projects capitalize on Canada's low LNG production emissions and utilize clean hydroelectric power. LNG Canada's Kitimat facility is forecasted to emit 35% less greenhouse gases than leading global facilities, with its liquefaction costs estimated at CAD$1 per ton of LNG, notably lower than the CAD$1.35 average for US Gulf Coast projects, as per research by the Institute for Energy Economics and Financial Analysis (IEEFA) . Projects located on the West Coast of Canada benefit from shipping routes to Asian markets that are approximately 50% shorter compared to those from the US Gulf Coast, also circumventing Panama Canal fees.
Figure 1 illustrates the geographical coverage of onshore Canadian wells in the area supplying West Coast connecting pipelines from the top 10 operators using TGS Well Data Analytics. According to TGS Well Data, approximately 200,000 active producing onshore wells in the area supplying West Coast connecting pipelines and LNG facilities produce about 12 billion cubic feet of gas per day in total (Figure 2). Given that Canada exports 30% of produced natural gas (IEA), production growth from the Western Canadian Sedimentary Basin will fuel a growing LNG industry while supplying enough gas to meet domestic demand.
Figure 1. Illustrates the geographic distribution of onshore Canadian wells from the top 10 operators using the TGS Well Data Analytics application.
Figure 2. Displays (top) the total cumulative gas production from Canadian onshore wells, and (bottom) the daily gas production from the top 10 Canadian operators.
During the pandemic, the Canadian energy sector demonstrated commendable financial discipline, significantly bolstering balance sheets. This strength allows them greater flexibility to invest in more lucrative capital projects, whether it’s production growth for operators, pipeline buildout for midstream players, or LNG facilities for downstream enterprises. The ongoing construction of LNG terminals, coupled with expected higher demand, is set to amplify Canada's gas exports.
Leveraging TGS Well Data Analytics enables swift comparative analysis and evaluation. For further details on Well Data Analytics or to schedule a demo, please contact us at WDPSales@tgs.com.
