Canada’s sole liquefied natural gas (LNG) terminal commenced operations last year, and a recent report indicates that the nation has the potential to expand this sector and emerge as one of the leading natural gas exporters globally.
However, there are multiple challenges to address, such as an extensive permitting process and a shortage of proposed projects from the private sector.
The federal government has set a target to elevate LNG exports to more than 100 million tonnes annually.
At present, there is one functioning facility with an annual capacity of 14 million tonnes.
Achieving the federal objective could lead to considerable economic benefits, as highlighted in a report released on Thursday by S&P Global. This includes generating nearly 250,000 jobs each year and attracting close to $1 trillion in investments within the natural gas sector by 2050.
“If Canada can resolve its permitting and cost challenges, it could significantly impact the global LNG market, which would undoubtedly be advantageous for the Canadian economy and would help diversify its economic dependencies beyond its southern neighbor,” stated Daniel Yergin, vice-chairman of S&P Global, during an interview with CBC News.
Western Canada is rich in natural gas reserves, which can be extracted at some of the lowest costs in North America.
Nevertheless, constructing pipelines to ferry the gas from Alberta and northeast British Columbia to the West Coast has proven to be a complex and costly endeavor.
The Coastal GasLink project, developed by TC Energy and co-owned by local First Nations, has experienced numerous delays and budget overruns. It has faced opposition from various Indigenous groups and environmental advocates. The pipeline traverses around 625 lakes, rivers, creeks, wetlands, and streams in northern British Columbia.
Some analysts argue that Canada may never achieve superpower status in LNG exports due to the significant difficulties in developing and constructing energy infrastructure. Additionally, the country faces stiff competition from other nations vying for LNG investment, including the United States.
According to the S&P report, Canada’s permitting process is taking 27 months longer than in Texas, and the costs of building pipelines are 160 percent higher.
The federal government has introduced new legislation to expedite regulatory reviews.
LNG Canada is currently the only operational LNG export facility in the country, although six additional facilities are either under construction or in the developmental phase. Collectively, these would yield just over 50 million tonnes of LNG annually.
S&P Global vice-chairman Daniel Yergin appears on stage at CERAWeek in Houston on March 10, 2025. Yergin says Canada has many advantages and hurdles to grow its LNG sector. (Kaylee Greenlee/Reuters)
Yergin remarked that one of the lesser-known aspects of the global energy landscape is the scale of Canada’s oil and natural gas reserves, coupled with its geographical advantage of a relatively short shipping distance to Asia.
“Asian buyers are eager for LNG from Canada,” Yergin noted, along with other nations worldwide, especially given the disruption in the global natural gas market caused by the ongoing conflict in the Middle East. As winter approaches, Europe is facing concerns over the high costs of gas for heating.
“There is a strong desire for diversification. There is a belief that security and resilience must be integrated into systems. A diversified portfolio is essential, and having resources that bypass choke points is advantageous. All these factors highlight Canada’s current advantages,” he added.
Yergin emphasized that Prime Minister Mark Carney holds considerable credibility on the international stage, but investors will be looking for evidence of permitting reforms, as prolonged wait times can be costly for businesses.
Demand for natural gas is anticipated to rise in the coming decades due to various factors, including a growing global population and increased power requirements from AI data centers and air conditioning systems.
According to S&P Global, Canadian LNG has a 55 percent lower greenhouse gas intensity compared to similar projects in other countries.
