Natural gas is a fossil fuel majorly comprising of methane. As with other fossil fuels, it is formed deep beneath the earth’s surface due to the decomposition of dead plants and animals under extreme heat and pressures. Natural gas is cleaner than most other fossilized fuels. However, its calorific value is lower than the fossil fuels like petrol, diesel, and LPG.

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Besides feed gas cost aspects, there are various factors for many US LNG projects moving forward while Canadian initiatives have stalled. These include indigenous land rights, Greenfield versus Brownfield building, labor availability at certain sites, environmental studies, and government changes.

Canada is the fourth-largest natural gas producer globally (after the United States, Russia, and Iran). Production had increased by 1.3% per year on an average between 2013 and 2019 but later dropped by 2% in 2020, equivalent to 172 bcm (billion cubic meters). The production mainly comes from the Alberta region (70% of the total production). The total proved reserves of the country as of 2020 are 2.0 trillion cubic meters. This forms 1.3% of the global total proved reserves.

However, liquefying natural gas is a cost-effective alternative in some places where pipeline transit is not feasible. When natural gas is frozen to around -260°F, it becomes Liquified Natural Gas, also known as LNG. The volume decrease is 600 times that of the original.

For many years, industry officials have benefitted by building up more capacity for LNG in Canada, specifically along the West Coast. The reason is its shorter shipping distance to key Asian importing markets than the US Gulf Coast and the closeness to prolific shale basins that provide feed gas.

Moreover, factors such as uncertainty over the global prices, bigger challenges to the securing partners and further commercial agreements with buyers, the high infrastructure costs in Canada as compared to the US, the requirement to get indigenous groups on board with the industry, and the pandemic have impacted the Canada LNG market growth. LNG Canada, backed by Canada in Kitimat and British Columbia, is the only major LNG terminal still under construction in the country. Woodfibre LNG, which delayed its terminal work in Squamish, BC, until summer 2021, is the only other major project that has been sanctioned in recent years.

LNG is highly flammable, and major exporting takes place by the sea. As a result, many regulations must be followed by the industry players. Key regulatory authorities that govern the LNG industry in the country are Natural Resources Canada (NRCan), Canada Energy Regulator (CER), and Impact Assessment Agency (IAAC).

The top LNG companies in the country are Encana, CNR, Repsol, etc.

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