Over the past decade we have produced a range of publications on the B.C. natural gas sector, with a particular focus on liquefied natural gas.[1] Why? Because:

• The world is seeking additional long-term supplies of natural gas and the only way to ship this product between continents is in liquefied form.

• B.C. has extensive natural gas resources and is proximate to Asian markets where demand for natural gas will continue to rise.

• More recently, the war in Ukraine has created an urgent need for long-term, stable supplies of natural gas (and fossil fuels generally) in Europe.

• Even before the Russian invasion of Ukraine, the International Energy Agency concluded that natural gas is critical for making progress on global aspirations to reduce greenhouse gas emissions in the coming decades.

• Regardless of what we might wish, the future global fuel mix is not “either/or” between fossil fuels and renewables rather, it is an “AND.” Natural gas is a key and strategic resource for the foreseeable time horizon. This means that any country with ample supplies will enjoy a sizable global comparative advantage.

• There are strong links between energy use, population, and economic growth, all creating demand for affordable, reliable, and dense forms of energy. Natural gas/LNG is a highly dense (between 33 and 83 MJ/m3) and flexible form of energy.

• Natural gas is one B.C./Canada’s most productive industries in terms of real GDP per hour of employment — about 26 times the overall business sector average. Productivity is important for maintaining our standard of living.

• Trade is critical to prosperity, especially for small open economies like B.C. and Canada. We use trade in things where we have comparative advantages (e.g., LNG) to generate revenues that enable the purchase of goods we cannot or do not produce ourselves.

• Intercontinental trade is conducted primarily by ship. Ninety percent of all finished goods and raw materials transiting around the world do so by ship. LNG displacement of heavy oil to move ships could have a very positive effect in reducing global emissions in the marine sector.

• LNG in the marine sector also has more general air quality benefits, including the reduction of other pollutants including nitrogen and sulphur dioxides. This is important in Metro Vancouver, home to Canada’s largest port and trade enabler.

• BC's LNG strength is its lower greenhouse gas emissions intensity compared to other suppliers in the world. If B.C. cannot or will not provide supply in a growing market looking for gas we rob the world of lower emission fossil fuel options that are necessarily (not optionally) required for a different future and less GHG intensive energy system.

• Developing our natural gas assets can be reconciled with our desire to have a less greenhouse gas-intensive global fuel mix even if this increases regional (B.C./Canada) emissions. A revised global GHG accounting system that more accurately reflects energy production and consumption patterns would help. The current system penalizes goods-producing countries/regions for meeting global consumer demand and falsely awards high marks to jurisdictions that “offshore” the production of raw materials and manufactured goods that are subsequently imported into those same jurisdictions.

• Indigenous people are key participants in Canada’s economy, particularly in land-based industries. Many of them see the development of and trade in LNG as a big opportunity to advance economic self-sufficiency and foster greater prosperity for their communities.

Unfortunately, a quick look at the North American LNG landscape shows that despite our geological gifts, Canada trails far behind the United States which started exporting LNG back in 2016. The U.S. was able to ramp up quickly by transitioning several LNG import facilities to enable exports. So, as of August 2022, the United States has eight operating export LNG facilities, four more that are approved and under construction, 11 approved but not yet started construction, six proposed facilities awaiting regulatory review, and two LNG facilities in pre-filing stages.[2]By comparison, and disappointingly, Canada has no operating export facilities despite the size and high quality of our natural gas resources.Even if all Canadian facilities shown in Table 1 are completed and further development stops dead in the United States (ie only existing and additional approved projects proceed), Canada would account for slightly more than 10% of existing US volumes. If all US facilities in Table 1 are constructed, and Canada completes the projects listed, Canada will represent about ~8% of total LNG volumes south of the border.

Given that global demand for LNG is predicted to double by 2040,[3]and despite Canada being the 5th largest natural gas producer in the world, so far, Canada has managed to forfeit the potential benefits that could flow to all Canadians from the responsible development of our enormous natural gas endowment. Importantly, all of Canada’s current natural gas exports are destined for the United States — equal to 2,800 billion cubic feet in 2021.[4] If all of this was converted to LNG, it would equal 58 MPTA.[5] For comparison, the U.S. exported 74 MPTA[6]of LNG in 2021. It is not a stretch to conclude that Canada’s natural gas contributes mightily to America’s rapidly growing LNG production.[7] While we dither endlessly and enact barriers to development, the rest of the world is moving ahead.[8]The saga of LNG amounts to a truly epic Canadian policy and political failure, one that represents a significant lost economic and environmental opportunity for B.C. and Canada.

A global transition to natural gas in the marine sector is also underway. Increasingly stringent International Maritime Organization rules are driving shippers towards LNG as an energy source that achieves both improved air quality and GHG emissions reductions. In November 2020 the Port of Vancouver welcomed NYK’s Sakura Leader. This vessel is one of the world’s largest car and truck carriers, handling approximately 7,000 vehicles per voyage. By using LNG as its primary fuel source, together with a modern hull design, this ship reduces its overall level of air contaminants and GHGs.

DNV, the world’s largest shipping classification society, predicts that by 2030 LNG will account for 37% of the energy consumed on board ships. At the end of May 2022, worldwide LNG orders reached 805 vessels. DNV notes that despite the rapid growth in the orderbook for LNG-fueled vessels, current LNG fuelling activity remains very low, requiring expanded infrastructure to support a growing LNG fleet. In the case of the 2020 visit to Vancouver of the Sakura leader, the vessel was fuelled in Japan because the Port of Vancouver was (and is) unable to provide LNG as a marine fuel for trans-oceanic vessels.

On August 17, 2022, the very first LNG fuelling operation for a container ship took place at the Port of Long Beach in California. This was a first for the west coast of North America. The Port highlighted this development as a historic milestone that will kick off the industry-wide shift to alternative fuels in marine shipping.The Port of Tacoma just south of Vancouver, has also built out greenfield infrastructure to enable LNG marine fuelling. Notably, local regulators required that the project use natural gas sourced from B.C. and Alberta, as they (unlike Canadian policymakers) recognize the lower life-cycle emissions of Canadian natural gas relative to U.S. feedstock.

On the positive side, B.C. has a long-standing domestic supplier of LNG, FortisBC. For the past 50 years, the company’s Tilbury facility in Delta has provided natural gas storage for domestic use. The current proposal to expand the facility along with the development of the Tilbury Jetty will enable the displacement of diesel and bunker oil in marine ships, such as the Sakura Leader calling at the Port of Vancouver. The outcomes are fewer greenhouse gas emissions and improvements to air quality in the Metro Vancouver Region. This project could also be a near-term test of our regulatory processes and political commitment to being more than a bystander in the changing global energy system.

The reality is that the world will continue to rely on fossil fuels,[9] particularly natural gas, for a long time to come because of physics and the intrinsic characteristics of these resources: energy density, portability, reliability, and flexibility. Canada has a clear role to play, as the German Chancellor’s visit to Canada in August 2022 demonstrates despite the conversation that studiously steered clear of the obvious.With the right policies and smart leadership, we can be part of the solution — helping the world shift to responsibly produced, less GHG intensive fuels; improving air quality in the Metro Vancouver airshed; employing more British Columbians; generating additional revenues for cash-starved governments; and facilitating Indigenous economic development.

[1]https://bcbc.com/dist/assets/publications/lngs-role-in-enabling-global-energy-transitions-and-what-it-means-for-british-columbia/EEBv12n2.pdf, https://bcbc.com/insights-and-opinions/the-energy-evolution-and-lng, https://bcbc.com/insights-and-opinions/lng-in-a-shifting-global-context, https://bcbc.com/insights-and-opinions/will-bcs-natural-gas-help-reduce-emissions-globally

[2]https://www.ferc.gov/media/nor...

[3]https://www.shell.com/energy-a...

[4] StatsCan Table: 25-10-0055-01

[5] billion cubic feet natural gas per day (Bcf/d) to million tonnes LNG per year (MTPA) – bcf/d * 7.59974192

[6]https://www.eia.gov/energyexpl...

[7]https://www.canadianenergycentre.ca/u-s-exporting-canadian-natural-gas-as-global-lng-demand-surges/

[8]https://www.portoftacoma.com/puget-sound-energy-lng-facility, https://www.alaskahighwaynews.ca/local-business/new-lng-plant-in-washington-must-use-bc-gas-3501560

[9]https://bcbc.com/insights-and-opinions/2021-global-energy-data-and-key-trends