Brian Zinchuk: Just as the world cries out for Canadian LNG, “No business case” Trudeau has totally failed us

In the Canadian Military, the 1990s are often referred to as the “decade of darkness,” where the military shrunk, morale was low, we didn’t really re-invest into the military (except for buying garbage used subs from the UK). It was a time that all who served then wish they could forget.

Notably, that decade started in 1994 under a Liberal government.

Today, Canada’s natural gas sector is also seeing its decade of darkness, again due to a Liberal government. And it’s not because the opportunity wasn’t there. It was because our government allowed its ideology, and that of its anti-oil and gas friends (also known as protestors) to stand in the way, while the rest of the world passed us by.

And while most people (except for geopolitical strategist Peter Zeihan) would not have predicted a 2022 invasion of Ukraine by Russia (Zeihan did, six years earlier), they could had seen there would be a push towards an increased global market for natural gas by the way of LNG (liquefied natural gas). Sure as hell, the Americans did. And while we had proposed projects by the dozen, here in Canada, only LNG Canada, at Kitimat, is anywhere close to completion. Woodfibre LNG is finally getting going. As for the East Coast? Not so much.

And yet this past summer, German Chancellor Olaf Scholz came to Canada, basically begging us to supply them with LNG. And our illustrious Prime Minister Justin Trudeau said, in front of the man’s face, there was “no business case” for LNG.

But he did take Scholz to Newfoundland, to get him to sign onboard to some harebrained scheme for hydrogen fuel, several years down the road. The plan? To build massive onshore wind turbines on the southeast corner of Newfoundland. Then they’ll use that power to turn water from a retired mine site (not ocean water) into hydrogen.

But since there is only one ship on the entire planet capable of transporting liquified hydrogen, and in very small quantities at that (the Suiso Frontier is smaller than a World War 2 Liberty Ship), we have a better solution.

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We’re going to convert that hydrogen to ammonia, and ship it across the North Atlantic to Germany that way. What they’re going to do with it then, who knows? I haven’t heard of ammonia-fueled cars yet. Do they convert it back to hydrogen?

Wouldn’t it be simply easier to build those wind turbines in the North Sea, off the coast of Germany (as they are already doing), and either use the electricity to charge their electric vehicles, or make hydrogen there?

This honestly is the harebrained answer Trudeau gave to a world leader who desperately wants to make sure his people don’t freeze in the dark. We’ll ship you Newfoundland ammonia. Eventually.

The German Chancellor promptly flew to Persian Gulf and signed long term agreements with the UAE and Qatar for LNG supplies.

A little over a month ago, Scholz inaugurated Germany’s first LNG import terminal – put in place in less than a year. And on Saturday, Jan. 14, he was present at the opening of a second. A third is on its way in short order.

And last week, Japanese Prime Minister Fumio Kishida came to Canada, basically begging for LNG. And Trudeau spoke in front of this leader about the world decarbonizing.

In other words, don’t count on this country to help all that much on LNG you in your time of need.

“We’re going to continue to look for ways to be that reliable supplier of energy,” Trudeau said.

“Even as we do talk about things like LNG and other traditional sources of energy, we know the world is moving aggressively and meaningfully towards decarbonizing, towards diversifying, towards more renewables,” he added.

I’m shocked he didn’t offer ammonia, from Newfoundland.

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What is going on

At Kitimat, B.C., LNG Canada is currently building two “trains,” (processing lines) each with a capacity of 7 million tonnes of LNG per year. They’re now seriously considering continuing on with doubling that to four trains.

In the meantime, the U.S. literally went from zero to hero since 2016. They’ve gone from no export capacity of LNG to world leader. It was no small coincidence that the first tanker to show up at that brand new German LNG import terminal was carrying an American cargo.

Cheniere’s Sabine Pass Liquefaction, on the Louisiana side of the Texas/Lousiana border where they meet at the Gulf of Mexico, has six trains in place, already, each capable of 5 million tonnes per year. The first went online in 2016, the sixth in February, 2022. They’ve got five tanks (LNG Canada is building one), and three ship berths (LNG Canada is building two).

Across the Sabine-Neches Waterway, Golden Pass LNG, originally built as an import terminal operational in 2010, switched gears and is becoming an export facility, to be online in 2024. It’ll export 18 million tonnes of LNG per year.

Cheneire also has an LNG plant at Corpus Christi, with three trains totaling 15 million tonnes per year (more than LNG Canada’s Phase 1). It went into operation in 2018. They’re now building and expansion with “up to seven midscale trains with an anticipated total production capacity of approximately 10 million tones per year.”

A little east of Sabine Pass and Golden Pass are two more facilities on the same waterway. Cameron LNG has three trains and can export 12 million tonnes per year. It was converted from a LNG import facility. The third train went online in 2020.

Just north of it the Lake Charles LNG Facility, which will convert an existing import facility to an export facility. It will have a capacity of 16.45 million tonnes per year, with three trains.

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Kinder Morgan (remember them – the folks who abandoned the TMX project because of Trudeau?) is converting a former import terminal into an import/export terminal. The Gulf LNG Liquefaction Project at Pascagoula, Mississippi, will have a capacity of 10.85 million tonnes per year.

See all that American has accomplished?

And Canada’s LNG?

And what do we have to show on our East Coast, that could go to Europe? Squat.

There’s talk of converting New Brunswick’s Saint John LNG terminal from an import to an export facility. Formerly known as the Canaport LNG terminal, it was purchased in 2021 by Repsol.

Pieridae Energy’s Goldboro LNG project for Nova Scotia has shifted in concept from on-shore to an off-shore, floating LNG project. A year ago I asked a Pieridae rep if doing so was basically a prenuptial agreement. As in, if it doesn’t work out (due to things like the federal government), they can pack up their facility and float it elsewhere. He agreed.

Notably, this project was proposed nearly a decade ago, and got Nova Scotia’s approval in 2014. Guess who was elected federally in 2015? With two trains each capable of 4.8 million tonnes of LNG per year (in the on-shore proposal) Goldboro was originally scheduled to being operations this year.

Their December, 2022, capital budget notably did not include major funds for Goldboro.

And then there’s Énergie Saguenay, proposed initially in 2014 to use 100 per cent Western Canadian natural gas via a 750 km pipeline tying it into the TC Energy mainline system. It was killed by both the Quebec and federal governments, as if one death wasn’t enough for an energy project in this country. Its two trains would have been able to export 10.5 million tonnes per year. The federal decision was 17 days before the start of the Ukraine war, and notably has not been reversed.

LNG Newfoundland, which might be in place by 2030, is still kicking. So far. But then again, Newfoundland largely elects Liberal MPs, so there just might be a connection there. It would take natural gas from offshore projects like Hibernia, Hebron, Terra Nova and White Rose, ship it 600 kilometres by subsea pipeline, and produce 2.5 million tonnes per year. Like the Goldboro prenuptial agreement, it, too, would use a floating LNG facility. Should the situation arise, they can take their bat and ball elsewhere.

US cashes in, while Canada is on the sidelines

So there you have it. While the US has moved fast and hard to get LNG export facilities in place over the last decade, Canada has dragged its feet and stubbed its toe. We let protestors (Coastal GasLink), provincial governments (Quebec) and the federal government (Energie Saguenay) get in the way. Now, while the world is crying for LNG from Canada, we have nothing – NOTHING – to give them.

What else would you expect from a government who killed the Northern Gateway and Energy East pipelines? That scared off Teck from its $20 billion Frontier oil sands project? That hardly whimpered when Biden killed Keystone XL?

The only way this will change is if we have a change in government in Ottawa, and a change in attitude in this nation. We can’t be Can’tada any longer. The world needs us.

 

Brian Zinchuk is editor and owner of Pipeline Online. He can be reached at brian.zinchuk@pipelineonline.ca.

 

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