President of the Federal Republic of Germany Frank-Walter Steinmeier, left, and Canadian Prime Minister Justin Trudeau participate in a discussion with students at the University of Ottawa in Ottawa on Monday, April 24, 2023. Trudeau says Canada can be a leader in things like lithium mining if global companies make their imports contingent on being environmentally responsible and barring slave labour. THE CANADIAN PRESS/Justin Tang

 

OTTAWA – Prime Minister Justin Trudeau wants Canada to produce some of the last barrels of oil to be used, but it should be processed into petrochemicals, not burned.

That was part of his response to a student asking about shipping LNG to Canada. His answer also extended into oil, gas, and substantial increase of nuclear power. And months after his government acted to kill and LNG project in Quebec, he spoke of being “open to projects that actually continue to get natural gas out.”

He also spoke of carbon capture and storage for oil and gas, despite his government specifically excluding enhanced oil and gas recovery from federal incentive programs.

Trudeau was hosting German President Frank-Walter Steinmeier at a town hall with University of Ottawa students on April 24. (Germany’s president is its head of state, but its chancellor, Olaf Scholz, it its head of government, similar to how Canada has a king and prime minister, with the prime minister being equivalent to the German chancellor.)

About Canada supplying LNG to Germany

The student asked, “Will Canada be shipping more LNG to countries like Germany to displace Russian natural gas, given the impact that the Russian invasion has had on Ukraine and on other European countries? And then for the German president, what can countries like Canada do to help more during this time?”

Notably, last summer Trudeau stood in front of German Chancellor Scholz, who had come to Canada seeking liquified natural gas, and declared there “was no business case” for LNG from Canada’s East Coast. His government, as well as the Quebec government, also quashed the massive Energie Saguenay LNG proposal, which would have seen an LNG terminal built at Saguenay, Quebec, connected by a pipeline to TC Energy’s mainline.

Trudeau responded, “The answer is yes. We have increased our production of natural gas to put it into the global markets, to ease some of the pressure off, so Germany can we can actually replace the natural gas that Russia has cut off.

“The hinge points really were where this first winter, which you managed to get through extremely well; higher prices for everyone. But Canada is going to continue to be there and be open to projects that actually continue to get natural gas out.”

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Trudeau continued, “We invested in one of the largest natural gas projects in Canada in Canadian history, LNG Canada on the West Coast a number of years ago. And we’ll continue to look for ways that makes sense.

“At the same time, however, even though in the short term there is a need for support of more fossil fuels into the global economy, what Germany is looking at, what the world is looking at is not just getting off of Russian oil and gas, it’s reducing our dependency on oil and gas overall, and decarbonizing our energy mix as much as possible. There is going to be a need for oil and gas long, long into the future. But the issue is, will it be burned for energy? Or will it be used in chemical processes and petrochemicals and plastics and things like that? It’s the burning of fossil fuels that is so damaging to carbon emissions in the environment.

“And so, we are going to continue to look for ways to be there, because we do have oil and gas resources that, that we’re working hard to decarbonize. But we know that where we’re getting to in the future, 10 years from now, over the coming decades as we get towards the net-zero world, the capacities we have in Canada to generate energy for the world – wind, solar, geothermal, hydro, which is a huge part of our mix right now, even a return to nuclear, which we’re very, very, very serious about and investing in some of the small modular reactors. I mean, as we look at what the baseload energy requirements are going to be needed by Canada over the coming decades, especially as we continue to draw in global giants like Volkswagen, who choose Canada partially because we have a clean energy mix, to offer to power it. We’re going to need a lot more energy, and we’re going to have to be doing much more nuclear over the coming decades.

“But Canada can and will be that solution. Oil and gas is going to continue to be a part of that mix for a long time, particularly as we move forward on things like carbon capture and storage. And decarbonisation of the processes, so that those last barrels around the world that are almost carbon-free, have a good chance of being from Canada because of the technology we’re laying on top of it because of the expertise of our energy workers.”

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German response

Touching on the “unfortunate” circumstance of Canada not providing LNG to Germany, President Steinmeier said via translator, “A very short answer to your question could be the following: We are pleased we’re delighted to have friends like Canada.

“The longer answer to the question that you put to me is the following: We are working hard to have succeeded in freeing us completely from our dependency on Russian gas, which carried certain risks, I have to admit. But there were a few positive framework conditions since helped us get through the winter. The first of which was to deal with the fact that the other suppliers, other important suppliers of gas to Germany, the Netherlands, that is, and Norway increased somewhat their exports to Germany.

“Secondly, because the winter turned out to be a fairly mild winter, in fact, because consumers in Germany were extraordinarily careful in the use of energy, that gave us some breathing space to put into place regulations that we will need to have in place for the future in order to ensure in future to that Germany has enough energy to live on, that the supply is stable in the field of oil supplies.

“For example, the federal government has now entered into contracts with countries like Kazakhstan. We are no longer importing oil from Russia, but from Kazakhstan. And we are also availing ourselves of the opportunities that the world market offers to us, as far as gas is concerned. LNG that is now increasingly being brought to Germany unfortunately, not directly from Canada, because we lack the lack of the terminals along the eastern coast of Canada for a direct transportation to Germany, or to Europe.

“I’ve been nevertheless very grateful to Canada that it keeps high is its LNG production, because you, in so doing, help fill the market, put more LNG on the market.”

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As Canada has zero capacity at this time to export any natural gas except by pipeline to the United States, he is referring to Canadian production allowing American production, which does have LNG export facilities, to supply Europe.

Steinmeier continued, “The situation in the Middle East has become more difficult. China is very active in that regard. Much of the gas capacities that the countries in the Arab Gulf area have, they have entered into principle declarations of readiness to help, but we need vast amounts of this until we have reached climate neutrality in a couple of years. And these amounts will probably not come from that part of the world.

“As far as that is concerned, that we rely very much on countries like Canada who by supplying the world market will also supply us.”

“And a final statement because you made that point more than once Justin. As far as chemical industry is concerned, we will continue to have to rely on oil in that regard. But in the long run, we have to be quite clear that the oil that we are used for that purpose is far too precious for us to burn it these days.”

BASF’s Ludwigshafen site has developed into the largest integrated chemical complex in the world. But now much of that capability is moving to Louisiana due to shortage of gas in Germany. BASF

Germany’s petrochemical industry, which is the basis of much of its industrial economy, had been heavily dependent on cheap Russian gas. German chemical giant BASF, the largest in the world, is currently in the process of relocating much of its processing capability to Louisiana at this time. At the same time, it is dramatically cutting back its flagship facility at Ludwigshaven, Germany. It covers approximately 10 square kilometres and is the world’s largest integrated chemical complex, according to BASF.

 

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