World demand for natural gas is expected to increase 47 per cent by 2040.
Liquefied natural gas (LNG) is natural gas cooled to -161°C to form a liquid. Cooling natural gas to a liquid reduces the volume of natural gas so that it can be transported safely and efficiently by ship where it is converted back to a gaseous state for use.
Canada’s LNG opportunity
World trade in LNG has more than tripled over the last 20 years, growing from 8.5 Bcf/d in 1994 to nearly 33 Bcf/d in 2015.
As Canada’s exports of natural gas to the United States, our only foreign customer, continue to decline as the United States becomes a net exporter of natural gas, the need for Canada to find other foreign customers is critical.
With world demand for natural gas expected to increase 47 per cent by 2040, developing Canada’s LNG industry is critical to the future of Canada’s natural gas producers. Canada’s potential participation in the LNG market is driven by a number of factors:
- The large resource base located near the country’s West Coast
- The proximity of Canada’s West Coast to Asian markets
- An influx of foreign investment from countries that consume LNG
- The need for Canadian producers to increase their market diversification
- The desire to access markets with the potential of higher returns given the relatively low natural gas prices currently found in North America compared to world markets
A Canadian LNG industry in B.C. exporting 30 million tonnes each year will:
- Generate $3.2 billion in federal government revenues annually.
- Generate $3.0 billion in government revenues for British Columbia annually.
- Increase national employment by an average of 65,000 jobs.
- Reduce B.C.’s unemployment rate by an average of 0.5 per cent over the 30 year period.
(Source: Conference Board of Canada)
LNG Markets and environmental benefits
Natural gas has a substantial impact on reducing emissions of CO2 as well as harmful pollutants in countries that rely heavily on coal for power generation. Asia and Asia Pacific markets continue to dominate LNG imports, consuming 70 per cent of the LNG production in 2015. Japan has very limited domestic supplies of natural gas, and as a populous country with a highly developed economy, it has emerged as the world’s largest consumer of LNG.
Canadian natural gas can provide a global net environmental benefit: by exporting this cleanest-burning hydrocarbon in its liquid form, Canadian natural gas can displace fuels with a higher greenhouse gas emission profile and higher emissions of harmful pollutants such as particulate matter and mercury emissions, thus reducing global pollution.