Canada’s sole liquefied natural gas (LNG) facility commenced operations last year, and a recent report suggests the nation has the potential to expand this sector, positioning itself among the leading natural gas exporters globally.
However, there are multiple challenges to address, such as a protracted permitting process and a shortage of initiatives proposed by the private sector.
The federal government is striving to elevate LNG exports to more than 100 million tonnes annually.
At present, there is one operational facility with a production capacity of 14 million tonnes per year.
Achieving the federal target could lead to significant economic benefits, as highlighted in a report published on Thursday by S&P Global, which estimates nearly 250,000 jobs created each year and close to $1 trillion in natural gas industry investment by 2050.
“If Canada can resolve its permitting challenges and cost issues, it could play a substantial role in the global LNG market, which would certainly benefit the Canadian economy and help diversify it, reducing dependency on its southern neighbor,” stated Daniel Yergin, vice-chairman of S&P Global, during an interview with CBC News.
Western Canada is rich in natural gas, which can be extracted at some of the lowest costs found in North America.
Nevertheless, constructing pipelines to transport gas from Alberta and northeastern British Columbia to the West Coast has proven to be a complicated and costly endeavor.
The Coastal GasLink project, initiated by TC Energy and partly owned by local First Nations, has encountered numerous delays and budget overruns. It has faced opposition from various Indigenous groups and environmental activists, as the pipeline crosses approximately 625 lakes, rivers, creeks, wetlands, and streams in northern British Columbia.
Some analysts argue that Canada may never achieve the status of an LNG-exporting powerhouse due to the significant challenges associated with developing and constructing energy infrastructure. Additionally, there is fierce competition from other nations eager to attract LNG investments, particularly the United States.
According to the S&P report, Canada’s permitting process takes 27 months longer than that of Texas, and the cost of building pipelines is 160 percent higher.
The federal government has introduced new legislation designed to expedite regulatory reviews.
Currently, LNG Canada is the only LNG export facility operational in the nation, although six additional facilities are either being constructed or are in the planning stages. Collectively, they are expected to produce just over 50 million tonnes of LNG each year.
S&P Global vice-chairman Daniel Yergin appears on stage at CERAWeek in Houston on March 10, 2025. Yergin says Canada has many advantages and hurdles to grow its LNG sector. (Kaylee Greenlee/Reuters)
Yergin noted that one of the industry’s lesser-known facts is the substantial size of Canada’s oil and natural gas resources, coupled with its geographical advantage of having a relatively short shipping route to Asia.
“Asian consumers are keen on acquiring LNG from Canada,” Yergin remarked, along with interest from other countries, particularly in light of this year’s Middle Eastern conflicts that have disrupted the global natural gas market. In Europe, there are rising concerns about the high costs of gas for residential heating as winter approaches.
“There is a strong desire for diversification. There is a belief in the necessity of building security and resilience into energy systems. A diversified portfolio is essential, and it would be advantageous to have resources that do not need to pass through choke points. All these factors highlight the advantages Canada currently possesses,” he added.
Yergin stated that Prime Minister Mark Carney holds a significant amount of credibility internationally, but investors will seek evidence of permitting reforms, as prolonged wait times can incur high costs for businesses.
The demand for natural gas is projected to increase in the coming decades, driven by factors such as the expanding global population, energy needs from AI data centers, and air conditioning.
According to S&P Global, Canadian LNG has a greenhouse gas intensity that is 55 percent lower than comparable projects in other nations.