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LNG optimism for Canada International Energy Agency forecasts liquefied natural gas demand will grow by average 3 percent worldwide over next 20 years GARY PARK For Petroleum News
The Conference Board of Canada has tried pumping some good cheer into the floundering Canadian LNG business, forecasting that global demand for the commodity will continue to grow.
A report by board economist Carlos Murilloo says investments in LNG will likely slide from the US$200 billion spent over the past decade by about 40 percent a year to about US$4 billion through 2020.
But he cautioned that “this opportunity cannot be taken for granted. Cost competitiveness and time of entry must be kept top of mind in order for Canada to succeed in the growing global LNG market.”
Given the slow pace of project approval and development in Canada, “this is not a concern to be taken lightly,” he said.
Although Canadian government approval of the C$36 billion Pacific NorthWest LNG project was a “positive development for the industry,” any surge of industry output is “still years away,” even if there is a slowdown in global investment, Murilloo said.
IEA forecast Some of his optimism is based on an International Energy Agency forecast that LNG demand will grow by an average 3 percent worldwide over the next 20 years, or double the pace of global natural gas demand, resulting in a need for US$15 million in annual LNG spending.
The report predicts that Canada’s gas extraction industry will post a pre-tax loss of C$1.6 billion this year, following C$1.7 billion in 2015, as companies cope with the repercussions of persistently low commodity prices, but a turnaround is forecast for 2017 with profits growing back to about C$1 billion by 2020.
An added prod for Canada comes from reports that, for the first time in 60 years, the United States will likely export more gas in 2017 than it imports - with LNG shipments doubling to 3.2 billion cubic feet per day and gas exports accounting for 9 percent of total U.S. production.
The rise in exports, with two-thirds of shipments destined for Argentina, Brazil, Chile and Mexico, will see imports drop by 36 percent from record levels of 1.76 trillion cubic feet in 2007.
Currently, all LNG exports leave from the Sabine Pass terminal in Louisiana owned by Cheniere Energy, which opened two liquefaction plants this year and will add two more in 2017.
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