OTTAWA
\nGerman Chancellor Olaf Scholz visited Canada this week, hoping a democratic G7 ally would one day ship his country liquefied natural gas to replace Russian gas imports, but the response he got from the world\u2019s fifth-largest producer was not to count on it.
\nEnvironmental and regulatory hurdles to gas pipeline construction are a stumbling block to new LNG terminals on Canada\u2019s Atlantic coast, and support for the idea in Ottawa has been cooling. As recently as May, Canada said it was in talks with two companies to possibly accelerate LNG projects there that ship could gas to Europe within a few years.
\nThose projects involved Repsol, which could possibly retool an LNG intake facility in New Brunswick, and Pieridae Energy which had proposed the Goldboro LNG facility in Nova Scotia.
\nPrime Minister Justin Trudeau\u2019s Liberal government is now publicly questioning whether those terminals can be profitable and built fast enough to make a difference to Europe\u2019s long-term supply difficulties.
\nDays before Scholz arrived, Canadian Natural Resources Minister Jonathan Wilkinson told Reuters the government now thought the best solution was to export hydrogen, not LNG.
\nTrudeau reinforced that message during a joint press conference with Scholz on Monday, saying \u201cthere has never been a strong business case\u201d for LNG terminals on the east coast.
\nGermany wants to wean itself off Russian gas by 2024. It would take at least that long for new Canadian LNG terminals to come online, largely because of the need for expanded pipeline capacity to get western Canadian gas to the east coast.
\nBuilding new pipelines in Canada and the United States has proved difficult due to fierce environmental opposition and high regulatory hurdles. TC Energy\u2019s Energy East and Keystone XL oil pipeline projects were both cancelled after years of delays.
\nThe gas pipeline network, operated by TC Energy and Enbridge, runs through the northeastern United States to reach Canada\u2019s east coast, with the TC Energy section already operating at capacity.
\n\u201cYou\u2019d have to be expanding pipelines outside of Canada in New England, and it\u2019s not the most friendly region for pipeline development,\u201d said Wood Mackenzie analyst Dulles Wang said.
\nIn a statement, TC Energy said any project would require broad support, including from indigenous groups and communities. Enbridge said it was focused on LNG projects underway on the US Gulf Coast and Canadian west coast.
\nOn a July earnings call, Repsol Chief Executive Josu Jon Imaz said the company would need a buyer to commit to a 15- to 20-year offtake agreement for the gas, as well as new pipeline infrastructure and tolling agreements to get the gas from western Canada to the Atlantic coast.
\nThe climate change fight is another wrinkle: Germany aims to reach net-zero carbon emissions by 2045, so some analysts warn new LNG terminals could become stranded assets.
\nOttawa also wants to ensure any new project fits within Canada\u2019s goal to reach net-zero emissions by 2050, noted Keean Nembhard, press secretary for Wilkinson.
\n\u201cIt is not an easy game; there are a lot of difficulties to arriving at this scenario,\u201d Imaz said.
\n\u2018Honest interest\u2019
\ndid leave the door slightly open to new terminals in addition to two on British Columbia\u2019s Pacific coast that is scheduled to start operating in 2025 and 2027, saying that was \u201cdoable\u201d if there is \u201ca worthwhile business case\u201d.
\nCanada is \u201ceager\u201d to help Europe on energy, said Wilkinson\u2019s spokesman Nembhard, but \u201cthe onus of establishing a business case to go forward with proposed projects remains with the company\u201d.
\nFighting climate change was a cornerstone of Trudeau\u2019s election campaign last year, but oil and gas account for about 5% of Canadian GDP and the country has some of the largest fossil fuel reserves in the world.
\n\u201cThe government itself is very split between focusing on decarbonization and supporting another fossil fuel project, and that\u2019s the problem,\u201d said an industry source with knowledge of the discussions about developing east coast LNG.<\/p>\n
Canada is privately supporting Atlantic LNG development in ongoing talks, a second industry source with knowledge of the discussions said. Some German utilities have shown very preliminary interest in offtake contracts, the source added.<\/p>\n
\u201cThere\u2019s honest interest\u201d from the Canadian government, which is \u201ctrying to help\u201d, the source said.<\/p>\n","protected":false},"excerpt":{"rendered":"
OTTAWA German Chancellor Olaf Scholz visited Canada this week, hoping a democratic G7 ally would one day ship his country liquefied natural gas to replace Russian gas imports, but the response he got from the world\u2019s fifth-largest producer was not to count on it. Environmental and regulatory hurdles to gas pipeline construction are a stumbling […]<\/p>\n","protected":false},"author":2,"featured_media":279975,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":{"0":"post-279942","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world"},"yoast_head":"\n