Breathing New Life into Canada’s LNG Projects? [Gas in Transition]


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Summary

High LNG prices indicate a shortage of liquefaction capacity globally, limiting the ability of importers to substitute for higher carbon fuels. But while high prices are expected to rejuvenate the prospects for LNG in Canada, the developers’ biggest battle revolves around their social license. [Gas in Transition, Volume 1, Issue 7]

through: Ross mccracken

LNG prices have recovered remarkably from the pandemic and supply-induced lows in 2020, driven by a global recovery in energy demand and, in particular, Asia’s thirst for fuel. China looks certain to become the world’s largest LNG consumer this year, relegating Japan to second place for the first time on an annual basis. Asian buyers are willing to pay over $ 20 / million Btu for one-time shipments, all-time highs for this time of year, as they stock up before winter in the northern hemisphere. The available cargoes have been diverted from the Atlantic basin, leaving Europe short and pushing the prices of European gas hubs to high levels. But at these prices, Asian and European buyers are switching to higher carbon fuels and interest in expanding LNG import capacity may wane. Coal-fired power plants across Europe are scaled up or re-commissioned in light wind conditions to ensure sufficient operational generation capacity during the winter. For many coal-fired power plants, this will likely be their last hurray. Countries like the UK, France and Italy have policies in place that will phase out fuel from their production fleets over the next three to five years, leaving them more dependent on natural gas for flexible production. and basic production in times of high demand. In Asia, China’s growing LNG consumption is being driven by the switch from coal to gas, even as Beijing seeks to expand its renewable energy capacity. Likewise, the immediate decline of Japan and South Korea in the face of a high LN …

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