The price of natural gas price in Alberta is set to lose its discount once the LNG Canada project enters into operation, the chief executive of Tourmaline Energy, the country’s top natural gas producer, has warned.
LNG Canada, a project led by Shell, is going to need some 1.9 billion cu ft of natural gas in daily supply, Tourmaline Energy’s Michael Rose told Bloomberg in an interview this week. Currently, this amount is being exported to the United States and is depressing local prices. Once it gets diverted to LNG Canada, prices are set to move higher.
LNG Canada is the country’s first project for the export of the superchilled fuel, with the focus on Asian markets as the biggest demand drivers. Eventually, however, Canada could potentially supply 36.2 million tons of LNG per year by 2040, according to estimates by Wood Mackenzie. LNG Canada is scheduled to begin operations next year.
This projected growth in LNG capacity in Canada will further boost demand for natural gas in the country, leading to higher prices. Last year, in anticipation of these price trends, Tourmaline acquired another gas producer, Crew Energy, eyeing an even bigger footprint in the segment.
“Generally, the right time (for deals) is at the bottom of cycles, and we think we are near, or at, or past the bottom in the natural gas pricing cycle,” Michael Rose told the Calgary Herald in an interview after the news of the acquisition broke.
“The future looks bright for Canadian and North American gas with the doubling of the LNG capacity in the U.S. and the startup of Canadian LNG on the West Coast,” Rose added.
It is worth noting that Canada’s energy industry is pursuing its LNG ambitions despite an anti-LNG stance by the federal government, which recently dashed hopes by the German cabinet about securing a steady supply of Canadian gas for the future in liquefied form.
By Irina Slav for Oilprice.com
