A few weeks ago, one of my columns spoke of the pall or lethargy that seems to have been cast over Canada. Whether through over-regulation, over-consultation or over-inhaling, Canada seems unable to rise to the challenges of keeping the nation moving forward. Many wrote to say how much the message resonated (thanks), and a few semi-coherent emails came in that missed the message but defended cannabis (and that resonance, between the garbled messaging and the defense of weed, seemed touchingly appropriate).
All is not lost though, obviously. The headline news is Shell’s $40 billion LNG export project; that sort of dollar value gets everyone’s attention. Of lesser notice was TransCanada’s notice to build a potential 5 billion cubic feet per day pipeline to feed that export terminal and possibly others.
Despite some very weird comments by politicians and other assorted haters, the LNG export project(s) will be beneficial to the environment. BC’s Energy Minister Michelle Mungall, who displayed a stunning sort of ignorance several years ago (“Christy Clark reassures us that moving India and China away from coal-burning facilities to LNG facilities is the cleanest, greenest answer,” Mungall said in 2016. “I can’t believe how ridiculous that is. It’s still a fossil fuel!”) has been miraculously transformed (“We know that if we see success it’s a big part because of our new LNG framework by this government,” said the Energy Minister earlier this week.) into an LNG supporter. Cynics will point out the obvious – that Mungall is simply making political hay, and while that is definitely true, we should not exclude the possibility that she is simply no longer ignorant. That is what we hope for; that politicians and intellectually honest bystanders will expand their vision, and if that has indeed happened we will gladly accept Ms. Mungall into the circle.
Ms. Mungall’s earlier faulty reasoning should be shockingly bare to anyone who can piece together the words, but since it is still espoused by Weaver, the BC Green party leader (I don’t feel like giving him a first name), it is worth commenting on. Abandoning BC’s LNG facility so that BC can meet its emissions targets is nonsensical if building the facility will reduce India/China’s emissions by substantially more, which it certainly will if the LNG replaces coal. if BC’s specific methane molecules don’t replace directly Indian/Chinese coal, which would be Weaver’s most plausible theoretical retort, it doesn’t matter, because the exported LNG will go into the pot of natural gas supplies that are meeting Asia’s increased demand.
So this is all good news for Canada and for the world’s greenhouse gas emissions levels, if not BC’s, but what is more interesting to me is Cenovus’ announcement that it will be shipping 100,000 barrels per day of crude by rail starting sometime in 2019. This is significant for several reasons.
With respect to those blocking infrastructure to prevent climate change, this should be a crystal-clear example of how product will move to the market that wants it, one way or the other, as long as it is physically possible and the cost is bearable. If more pipelines are blockaded, more will move by rail. The cost to move the oil by rail is higher, but is offset by the fact that the bitumen does not need to be 1/3 diluent as is required for a pipeline. Unfortunately it is also a fact that rail cars tend to spill significant quantities more often than pipelines, but pipeline opponents appear to be comfortable with that risk.
Back to the LNG story, as speculated elsewhere the construction of one LNG facility will make the construction of others easier. The natural gas supply pipeline will be able to handle the needs of several. We therefore may actually see the birth of an industry in Canada, the most significant one since bitcoin mining became a pillar of the Canadian economy (if all those trailers full of computers are still there this morning). Cannabis proponents of course will try to get off the couch to argue that their industry will be far more vital, and perhaps it will be, but for now we will work on the assumption that several billion cubic feet per day of natural gas will trump it, somehow.
It was a good week for Canada, let’s hope the momentum remains. It would be a delight to recant my earlier story, which would mean Canada was returning to its former industrious self.
Read more insightful analysis from Terry Etam here. To reach Terry, click here