Will LNG Canada See the Break of Dawn?

It’s been a quiet past few years in Kitimat, the town of just over 8,000 in Canada’s British Columbia that is closer to Alaska than it is to Vancouver. Boasting a natural harbour in a deep inlet, Kitimat has geographical promise. It is the closest launch point in North America to deliver LNG volumes to the ravenous markets of East Asia. Eight years ago, when the Asian wave of demand first began cresting and Canada’s ambitious LNG ambitions took shape, Kitimat was a hub of activity. Then hopes were dashed as energy prices crashed. It was a return to sleepiness for the town, nestled by stunning mountainous terrain.

But over the past six months, activity has crept back in. Empty parking lots are now full again. Landlords are raising rents. Workers at the nearby Rio Tinto smelter are considering switching jobs. As Shell and its partners rumble towards a Final Investment Decision on the US$40 billion Kitimat LNG project, the town is hoping that this will finally be its time to shine.

It’s been a rough few years for Canadian LNG. There is plenty of natural gas in British Columbia but not many local markets that it can be piped to. So it stayed in the ground until the rise of Asian LNG demand spurred Canada into considering using its proximity to Japan, South Korea and China to its full advantage. Between 2011 and 2014, some 20 LNG projects were announced in British Columbia alone. Some were speculative, but some were also concrete. Fast forward to 2018, and there is still no LNG terminal operational, let alone being built. In contrast, Australia is on the verge is completing the last of its LNG megaprojects when Ichthys begins operations this year.

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