LNG And Ontario: West Coast Energy Development Good For Central Canada Economy

If one thinks about Ontario energy, the province’s nuclear and hydroelectric “crown jewels” likely come to mind, says Rocco Rossi, president and chief executive officer of the Ontario Chamber of Commerce (OCC).

But Central Canada also is an important supply-chain partner in the country’s natural gas industry, which could grow with LNG.

“Whether it’s Hamilton, Sault Ste. Marie steel, or tremendous pipe manufacturing, financing or controls, Ontario plays a critical role,” he told an OCC webinar on Wednesday about pan-Canadian economic-recovery opportunities through LNG. “Recovery in energy more broadly is an enormous contributor to the future success of Ontario.”

David McHattie, vice-president, institutional relations, Canada, Tenaris SA, said more energy generally means increased opportunities for domestic manufacturing. For example, 30 per cent of Canadian steel consumption comes from the energy sector. “Much of this steel we’re thinking of is for steel pipes, like what we make in Ontario, although there are many steel products, and it’s everywhere in the energy-development world.”

A liquefied natural gas industry in B.C. could provide provincial governments across Canada with more than $90 billion in new revenue between 2020 and 2064, Bryan Cox, president and CEO of the Canadian LNG Alliance, told the webinar. Developing an LNG industry could create 96,000 jobs every year, he said, including 10,800 in Ontario.

“No matter in what sector, and no matter where in the country, when we grow the economy with big infrastructure investments, and with big private-sector investments, everyone wins — manufacturing, retail, accommodation and food services. It does not matter where you work.

“And so, we all have skin in the game when it comes to developing, especially, our resource industries, and one like LNG, which is all growth for our country.”

Late last year, the Ontario government invested $9 million in Tenaris Algoma Tubes, which the province says will leverage more than $117 million in private sector investments, creating 153 high-paying local jobs.

If Canada develops its LNG industry, McHattie added, then that industry will consume increasing quantities of Canadian manufactured products in its construction, maintenance of natural gas development wells, as well as in its infrastructure to bring natural gas to the West Coast. “LNG Canada’s 2 bcf/d has the potential to increase the demand for the products we offer by about $100 million per year.

“This is incremental, what their product would bring. If we think about it during the life of that one train of that one project, it’s $5 billion over the life of the facility.”

According to Susannah Pierce, director of corporate affairs, LNG Canada, Canadians have yet to rally behind the LNG industry, and what this bourgeoning sector needs now is for more people to “speak boldly and proudly” about it as something that can address the energy demands of the world in a sustainable way.

“We need to rally behind it, we need to demonstrate that we can be a significant player in the export sector from a lower carbon perspective, we can be competitive, and then let’s go after it,” she said. “I think we need to be bold, and I think we need to be proud of it.”

Not only is LNG good for the economy, said McHattie, but it is environmentally sound, especially when it sources manufactured components domestically. “If we buy steel from Canada, made in Canada, then the full life cycle GHG emissions are one-third what they would be if we bought steel in China, and one-half if we bought it from Korea.”

He added: “This is a national opportunity. It’s a national industry. The more that we as businesses in Ontario grab hold of this, the better off we will be. This is so critical in the economic development recovery from COVID-19.”

The energy complex globally faces major challenges, suggested Steven Murphy, president and vice-chancellor of Ontario Tech University. He said what has been sorely missing from the green energy dialogue, especially in Canada, is a clear roadmap for how to achieve emission-reduction targets. “We need to get to a point in this country where we aren’t pitting one industry versus the other, but realizing that our energy future is an area we’ve always led in Canada.”

LNG from Canada helps decarbonize the world

Canadian LNG can help decarbonize countries that currently depend on more carbon-intensive energy, and this could be accounted for when considering Canada’s own GHG emissions profile, Pierce, who will become Shell Canada’s new president and country chair in 2021, told the OCC webinar.

“If we can export all of this LNG to Korea, and then they’ll remove 24 coal-fired power plants from their country, which then removes over 60 million tonnes of carbon equivalent per year by doing that, then there’s a carbon reduction there even if there’s a carbon increase here,” she said, noting a related trading mechanism was contemplated during the United Nations 21st Conference of the Parties (COP 21) in 2015.

Natural gas helps in Canada’s energy transition

In terms of Canada’s energy transition, McHattie told the chamber event, simply switching to green hydrogen in the country’s industrial sector would be a “monumentous challenge” taking multiple decades. However, if the country invests to adapt its industries to use blue hydrogen from natural gas, he said, then industries will be ready to switch to green hydrogen when it can be commercially available, and in quantities needed.

“Natural gas is for sure a part of the solution in this hydrogen transition, and the revenues generated and economic contributions of the country are going to be helpful for Canada to have a roll in this. If not, then we need to think about where else the money will come from. I think LNG is an important opportunity.”

He added: “We have an opportunity to invest in this transition, but the money that is generated in our economy, we can’t take away that too, because then we have nothing to invest.”

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