Canadian LNG Is The Cornerstone For Global Future Energy Supply: Fitzgerald
Canada is the future cornerstone of energy supply for most global companies looking to “the right” form of energy supply, says Mark Fitzgerald, president and chief executive officer, PETRONAS Energy Canada Ltd.
“We believe that Canada has the resources, it has the rule-of-law, it’s actually a stable country most days, and it has that innovation mindset and environmental mindset,” he told the Calgary Chamber of Commerce’s Transform: Energy Summit on Wednesday. “And so, it’s a cornerstone of our view of long-term energy supply.”
In particular, he said, Canadian LNG represents a cornerstone to the future of energy, and it is key to the end of energy poverty for many people worldwide. “It’s not a transition fuel, it’s not a transformation fuel, and it’s not something that’s going to go away. It is a cornerstone of the future.”
He added: “It must be recognized as being low-emissions intensity in terms of its development. In our view, it also has to be recognized as a contributor to social change and social justice around the world, whether that’s Indigenous partnerships, whether that’s rule-of-law, whether that’s regulatory excellence, or whether that’s environment law.”
West Coast LNG sourced from Western Canada has a distinct advantage to anything coming out of the U.S., and it has a distinct advantage to any other basin in terms of energy supply on the southeastern or eastern side of Asia, which would be Canada’s key markets for LNG, according to Fitzgerald, who is transferring to Kuala Lumpur next month to serve as PETRONAS Global’s vice-president of international assets.
“I believe Canada has this opportunity to absolutely be a global leader in defining how you produce responsible energy going forward. Part of that is stepping out of our domestic view and taking an international view.”
However, he said, while Canada ranks “top tier” in terms of its economic development opportunity, due to the low cost of natural gas supplies domestically, as well as the efficiencies and the expertise, the challenge is that international investments require certainty and lower risk. Unfortunately, in Canada, there are risks associated with approvals, noted the CEO — specifically, uncertainty in terms of the rules to have projects approved.
“And so, industry can adapt again to whatever the structure and the rules are, within reason, but the clarity and certainty in that is absolutely critical for bringing foreign investment back in. Otherwise, no matter how attractive the economics are, if there’s a risk that, as we’ve done, we’re going to invest significant amounts of money in a project and then not have it proceed, then it’s untenable. There are other places for them to put their money.”
In light of the ongoing Russian-Ukrainian conflict, Fitzgerald told the summit, not only are global environmental and social measures advancing, but so too is the re-emergence of energy security as a concern, including as it relates to national security. In Europe, for example, there are countries highly dependent on Russian natural gas, he said, and the world would have been better off now if more of the once-proposed Canadian LNG projects had progressed.
PETRONAS completely agrees with policies of the Canadian government in terms of “creating a world leadership place” with regards to society transitioning to a low-carbon future, according to Fitzgerald.
“My argument is: Create that low-carbon energy and create that space through the partnerships we’re talking about — the partnerships with government, the partnerships with the innovative mindset that exists, and the partnership with the technical staff that we have, but then export that. Export that through LNG.”
What is happening around the world is an imbalance where countries are trying to transition away from emissions-intensive fuels to lower-emissions or more renewable fuels, he said. However, societal and social consequences arising from such an energy transition are “untenable and unfair.” Fortunately, he added, Canadian LNG can compete with the likes of renewable fuels, including through emissions reductions and access to cheap energy worldwide.
“I don’t think that, as an industry, we can continue to be averse to sitting across from an NGO and having a conversation, because I actually think we have more commonality than we realize,” Fitzgerald added. “We’re not fighting against a common outcome or a common goal. How we get there is very much in discussion.”
Last year, PETRONAS, ITOCHU Corporation and a local midstream firm, entered into a memorandum of understanding (MOU) to explore the feasibility of producing blue ammonia in Alberta’s Industrial Heartland, with PETRONAS and ITOCHU planning to jointly co-ordinate marketing of the blue ammonia, potentially for thermal power generation in Japan. Fitzgerald said he is quite optimistic about the potential of this project.
“Ammonia is a transportation vehicle for hydrogen, and so [the project] allows us to supply natural gas, generate [blue] ammonia through [CCUS]. It’s a net-zero facility, we move the ammonia to the coast, it’s taken overseas, and then it becomes a fuel source as hydrogen.”
He added: “We have to be bold. We have to get back to what our industry was built on, which is being bold, being visionary and stepping into that space with a global view. Many companies are moving into that direction.”