Wilkinson On LNG: Open To Exploring How To Navigate Regulatory Concerns

Minister of Natural Resources Jonathan Wilkinson

The window to help Europe diversify its energy sources is about five years, according to Minister of Natural Resources Jonathan Wilkinson, who said there’s interest in Canadian LNG and his government is open to helping projects of this kind progress.

Wilkinson joined Andrew Parsons, minister of industry, energy and technology for Newfoundland and Labrador for a press conference following the Energy and Mines Ministers' Conference (EMMC) 2022 on July 8.

Both ministers were asked about the proposed LNG Newfoundland and Labrador (LNG NL) project and what steps might be taken to expedite its development from a regulatory perspective.

“This proposed project is one of three in Atlantic Canada that is on the radar screen at this point in time,” Wilkinson replied.

“… In the aftermath of the invasion of Ukraine, Germany in particular, but other countries in Europe are looking to displace Russian gas and oil.”

Wilkinson said he believes Europe thinks it can displace Russian oil dependance within a relatively short timeframe.

“Gas will take longer,” he added. “Particularly, for countries like Germany that were so dependent on Russian gas. But their window, in terms of displacement is about five years. They intend to be in a position where they essentially, fully replace Russian gas with other sources within about five years.”

In order to meet that window, project proponents would need to move quickly, according to the federal minister, then adding he’s not saying demand will cease following that five-year timeframe.

“We are certainly open to looking at how we can assist with some of the regulatory issues and we have actually been doing that with one of the projects in New Brunswick, looking at some of the regulatory challenges — which are not just federal, they are provincial, and in some cases, American, state level,” said Wilkinson.

“Certainly, we’ve also said that we would be quite prepared to engage with the German government as part of the discussions around commercial arrangements,” he added. “We are not funding, we are not putting money into the projects, but we are certainly working to try to see if there are bumps in the regulatory process and what we can do to help a company get to the point it can make a business decision as to whether to proceed or not.”

Climate a factor

Wilkinson underscored the importance of LNG projects being “climate-compatible.”

This means, among other considerations, minimizing domestic emissions, and being hydrogen-capable, converting natural gas into hydrogen either domestically or in the counterparty country.

“If you are thinking about supplying it to Germany, for example, their net-zero date is 2045,” said Wilkinson. “In order to payback the capital on a big investment like this, you probably need at least a 20-year time horizon, which means you’d have to think about that transition to hydrogen at some point.

“All of those things are relevant, but yes, of course, we are interested and open to working with companies to navigate some of the regulatory issues.”

An appetite for Canadian LNG

The DOB asked Wilkinson about his read on how European countries view LNG from Canada’s East Coast as a potential source for their energy diversification.

“European countries certainly are interested in securing supplies of LNG from Canada,” he replied. “In part, because we are stable, we are democratic, we share common values and so I think there is a significant appetite. But as I said, there’s a window there.

“Their focus is getting off Russian oil and gas and, ultimately, they will do whatever they need to do in order to actually ensure that they are able to achieve that objective.” Wilkinson added. “We are looking at the projects and working with the projects that could potentially meet that window.

“There’s an opportunity there but I wouldn’t want to overstate it. The amount of LNG that Canada would be able to supply, given existing infrastructure and pipelines, is not nearly enough to satisfy Europe’s needs. They will need other sources and they are securing supply from other sources, including from our friends to the south.”

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