Don Braid gets it wrong on LNG Canada

LNG Canada
LNG Canada facility

Positive FID on LNG Canada will lead to more West Coast liquefaction facilities, good news for Alberta gas producers

Don Braid’s Sunday column in the Calgary Herald on LNG Canada is problematic for anyone who has an interest in – much less an understanding of – the energy sector’s past, present, and future. In it, Braid devotes his column inches to raining on the only parade the energy sector has seen in recent years.

Never mind that Alberta’s gas producers have been hit even harder than the rest of the energy sector, or that Alberta gas has actually been priced with a minus sign in front of it at times (admittedly, brief ones) in recent months.

Never mind that LNG Canada and its 3.5 bcf/d of outtake capacity will eventually put an end to this sorry state of affairs.

Never mind that, as gas industry leaders like CNRL’s Steve Laut and Tourmaline Oil’s Mike Rose have said recently, getting LNG Canada built will almost certainly mean other major projects will follow in its wake.

“If you get one plant through,” CNRL’s Laut said last week at the Global Business Forum in Banff, “there will be a second and third plant that will follow much easier, and that makes a difference.”

And never mind that the provincial treasury has suffered more from the decline in natural gas royalties than ones from oil sands and conventional oil wells (remember that Ralph Klein’s biggest budget surpluses were driven largely by the revenues from natural gas, not oil).

No, for Braid what really seems to matter is that the Prime Minister passed a piece of legislation a while back that bans oils like bitumen, condensate, and other “persistent” products from being shipped by tanker off the northwest coast – something that he suggests amounts to an “attack on the oil sands” by the federal government.

He doesn’t say it himself, mind you, instead choosing to quote Senator Doug Black on it, but the point is clear.

Braid isn’t wrong about the folly of the so-called tanker ban. It’s logically inconsistent – what makes the waters around Prince Rupert any more special than the ones around the Sunshine Coast? – and appears to have been the product of an attempt to play both sides of this issue. By banning tankers on the north coast and getting Trans Mountain built on the south, he could satisfy both the environmental community and the energy sector.

In the end, as we’ve seen over the last year or so, he’s satisfied neither.

But now isn’t the time for playing the Eeyore.

Everyone in Alberta should be celebrating a positive final investment decision from LNG Canada, and not just for the near-term boost it’ll give energy stocks. It also serves as a blueprint for how to get major energy infrastructure built in Canada going forward, and it’s one the industry should be studying closely.

It may hold the key to getting an oil pipeline built to Prince Rupert one day, and it will almost certainly be the template for other major LNG projects in the region.

It will improve the economics of Canada’s two most important plays, the Montney and the Duvernay.

It will lead to more work for everyone in the service side, from companies in the business of drilling and completing wells to those who build and operate the midstream infrastructure needed to separate, sort, and ship the gas to its final destination.

“This just poses a huge opportunity for the production companies … for the drilling contractors,” Hal Kvisle told the Herald’s Chris Varcoe in a piece that also ran this weekend. “This is a great thing — it’s a whole new game.”

Editor’s note: a previous version of this column included a reference to Herald opinion writer Naomi Lakritz’s recent article defending US Supreme Court nominee Brett Kavanaugh. The reference was unnecessary and has been removed.

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