Canadian natural gas firms eager for LNG boom to swamp market with excess supply

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The slump has hurt producers who boosted drilling activity this year in anticipation of new demand from LNG Canada and prompted some firms to curtail production

The booth of the Kitimat-based LNG Canada energy project during the LNG 2023 energy trade show, in Vancouver, on July 12, 2023.A huge liquefied natural gas export terminal led by Shell, called LNG Canada, may struggle to dramatically raise Canadian natural gas prices when it starts operating next year because a flood of pent-up supply is waiting to hit the market, analysts said.

Advantage Energy became the latest producer to announce temporary curtailments on Tuesday. The Calgary-based company began shutting in up to 130 million cubic feet a day of dry gas last month. The 14 million ton per annum LNG Canada facility, a joint venture between five partners including Japan’s Mitsubishi Corp and Malaysia’s state energy firm Petronas, will be Canada’s first major liquefied natural gas export terminal and require around 2.1 billion cubic feet a day of gas.

He said there was a growing consensus among producers that LNG Canada likely will not fully ramp up until the second half of 2025. LNG Canada should reduce volatility in the AECO market, which is prone to big price swings because of limited storage capacity, said BMO Capital Markets analyst Jeremy McCrea.

 

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Canadian natural gas firms eager for LNG boom swamp market with excess supplyA huge liquefied natural gas export terminal led by Shell, called LNG Canada, may struggle to dramatically raise Canadian natural gas prices when it starts...
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