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Natural gas wellheads at Shell Canadas Groundbirch site in northeastern British Columbia.Ian Jackson

With western sanctions threatening to tighten the taps on Russian energy exports to Europe, Canada could become an alternative supply source – but not any time soon.

The Conservative government has been pushing for Canada to expand its energy-export reach by building new oil pipelines to coastal waters, as well as multibillion-dollar plants that would enable natural gas to be transported by tanker overseas in an ultra-chilled liquid form.

The crisis in Ukraine is adding urgency to those efforts, Foreign Affairs Minister John Baird said Thursday in Ottawa.

"I think, if anything, it underlines the importance of moving ahead responsibly on the export of not just our oil but natural gas," he said.

"And it's an important reminder that opportunities are not all exclusively south of the border or to the Asia-Pacific region but also to our traditional allies in Europe."

German Chancellor Angela Merkel was asked about the possibility at a news conference in Berlin on Thursday, alongside Prime Minister Stephen Harper.

Her enthusiasm for Canada as a potential energy provider was tempered by its current lack of export infrastructure.

Germany gets 35 per cent of its gas from Russia, she said, with the rest coming from Norway, the U.K. and elsewhere.

Baird noted that some countries, like the Baltic states, are fully reliant on Russian energy.

The continent as a whole now gets about a third of its natural gas from Russia. By the end of the decade, about half of its gas demand will need to be met by outside sources – whether that's Russia or LNG from abroad, said Barry Munro, head of Ernst & Young's Canadian energy practice.

"There are probably a bunch of North American LNG guys who see these developments as creating a market opportunity for them to move gas to Europe," he said.

But it's not going to happen quickly. Exports of liquefied natural gas from Canadian shores are several years off.

"Good or bad, one of the realities is that these are big, complex, very expensive projects which take a lot of time," said Munro.

And, in any event, the vast majority of Canadian projects in the works would be pointed in the opposite direction – on the West Coast and aimed at growing Asian markets ravenous for energy.

But Ed Kallio, director of gas consulting at Ziff Energy in Calgary, said he expects Canada's natural gas industry to benefit from a domino effect of sorts.

There are a host of liquefied natural gas export terminals planned for the U.S. Gulf Coast – a handful of which have been approved by the U.S. government – that could send cargoes to Europe instead of Asia via the Panama Canal. Canadian West Coast LNG projects could then backfill the Asian demand.

"Of course the Europeans would have to pay a higher price for that gas," said Kallio, noting gas currently fetches $18 (U.S.) per 1,000 cubic feet in Asia versus $10 in Europe.

"But what price do you put on your energy security? It's one thing to pay a bit more for your gas, but it's quite another for Granny to freeze in the dark," he said.

"I think even if there aren't energy sanctions on the Russians, that Europe is going to begin to wean itself off that Russian gas and look more and more to LNG in the Atlantic Basin to serve their needs."

In Canada, the East Coast has been quieter on the LNG front than the West – but there is some action.

For instance, the Goldboro LNG project in Nova Scotia, planned by Pieridae Energy (Canada) Ltd., last year signed a major German utility as a long-term customer. If all goes according to plan, it would start up toward the end of the decade.

Geoff Hill, oil and gas sector leader at Deloitte in Calgary, said it will take more than current geopolitical events to convince the Europeans to sign 30– or 40-year contracts for Canadian LNG. The same goes LNG developers contemplating multibillion-dollar investments in East Coast infrastructure.

"I don't think any rash, short-term decisions are going to be made," he said.

"Do I expect to see more interest in the East Coast? I would say it's possible. But I wouldn't see any short-term major announcements. These things take a lot of time to materialize."

Munro said one potential outcome of the crisis could be a larger role for coal in the European energy mix in a bid to reduce reliance on natural gas to generate electricity – essentially displacing one form of energy with another that emits more carbon.

On the oil front, Munro sees TransCanada's Corp.'s proposed $12-billion Alberta-to-New Brunswick Energy East pipeline as a boost to Europe's energy security.

That doesn't necessarily mean Canadian oil will arrive at European ports in any significant amount. Refineries in Eastern Canada currently import a lot of crude from overseas. But with Energy East enabling those refineries to tap into domestic supplies, those foreign cargoes would have to head elsewhere.

"So maybe that means that there'd be crude available into Europe that would have otherwise been destined into Canada," Munro said.

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