Enbridge Inc. ENB-T chief executive Al Monaco believes Canada missed a huge economic opportunity to supply the world with natural gas, when demand for the fuel started to climb.
Now, as Moscow’s war against Ukraine continues and Europe struggles to plug the supply gaps left by sanctions on Russian natural gas, Mr. Monaco says he is optimistic that Canada can help shore up the market.
Calgary-based Enbridge recently made a significant bet on the Woodfibre LNG terminal in British Columbia, investing US$1.5-billion for a 30-per-cent stake. The company’s hope is to bolster the long-delayed project, which is still years away from being operational. When complete, the terminal will export liquefied natural gas to Asia.
In an interview from Houston on Tuesday, Mr. Monaco said the Western Canadian basin has many advantages over the U.S. Gulf Coast as a fuel export location, including cheaper natural gas supplies; shipping times to Asia that are shorter by two to four weeks; and abundant hydroelectric power, which will lower Woodfibre’s overall emissions.
“You’ve got low-cost supply and you’ve got a growing LNG market at higher prices. So you’ve got to capture that,” Mr. Monaco said.
He called the terminal a “gem” of an investment for Enbridge, despite lengthy permitting and work delays that have stymied both it and another West Coast export terminal project, Shell PLC-led LNG Canada.
Enbridge had been searching for an opportunity like Woodfibre for some time. The terminal fits with the company’s strategy of investing in North American export infrastructure.
“We have a huge position in both oil and natural gas exports on the Gulf Coast. So now we have essentially the same view of Western Canada in terms of natural gas, and its ability to reach foreign markets,” Mr. Monaco said.
The Squamish-area LNG facility, to be built on the site of a pulp mill that closed in 2006, will have an export capacity of 2.1 million tonnes a year. Enbridge said when it announced the US$1.5-billion deal last month that Woodfibre had lined up buyers for the fuel in Asia, including through a 15-year commitment with London-based BP Gas Marketing Ltd., which would account for 70 per cent of the export terminal’s capacity. Enbridge is also looking to bring in Indigenous groups as equity partners in the project.
Mr. Monaco said that while there are regulatory hurdles and challenges involved in building any energy project today, Woodfibre was nonetheless an attractive prospect for Enbridge for a few reasons: it has been in development for a decade, it has local community support and Enbridge can use its own infrastructure to feed into the terminal.
Many environmental groups have been critical of the way companies and energy jurisdictions boost LNG as a climate-friendly transition energy source for the world. They argue that the fossil fuel still creates greenhouse emissions and hastens climate change.
But Mr. Monaco said he believes conventional energy projects like Woodfibre are going to play a critical role in the world’s energy future. While Enbridge is already a significant player in renewables, he said, a variety of energy sources are needed to manage global geopolitical risks.
“As a society, I don’t think we can put all our eggs in the renewable basket,” he said, noting that emissions from conventional energy can be reduced using carbon capture or other methods.
Even prior to Russia’s invasion of Ukraine, the energy market was coping with a supply-demand imbalance. A surge of energy use as the world started lifting pandemic restrictions was part of the problem, as was a lack of investment that had left supply chains weaker than they needed to be.
Now, with Europe staring down the barrel of an energy crisis, it has looked across the Atlantic to North America for fossil fuels. Feeding more Canadian oil and gas stocks into the U.S. will help open up those export markets, allow greater flows of energy around the globe and stabilize supply, Mr. Monaco said.
“We are extremely well positioned here ... We’ve got a massive resource base, we’ve got the skills and technology to develop those resources better than anybody else.”
And yet, he said, Canada needs to “get out of our own way when it comes to energy and building infrastructure” in the fossil-fuel and renewable sectors, both of which are known for lengthy reviews and permitting delays.
“We need a sense of urgency and clarity around regulatory and permitting certainty to make sure we attract capital.”
He said he is cognizant that the energy sector must lower its environmental footprint and cut emissions to net zero. At Enbridge, he added, that will mean investing in and modernizing conventional energy infrastructure, and ramping up low-carbon energy sources, such as hydrogen and renewables.
“Our ability to export low-emission natural gas can have a massive impact on global emissions,” he said.
“That’s where we’ve got to recognize the uniqueness of what we have in this country.”
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