How the U.S. became a global leader in LNG – and why Canada has fallen behind

As Highway 27 winds around Calcasieu Lake in southwest Louisiana, massive storage tanks tower over the wetlands in what is shaping up to be a new global epicentre for exports of liquefied natural gas.

Near the town of Hackberry, Cameron LNG is eyeing expansion of its already-huge terminal, which opened in 2019.

Along the highway and down other roads, there are three new proposed export terminals fronting the lake, which is just south of the small city of Lake Charles. One, Driftwood LNG, has more than 200 people working on early-stage site preparation.

Driving south toward the Gulf of Mexico – past the alligators, waterfowl and migratory birds at the Cameron Prairie National Wildlife Refuge – there are four proposed LNG sites near the mouth of the Calcasieu River.

The would-be terminal sites dotted among the marshes, swamps and industrial properties along the Gulf Coast of Louisiana and Texas have spurred excitement in the region’s booming energy sector.

At least a dozen LNG proposals are now in the works statewide in Louisiana. Eight projects are near Lake Charles in the southwest, all vying to join the three export terminals already operating in the state.

Open this photo in gallery:

Calcasieu Pass LNG opened south of Lake Charles in February, just days before Russia invaded Ukraine. It’s the seventh U.S. export facility to open since 2016.

U.S. LNG production and exports were already rising when the invasion upended global energy markets. And activity has ramped up even faster as Europe scrambles to reduce its dependence on natural gas from Russia.

“Right now, there is very much a race to develop export projects,” said Ruth Liao, a U.S.-based analyst with Independent Commodity Intelligence Services.

The boom along the Gulf Coast stands in stark contrast to an LNG industry in Canada that finds itself stuck in a holding pattern.

Open this photo in gallery:

The Shell PLC-led LNG Canada project in Kitimat, B.C., is the only export terminal under construction in the country, even though Canada is the world’s sixth-largest producer of natural gas.

The differences are particularly striking between Louisiana, where politicians enthusiastically back LNG, and British Columbia, where new NDP Premier David Eby is under political pressure to do more to fight climate change.

In 2013, there were more than 20 LNG proposals in B.C., but at the start of 2016, there weren’t any terminals exporting LNG from either Canada or the U.S. By 2019, most of the B.C. proponents had dropped out, unable to make the economics work.

LNG Canada’s $18-billion terminal is slated to begin shipping at a rate of 14 million tonnes of LNG a year to Asia in 2025, when it would become Canada’s first export terminal.

But in the first half of this year, the U.S. became the world’s top LNG exporter, edging ahead of Qatar and Australia. The U.S.’s current LNG export capacity is about 90 million tonnes a year.

That’s no surprise to Paul Sullivan, Houston-based senior vice-president of global LNG at engineering firm Worley Ltd. He returned to the U.S. from his job as a vice-president at Vancouver-based Steelhead LNG in late 2018, shortly before Steelhead halted a proposed facility on Vancouver Island.

“In Louisiana and Texas, you’re pretty well in the heart of LNG country,” Mr. Sullivan said.

Cheniere Energy Inc.’s Sabine Pass LNG, located 90 kilometres southwest of Lake Charles, is the U.S.’s largest LNG export terminal, with a capacity of more than 30 million tonnes a year.

Open this photo in gallery:

Venture Global LNG Inc.’s Plaquemines LNG, under construction south of New Orleans, is slated to come on stream in 2024. Within two years, Louisiana would boast an export capacity greater than the combination of Malaysia and Algeria, which were recently the world’s fourth and fifth largest LNG exporters.

When push comes to shove – and Gulf Coast LNG exporters have plenty of local opponents – the sector has prevailed. In just six years, the U.S. has become a global powerhouse in exporting the fuel, bolstered by the shale gas revolution.

The global realities of Europe’s energy crisis have sparked a U.S. LNG renaissance. And federal, state and local politicians in Louisiana express unabashed support for LNG.

Canada lags for several reasons, and one of the biggest is politics. Canadian leaders vow to keep climate goals top of mind. They already cite the need to eventually transition from LNG to hydrogen, and request that any new LNG projects rely on hydroelectricity in the liquefaction process instead of using traditional turbines fired by natural gas.

The heart of LNG country:

Louisiana and Texas

Seven U.S. terminals for exporting liquefied natural gas have opened since 2016, including five on the Gulf Coast, and three new facilities are now under construction. Many other projects are jockeying for position to get their terminals built, with most of them clustered on the Gulf Coast of Louisiana and Texas.

MISSISSIPPI

ALA.

Existing terminals

Future prospects*

LOUISIANA

Pascagoula

Cameron LNG

TEXAS

New Orleans

Houston

Calcasieu

Pass LNG

San Antonio

Sabine Pass LNG

Port Fourchon

Corpus Christi LNG

Freeport LNG

Gulf of Mexico

UNITED STATES

Cove

Point

LNG

Detail

0

100

Elba

Island

LNG

 

 

 

 

Brownsville

MEXICO

KM

* Proposed terminals/expansions or under construction

THE GLOBE AND MAIL, SOURCE: TILEZEN; OPENSTREETMAP

CONTRIBUTORS; associated press

The heart of LNG country:

Louisiana and Texas

Seven U.S. terminals for exporting liquefied natural gas have opened since 2016, including five on the Gulf Coast, and three new facilities are now under construction. Many other projects are jockeying for position to get their terminals built, with most of them clustered on the Gulf Coast of Louisiana and Texas.

MISSISSIPPI

ALA.

Existing terminals

Future prospects*

LOUISIANA

Pascagoula

Cameron LNG

TEXAS

New Orleans

Houston

Calcasieu

Pass LNG

San Antonio

Sabine Pass LNG

Port Fourchon

Corpus Christi LNG

Freeport LNG

Gulf of Mexico

UNITED STATES

Cove

Point

LNG

Detail

0

100

Elba

Island

LNG

 

 

 

 

Brownsville

MEXICO

KM

* Proposed terminals/expansions or under construction

THE GLOBE AND MAIL, SOURCE: TILEZEN; OPENSTREETMAP

CONTRIBUTORS; associated press

The heart of LNG country: Louisiana and Texas

Seven U.S. terminals for exporting liquefied natural gas have opened since 2016, including five on the Gulf Coast, and three new facilities are now under construction. Many other projects are jockeying for position to get their terminals built, with most of them clustered on the Gulf Coast of Louisiana and Texas.

MISSISSIPPI

ALA.

Existing terminals

Future prospects*

LOUISIANA

Pascagoula

Cameron LNG

TEXAS

New Orleans

Houston

Calcasieu Pass LNG

San Antonio

Sabine Pass LNG

Port Fourchon

Corpus Christi LNG

Freeport LNG

Gulf of Mexico

UNITED STATES

Cove

Point LNG

Detail

Elba

Island LNG

 

0

100

Brownsville

KM

MEXICO

* Proposed terminals/expansions or under construction

THE GLOBE AND MAIL, SOURCE: TILEZEN; OPENSTREETMAP CONTRIBUTORS; associated press

Despite anti-LNG protests in the U.S., proponents of more than 25 new projects and expansions there are jockeying for position to get their terminals built, with most of them clustered in Louisiana and Texas.

Given the fierce competition and limited pipeline capacity, industry experts expect two-thirds of the proposals will be suspended or outright cancelled. Yet that still leaves room for perhaps seven or eight new terminals, in addition to the three already under construction.

Of the total exports recently of LNG from the U.S., about 70 per cent went to Europe and the rest got shipped to Asia and other overseas markets.

Depending on how many new U.S. projects move ahead and how quickly, the country’s export capacity could surge to 150 million tonnes a year by 2029, or nearly 11 times higher than LNG Canada’s initial capacity. Woodfibre LNG and Cedar LNG, which plan to start exporting in 2027 from B.C., are both small-scale projects.

The U.S. LNG export renaissance began in February, 2016, when Sabine Pass LNG started shipping the fuel from its Louisiana site near the state’s boundary with Texas – the first project to begin exporting LNG from the lower 48 states.

But the roots of that revival date back to 2006. The U.S. was preparing for a wave of LNG imports, and companies built facilities to accept foreign supplies.

Clark Williams-Derry, a Seattle-based analyst with the Institute for Energy Economics and Financial Analysis, said the U.S. had a head start over Canada with planning and existing infrastructure because five of the current U.S. export terminals were originally configured as sites to handle imports. They provided the foundation for the post-2016 boom.

Now, Commonwealth LNG, to name just one Louisiana proposal, is seeking to build on the west side of the Calcasieu ship channel, just north of the Gulf of Mexico.

“You have access to shipping right on the Calcasieu River and the Gulf. It’s just almost ideal conditions for exporting from here,” Commonwealth spokesman Lyle Hanna said.

A four-minute ferry ride across the Calcasieu ship channel takes drivers to the east side, where there are two new sites envisaged for exports. One of the sites, Venture Global’s CP2 LNG proposal, is next door to its Calcasieu Pass terminal.

Mexico does not yet have any LNG export facilities, but the Sempra-led Energia Costa Azul project is under construction and scheduled to open in 2025.

A recent study of LNG prospects in the U.S. and Mexico, conducted by the institute, shows that 10 proposals have momentum in the U.S. and two in Mexico.

Open this photo in gallery:

The already-mature pipeline network and other energy infrastructure along the Gulf Coast have helped the U.S. Calgary-based Enbridge transport one-fifth of U.S. consumption of natural gas.

“The pipeline geography lends itself to being very attractive and competitive to being able to tie into those new liquefaction plants,” said Kurt Knight-Turcan, Enbridge’s Houston-based director of business development. “So, that ease of export is just that much simpler.”

Supplies of natural gas from the abundant Permian Basin in Texas and New Mexico, as well as from the Haynesville formation in Louisiana, are a relatively short distance to export terminals along the Gulf Coast.

An extensive network of U.S. pipelines also brings in natural gas from other areas such as the Marcellus shale deposits in Pennsylvania that are part of the Appalachian basin. Connector pipelines in the U.S. are less expensive and faster to build than constructing a major route across B.C. from scratch.

The 670-kilometre Coastal GasLink pipeline being built by TC Energy Corp. would transport natural gas from northeast B.C. to LNG Canada’s Kitimat terminal. More than 28 per cent of the contentious pipeline route cross the Wet’suwet’en Nation’s traditional territory.

Wet’suwet’en hereditary chiefs who oppose Coastal GasLink say they have jurisdiction over that territory. And the pipeline has provoked blockades and nationwide demonstrations.

U.S. LNG projects have opponents, too. The Louisiana Bucket Brigade, Healthy Gulf and Sierra Club say the focus should be on renewable energy, not LNG. They also warn that LNG projects and proposals are having a disproportionate impact on Black communities and Indigenous tribes in Louisiana.

Tia LeBrun, a member of the United Houma Nation in Louisiana, said LNG projects are harmful to the state’s coastlines from Sabine Pass to the Mississippi River delta region south of New Orleans. But she said many workers, including tribe members, have well-paid jobs in the energy sector.

“Louisiana believes so highly in oil and gas that it is going to take all of us coming together to demonstrate that we have better alternatives,” Ms. LeBrun said.

Louisiana is especially vulnerable to climate change, with hurricanes over the years wreaking havoc on flood-prone communities, where houses are built on stilts.

In Texas, demonstrators who have spoken out against LNG include the Indigenous Peoples of the Coastal Bend, comprising tribes such as the Karankawa Kadla.

Chispa Texas, a group representing Latino communities in the state, points to the need to look at the full life cycle of LNG, including greenhouse gas emissions stemming from methane leaks in the production of natural gas through fracking.

Open this photo in gallery:

Travis Dardar, an Indigenous commercial fisherman, is worried about the proliferation of LNG terminals and the impact on his earnings from catching shrimp and oysters in southwest Louisiana.

“In my opinion, it’s going to be game over for fishermen because we won’t be able to co-exist with LNG,” Mr. Dardar said, before he stepped onto a boat that would join a flotilla on the Calcasieu River to protest LNG.

John Allaire, a climate activist and former worker at Amoco Corp. and then at BP Amoco PLC, said talk about the energy crisis in Europe has unfairly overshadowed legitimate worries about the climate impact of fossil fuels.

He said the Louisiana’s roughneck culture – with the oil refineries and petrochemical facilities being major economic forces – makes the fight against LNG more difficult.

“There’s the gas flaring, the noise and pollution. It’s a sacrifice zone here,” said Mr. Allaire, who lives in a travel trailer near the proposed site for Commonwealth LNG, which is across the ship channel from Calcasieu Pass LNG.

Roishetta Ozane, organizing director for environmental group Healthy Gulf, is seeking to draw attention to climate concerns.

Open this photo in gallery:

In contrast to demonstrations in Canada, she said climate activists in Louisiana need to tread carefully in order to avoid unduly antagonizing workers in the fossil fuel industry that is intertwined with the state’s economy.

Even if environmental activists in Canada help thwart LNG projects in B.C., New Brunswick and Nova Scotia, LNG opponents on the Gulf Coast fear losing their climate war.

Ms. Ozane said that as a Black woman and single mother to six children, she feels a strong duty to assist in protecting the planet for youth in general, especially Black, Indigenous and People of Colour communities, which tend to be hit the hardest by LNG projects on the Gulf Coast.

“We’re trying to be peaceful – more Martin Luther King Jr. than Malcolm X,” she said in an interview during an anti-LNG rally at a park in Lake Charles.

But the rally was held at the same time as an energy conference in Lake Charles in early November. Politicians gave speeches, portraying natural gas as a transition fuel that helps reduce air pollution in countries that still rely on coal-fired generation of electricity.

Senator Bill Cassidy, a Republican from Louisiana, linked LNG to U.S. national security and energy independence for the European Union.

Open this photo in gallery:

“Russia has attempted to use their hegemony in terms of energy supply as an economic and a national security weapon,” he told the Americas LNG & Gas Summit & Exhibition.

Canadian pipeline giants on the defensive at home find the Gulf Coast much more welcoming. Calgary-based TC Energy, which oversees 13 pipelines in 40 states, transports about 27 per cent of natural gas demand in North America.

“Definitely on a state level, Louisiana and Texas are very friendly to energy,” said Tina Faraca, president of TC Energy’s U.S. natural gas pipelines business. “The very prolific resources are in those states.”

Besides the three export terminals in Louisiana, there are two in Texas, one in Maryland and one in Georgia.

Of course, the energy business itself also remains risky. A fiery explosion in June at Freeport LNG in Texas has resulted in a prolonged outage that will slow the growth rate of U.S. LNG exports in the second half of this year.

European natural gas prices have been volatile this year as well, hitting record highs before falling as fears eased about the severity of shortages of the fuel. European prices rallied again recently, after Freeport indicated that its outage will likely last several more weeks.

Open this photo in gallery:

Three more large-scale LNG terminals in the U.S. are expected to be on stream within three years.

Golden Pass LNG, a joint venture between Qatar and Exxon Mobil Corp., is eyeing an export start date at Port Arthur, Tex., in 2024. Plaquemines LNG in Louisiana is also aiming for completion in 2024, while Cheniere’s Corpus Christi LNG hopes to finish an expansion of its Texas facility by late 2025.

Mr. Sullivan of Worley Ltd. said the natural gas market in North America is integrated, so what happens in Louisiana affects Canada, and vice-versa.

Exports of natural gas into the U.S. from B.C. and Alberta could increase in the future, especially if plans by Saint John LNG in New Brunswick and Goldboro LNG in Nova Scotia continue to be stalled, and if LNG Canada decides not to expand.

Canada’s net exports of natural gas to the U.S. recently accounted for almost 30 per cent of Canadian annual marketable production, according to Natural Resources Canada.

Much of the gas from Canada ends up heating homes or supplying industries within the U.S., but some it of lands on the Gulf Coast, destined to be supercooled into LNG for export to Europe, Asia and elsewhere in the world.

Mr. Sullivan recalls the industry’s disappointment in Canada. Just after he left Steelhead and returned to the U.S., the company halted its proposed Kwispaa LNG venture at Sarita Bay on Vancouver Island in early 2019. Kwispaa ran into difficulties with developing plans to build a lengthy pipeline from northeast B.C. to the island.

In sharp contrast to Canada’s already scaled back LNG dreams, the industry on the Gulf Coast is trying to figure out how fast it can accelerate, even as political and corporate leaders at the COP27 climate conference in Egypt this week vowed to aim for net-zero emissions.

“The Gulf Coast is an area which has a hydrocarbon past. It’s really an ideal place for these LNG facilities because of the familiarity of dealing with specialized subcontractors,” Mr. Sullivan said.

Unfortunately for Canada’s struggling LNG sector, those realities are not about to change any time soon.