CANADA Drops the Hammer, Axes US Gas, Ships to Japan, South Korea and China: What’s Next?

CANADA Drops the Hammer, Axes US Gas, Ships to Japan, South Korea and China: What’s Next?

in recent days Canadian headlines have been dominated by Ottawa’s lastminute decision to scrap its planned 3% digital services tax on major American technology companies a move taken to revive stalled trade discussions with President Donald Trump after he publicly denounced the levy as a direct and blatant attack on US firms that tax set to be applied retroactively to 2022 revenues of companies including Amazon Google Meta and Apple was abruptly withdrawn just hours before it would have taken effect prompting US officials to agree to resume negotiations and avert the threat of tariffs on Canadian exports the political drama surrounding this digital tax has captured public attention framing Canada’s economic policy as being heavily influenced by its southern neighbor yet almost unnoticed amid the uproar over tech taxes Canada reached a long- aaited energy milestone when its first liqufied natural gas export set sale for Asia instead of flowing by pipeline to the United States liqufied natural gas or LNG is simply natural gas mostly methane that has been cooled to around 162° C turning it into a liquid in this form the gas occupies roughly 1/600th of the space it would take up as a gas making it far more efficient to store and transport over long distances once it reaches its destination terminal it is warmed back into its gaseous state and piped into local energy networks for heating electricity generation or industrial use lg has grown in importance because it allows countries without nearby pipelines to tap into global gas supplies before LNG natural gas trade was largely limited to regions connected by pipeline which meant that many nations could not access cleaner burning natural gas if they weren’t physically linked to exporting neighbors with LG gas can be shipped by specialized tankers across oceans opening up new markets and increasing energy security buyers can diversify their sources reducing reliance on any single exporter or choke point now let’s delve into the heart of the news shell’s LNG Canada project has achieved its first major milestone with the loading of its inaugural export cargo marking Canada’s entry into large-scale liqufied natural gas exports the Gazlog Glasgow departed from Kitamat on June 30th with the first shipment destined for global markets underpinning Shell’s 40% stake in what is the country’s first LNG export facility this shipment arrives as Asian demand for cleaner burning fuels continues to grow and as buyers increasingly seek supply routes that bypass geopolitical flash points in the Middle East by offering direct Pacific access the Kittyat terminal shortens shipping distances to East Asia compared with US Gulf Coast facilities avoiding the Panama Canal and reducing transit times by several days but why does this development matter in 2024 Canada delivered an average of 8.8 billion cubic feet of natural gas per day to the United States roughly 3.2 trillion cubic feet over the year netting about 8 billion in export revenues until now these flows relied almost entirely on crossber pipelines leaving Canada vulnerable to shifts in US policy and market conditions the launch of the LNG Canada facility changes that dynamic its 14 million tons perom of liquefaction capacity equates to about 1.9 billion cubic feet of gas per day when regified and at prevailing Asian spot prices it could generate another 8 billion in annual revenue once both trains are operating at full tilt by diverting nearly 20% of its daily output to Pacificbound LG carriers Canada can tap into the booming Asia-Pacific market home to buyers keen for cleaner energy and more secure supply routes while reducing its reliance on US pipelines this shift not only provides a hedge against fluctuations south of the 49th parallel but also forges a lucrative export pathway to Japan South Korea and beyond bolstering Ottawa’s negotiating leverage and insulating the country from regional price swings the LNG Canada plant represents a $40 billion Canadian dollar investment approved in October 2018 jointly held by Shell Petroleum National BHD Petronis Petrochina Company Mitsubishi Corp and Korea Gas Corp after 5 years of construction the facility produced its first LNG on June 22nd beginning operations with the first processing unit or train which has a nominal capacity of 6.5 million tons perom but initially ran at half capacity due to commissioning adjustments the cargo loading follows the completion of cooling and commissioning activities with the gas log Glasgow arriving on June 29th as the plant scales up a second train is scheduled to come online later this year bringing the total name plate capacity to 14 million tons perom by 2026 at full output LNG Canada is projected to make Canada the world’s eighth largest LNG exporter just behind Nigeria and will diversify the country’s gas export profile which is hitherto served primarily US markets at volumes of 8.6 billion cub feet per day in 2024 the terminal’s strategic location on the Pacific coast not only reduces shipping costs but also strengthens energy security for Asia-Pacific buyers by offering an alternative to routes transiting volatile regions local engagement has been a hallmark of the project’s development with LNG Canada working closely with First Nations and regional communities the Heisla Nation whose traditional territory encompasses the site partnered in key contracts such as the $500 million low emission tugboat services agreement ensuring significant local economic benefits and fostering long-term relationships at peak construction up to 9,000 workers were employed on site and more than 5.8 8 billion Canadian dollar in contracts went to British Columbia businesses and First Nations partners illustrating the project’s impact on the provincial economy investors and analysts view LG Canada as a cornerstone of Shell’s broader strategy to capture growing global LNG demand which the company forecasts will rise by 60% by 2040 driven largely by Asia’s energy needs shell’s integrated gas division which manages production trading and shipping operations already controls about 10% of the global LG fleet and handles some 66 million tons of LG sales annually with expected compound annual growth of 4 5% through 2030 the company plans to add 12 million tons perom of new capacity before the end of the decade through both project expansions and additional partnerships around the world discussions are underway among the LNG Canada partners regarding a possible second expansion phase which could add two more trains to raise total capacity to 26 million tons peranom a final investment decision on this expansion is anticipated next year reflecting confidence in long-term demand and in Canada’s role as a supplier of competitively priced lower emission natural gas with its combination of strategic geography robust infrastructure and strong stakeholder partnerships LNG Canada stands poised to reshape global LNG trade flows and reinforce Canada’s position in the international energy market thank you for watching as an independent channel we don’t have corporate backing we rely on your support to keep going if you found this video valuable please give it a thumbs up and leave a comment below it really helps more people find our work thank you so much for being part of our community check out the next video on your screen we picked it just for you