Right now Spectra Energy’s biggest challenge is accessing the world’s fastest growing market in Asia.
Doug Bloom, Spectra’s president of Canadian LNG and the first keynote speaker at the Natural Resources Forum in Prince George on Wednesday, said that is the importance of the company’s newest project.
With 55 years under its belt, Spectra is banking on its experience and reputation to help it take its place on the global scene.
“LNG put us in a global game. To date we’ve been in the North American games,” Bloom said.
With one and a half billion invested in the province over the last four years, Bloom said the company has established a framework for future operations.
He added there is a dramatic shift underway. Advances in gas production technology has been applied not only domestically, but in the States on a larger scale.
Since the States is Canada’s only importer of natural gas, if things remain the same the choices are stark, either accept declining exports, knowing that in 10 to 15 years the US may need no imported natural gas at all, or look into accessing the global market.
The world LNG demand is 10 times B.C.’s current total natural gas production. Sixty per cent of the demand comes from Asia. Four countries are responsible for over half of that demand, Japan, South Korea, China and India.
The market is growing rapidly.
Japan is in mid shutdown of its nuclear reactors, and the discussion is whether they should ever produce even part of their energy.
“Others want to expand their use of clean burning natural gas,” Bloom said.
Australia is interested in meeting that demand, sanctioning over six projects. Other interested countries include Indonesia and Papua New Guinea.
And the U.S., which last decade built a slew of LNG import terminals, is now turning them around as potential export terminals. Our only export customer may soon become our biggest competitor!
Africa, South East Asia and Russia remain interested.
Knowing your strengths and weaknesses are important, Bloom said.
“B.C. is in a massive supply position,” he said.
It has over 100 years of natural gas at current usage rates.
It’s close to Asia, has a stable democratic government offering a safe place for investment and has well developed premier facilities.
Some problems include the processes companies go through to get approvals which he said are duplicative, cumbersome and untimely. Though provincial and federal changes have helped, Bloom said there are still questions on whether or not anything can be built in B.C. in a timely manner.
The country’s relations with First Nations is also misunderstood, slowing investment, Bloom said. Though there are issues, like the Idle No More rally’s, many First Nation groups have partnered well with various businesses over the years, and many others have stand alone companies.
In the last two years alone, Spectra provided $120 million in contractor work to local and Aboriginal partners.
Though Canada is rich in resources, it has a modest population, causing regional economies to overheat, for example the tar sands, meaning skilled labour and management could be a limiting factor.
“We are going to need to diversify our market. Even if they foresee it wrong, and it wouldn’t be the first time, growth in North America will be modest. The reality is rapid long term growth is in Asia. We need to be there.”
Bloom said it is important to continue working to establish relationships with Asia, like the government trade missions.
“We need to make this a collective priority,” Bloom said.
To succeed, industry also needs the regulatory process to be rigourous, but on a global timeline.
He added they need capital from North America and abroad.
“Capital is mobile and goes where it gets the best returns,” Bloom said.
Labour wise, the natural gas sector is expected to employ 40,000 people by 2035, a number that multiplies when you think of indirect jobs, Bloom said.
He added domestic labour needs to be supported by immigration.
“We need a workforce in the north,” he said.
Those are some of the things, he said, that will be needed for them to compete on a global scale.
Bloom remains optimistic they will proceed, will win, but it will take effort.
“Prosperity is not a given. It must be earned just like those gold medals.”