It's not often that the supplier of a product will find itself competing with its customers.
But Spectra Energy vice-president of Canadian LNG Rob Whitwham told members of the Prince Rupert and District Chamber of Commerce that is exactly what is happening in the LNG industry.
"The problem right now is that the United States is our only export market for Canada. It is the only country we send LNG to. But because of the same advancing technology in the industry in Canada, they are increasingly able to access LNG ... so our only export market isn't going to need us any more," he explained, noting the U.S. is ahead of Canada in some respects.
"The U.S has some import terminals on the gulf coast that are being repurposed for export ... while all of the projects here in are what we call greenfield projects, meaning the infrastructure needs to be built from the ground up, the projects in the U.S. are brownfield, meaning the infrastructure is in place. The advantage we have is we are closer to the market, meaning less sailing time."
At the moment the industry in B.C. is experiencing significant growth, with Whitwham noting production in B.C. could surpass Alberta later in the decade. However, for that to happen, he said there needs to be more movement on the export terminals being proposed.
"The critical issue is the lack of markets. Access to markets will determine how much is produced," he said, adding he is doubtful all of the projects proposed will move forward.
"There are, I believe, seven projects proposed and others to be proposed. At the end of the day there won't be seven projects developed. There will be a few, but there won't be seven."
Whitwham also mentioned the different pricing structures in place that some point to as complicating commercial agreements between Canadian producers and Asian customers.
"In B.C. gas will sell between $3 and $4, but in Asia it is quite different because they have no indigenous supply ... that same gas in Asia would sell for $16," he explained.