The door to B.C.’s liquefied natural gas export sector is about to open. Here’s what you need to know

As Teresa Waddington proudly proclaimed LNG Canada is on track to wrap up construction in Kitimat, B.C., this year, the room full of hundreds of attendees at the BC Natural Resources Forum erupted in cheers.

“We are 90 per cent complete, bringing Canada’s first LNG export facility to life,” she said in mid-January, at the annual gathering of industry bigwigs and hopefuls, First Nations leaders, provincial and federal politicians and civil servants who had travelled from around the province to Prince George for the event.

Waddington, a senior executive with the consortium of companies building the gas liquefaction and export plant, lauded the role of liquefied natural gas, a fossil fuel commonly known as LNG, in building B.C.’s economy, supporting First Nations and contributing to global climate initiatives. 

In November, Coastal GasLink announced it had finished building its 670-kilometre gas pipeline across the north of the province, the first to do so in 70 years. The pipeline connects underground shale formations in B.C.’s northeast to marine shipping routes on the Pacific coast.

The pair of projects — touted as the single largest private investment in Canadian history — could, as Waddington put it, “open a gateway” that would enable numerous other projects to move forward. 

For some, this signals an era of economic prosperity the north hasn’t seen for decades and a long-overdue shift towards including First Nations in resource benefits. For others, it spells climate and ecological disaster and locks the north into a familiar boom-and-bust cycle. 

As British Columbia’s LNG export sector rounds the final corner of its long-promised boom, the stakes couldn’t be higher. Here’s what you need to know.

What the heck is LNG, anyway?

Underground deposits in B.C.’s northeast are home to about 449 trillion cubic feet of gas, according to the Canada Energy Regulator. The area is known as the Montney Formation and lies underneath Treaty 8 First Nations’ territories in both B.C. and Alberta.

Natural gas, as it’s widely known, is mostly composed of methane. Over a 20-year period, methane is 80 times more powerful than carbon dioxide in terms of heating the planet. 

To get the gas out of the ground, companies drill either conventionally (straight down) or horizontally. If the gas is in porous rock formations, conventional drilling is used to tap into a reserve and pump up the fossil fuel. But most of B.C.’s remaining reserves are harder to get at, locked in ancient shale formations. 

Extracting gas from shale means companies typically drill down until they reach a desired depth, then bend horizontally through the rock formation. At that point, they inject millions of litres of fresh water mixed with a cocktail of chemicals to fracture seams in the rock, releasing the gas. This is called hydraulic fracturing or, more commonly, fracking.

Once extracted and processed to remove impurities and water content, the gas is compressed and put into pipelines — typically burning some of the methane to power the compression process. When the end goal is export, the pipelines then transport the compressed gas to liquefaction facilities. There, it is cooled to roughly -160 C, reducing it to a liquid with a volume that is around 1/600th of its gaseous state for transport. 

The cooling process is extremely energy intensive. To power the turbines that cool the gas, liquefaction facilities either burn some of the gas itself, use electricity from other energy sources such as hydroelectric dams or use some combination of both. 

After it’s cooled and in its liquid form, the fossil fuel is transferred into ships, about as long as five hockey rinks laid end to end. At the receiving end, the process is reversed: the LNG is regasified, put into pipelines and transported to power plants, where it’s finally burned to generate electricity and heat. 

What are the environmental impacts of LNG?

Each step in the process, from extraction to power generation, produces greenhouse gas emissions. 

Methane leaks along the way, called fugitive emissions, are among the most insidious contributors to climate change. The gas is colourless and odourless and infamously hard to track. But plugging those leaks represents one of humanity’s best short-term opportunities to buy some time to tackle the bigger issues of restructuring the ways we produce and consume energy.  

Reducing methane emissions is widely seen by policymakers, climate analysts and energy experts as a win-win for climate and industry. Less gas lost to the atmosphere means more gas to sell. But installing technologies that address fugitive emissions comes with an upfront cost. To address any corporate reluctance associated with those costs, provincial and federal agencies are working on implementing stronger regulations.

Countries around the world are accelerating actions to reduce global dependence on fossil fuels. As policies, regulations and laws are adapted to meet the challenges of a rapidly changing natural world, investors are shifting their spending accordingly. 

If you add up all greenhouse gases associated with LNG Canada and Cedar LNG, the two currently approved projects in northwest B.C., the province will see its emissions increase by more than 14 megatonnes of equivalent carbon dioxide annually, according to energy analyst David Hughes. That’s about a quarter of the province’s current total. 

Emissions aren’t the only environmental impact. 

At the extraction point, fracking has been linked to earthquakes, water contamination and health impacts associated with both water and air pollution. Fracking and other sector-related activities are also contributing to precipitous declines in endangered species like caribou. Companies maintain the activities are approved and regulated by the government and do not pose risks to animal or human health.

But the cumulative impacts of extensive industrial development have been found to severely impede First Nations’ ability to hunt, trap and fish — activities protected under federal law. The B.C. government, which heavily subsidizes the oil and gas sector, was recently found guilty of encouraging and permitting so much industrial development, including oil and gas activities, on Treaty 8 territories that it infringed on nations’ Treaty Rights. 

Following a precedent-setting B.C. Supreme Court decision, the province and Blueberry River First Nations reached an agreement early last year that included a limit to where and how much companies can conduct activities like fracking on the territory.   

Pipelines also impact ecosystems. Since starting construction in 2019, the Coastal GasLink project has repeatedly failed to meet environmental regulations, earning the company more than $800,000 in fines levied by the B.C. government to date. Those failures resulted in impacts to wild salmon habitat, endangered whitebark pine and sensitive wetlands that support innumerable species.  

What’s the economic case for LNG? 

Supporters of the sector say getting B.C. gas out of the ground and to buyers overseas will provide a much-needed influx of revenue to the provincial economy, through jobs, taxes and royalties earned on the production, transport and export of the fossil fuel. 

According to B.C.’s labour market statistics, the oil and gas sector, including support jobs, employed around 13,000 people in 2023. Around half of those workers are directly involved in extraction.

With the addition of construction jobs associated with the sector’s recent uptick, that number has nearly doubled. Last spring, around 7,000 workers were in Kitimat building the liquefaction facility. Coastal GasLink employed more than 6,000 construction workers as it built its pipeline across the province. When construction in Kitimat wraps up and the plant’s first phase starts, the number of jobs will drop to around 250 to 350 full-time positions, according to LNG Canada. The pipeline will require 16 to 35 people to handle operations and maintenance after reclamation activities are completed. 

The projects will also contribute to the provincial economy through a suite of taxes, tariffs, royalties and hydro payments. In 2019, B.C. estimated it would receive around $23 billion in government revenues over the 40-year lifespan of the pipeline and export facility.

“British Columbians are counting on us to attract LNG investment that meets strict conditions: delivering jobs and financial benefits to B.C., creating economic partnerships with Indigenous Peoples and protecting our clean air, land and water,” former minister of finance Carole James said at the time.

LNG Canada says its project is also responsible for significant economic growth throughout the province, through contracts provided to local businesses, including opportunities for First Nations. A spokesperson with the project pointed to a $500-million contract signed with HaiSea Marine, a joint venture of the Haisla Nation and Seaspan, to “build and operate escort tugs and harbour tugs required for our export facility in Kitimat.”

How does the economic argument hold up? 

Predicted government revenues need to be held against government subsidies doled out in support of the project. Those subsidies add up to more than $6 billion. 

This doesn’t mean B.C. wrote LNG Canada a cheque. The subsidies come in a variety of forms, such as tax reprieves and exemptions, cheaper electricity rates, loans, incentives and payouts to First Nations for support of the industry. There’s also the $16-billion Site C hydroelectric dam under construction on the Peace River, which many critics say is being built to power the sector, and a recent $36-billion investment to expand electrification and emissions-reduction infrastructure across the province.

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While Kitimat has been undeniably busier since construction of the massive industrial complex started, and the community is earning direct revenues from the project through industrial taxes, the rapid increase in population and construction activity has also taken a toll on the likes of roads and other municipal infrastructure.

“Having that industrial tax base is clearly much more of a benefit than it is a burden, but it does give you unique challenges that nobody else has,” Kitimat Mayor Phil Germuth told The Narwhal in a previous interview.

Employment opportunities connected to LNG Canada and the pipeline aren’t all filled by locals. The promise of high paying jobs saw an influx of workers flood the north, both to cordoned off camps throughout the region and to municipalities. The projects have driven up housing prices and the cost of living across the northwest.  

More than 70 per cent of Coastal GasLink’s workforce don’t live in B.C., according to the project’s annual reports. 

The economic case for exporting LNG is also subject to volatile markets. According to the International Energy Agency, global demand for the fossil fuel is declining and the rapid increase in projects in response to Russia’s invasion of Ukraine is flooding the market, which could lower prices, making new investments in the sector increasingly risky.

“After their heyday between 2011 and 2021, the world’s gas markets have entered a new and more uncertain period that is likely to be characterized by slower growth and higher volatility — and could lead to a peak in global demand by the end of this decade,” Keisuke Sadamori, director of energy markets and security with the agency, said in a press release last fall.

Expansion of domestic LNG exports could also result in increased costs to British Columbians. In the United States, exporters reacting to the energy crisis in Europe led to an increased cost of more than $100 billion (USD) over a 16-month period, according to a new report from the Institute for Energy Economics and Financial Analysis. B.C. consumers could see similar effects over the next few years as the sector gets underway.

How big is B.C. betting on LNG?

B.C. has been pushing to get the gas export industry off the ground for more than a decade. LNG Canada and Coastal GasLink are just two of more than a dozen projects proposed during former premier Christy Clark’s government. In the north, many of those have been shelved or scrapped, but several are still on the books.

When Premier David Eby took office in 2022, his stance on the oil and gas sector was clear.

“We cannot continue to expand fossil-fuel infrastructure and hit our climate goals,” he said, as he outlined his leadership plans.

That hard stance appeared to soften in the ensuing months, when his government approved Cedar LNG last March. The project is a partnership between the Haisla Nation and Pembina Pipeline Corporation. Touted as the first Indigenous majority-owned LNG facility, the floating liquefaction and export terminal would be built on the Douglas Channel across from the Haisla village of Kitamaat, a few kilometres from LNG Canada.

Just hours after approving the export facility, Eby’s government announced an energy framework that included a cap on emissions from the oil and gas sector.

“Our work on the climate crisis and our commitment to the next generation requires everyone, including the oil and gas sector, to do their part to reduce emissions,” Eby said. “It also requires us to forge a new path forward with clean-energy projects that people and communities can count on. We can and must do both.” 

Like its larger neighbour, Cedar LNG will receive gas from Coastal GasLink and plans to export three million tonnes annually, about 30 per cent of what LNG Canada plans to ship during its first phase.

B.C. approved LNG Canada’s plans to burn gas to power its plant and the project holds a 40-year export licence issued by the Canada Energy Regulator. After construction is complete, the liquefaction facility will start receiving gas from Coastal GasLink. 

The controversial pipeline project, built by Calgary-based TC Energy, has faced strong opposition from Wet’suwet’en Hereditary Chiefs and their supporters since its approval in 2014. Despite the province and the pipeline company signing deals with five of six elected band councils, neither received consent from the Hereditary Chiefs, whose authority and jurisdiction over the 22,000 square-kilometre territory was affirmed in a landmark Supreme Court of Canada ruling in 1997. Conflicts between land defenders and the pipeline builder led to more than 80 arrests, allegations of RCMP misconduct and international scrutiny. Court proceedings are ongoing.

Meanwhile, TC Energy could be gearing up to start pushing another gas pipeline across northern B.C. Approved by the B.C. government around the same time as Coastal GasLink, the Prince Rupert Gas Transmission pipeline would span around 900 kilometres and cross the Kispiox and Skeena rivers and traverse Nilkitkwa Lake at the headwaters of the Babine River. The pipeline would connect Montney gas reserves to Ksi Lisims, a proposed liquefaction and export facility on Nisga’a territory. The Nisga’a-led liquefaction and export project is currently undergoing environmental assessment.

LNG projects could be a major political issue this year 

As B.C. enters a provincial election year, the LNG export sector could be at the forefront of political debate. With projects like Ksi Lisims pending approval, pipelines at the ready and LNG Canada firing up its smokestacks, voters across the province will be paying attention to what politicians have to say on the subject. 

South of the border, LNG has already become an election issue. As the New York Times recently reported, U.S. President Joe Biden’s administration is delaying a decision on all LNG proposals to assess the sector’s true impact on climate.

“This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time,” Biden said in a statement. “We will heed the calls of young people and frontline communities who are using their voices to demand action from those with the power to act.”

B.C. environmental groups applauded the president’s decision, calling on the province’s politicians to do the same.

Is there a climate case for LNG?

Proponents say gas extracted in northeast B.C. and exported via Pacific ports will support Asia’s transition off of more emissions-intensive energy sources like coal. LNG supporters are fond of saying the gas is “cleaner” than coal and key to global climate action. 

“Our project represents an LNG facility that produces LNG at one of the lowest greenhouse gas [intensities] in the world today,” Waddington said. “It really demonstrates how Canada is at the forefront of delivering climate solutions and less intense greenhouse gas energy … that we’re going to need as energy demand triples by 2050 across the globe.”

Former federal minister of natural resources Amarjeet Sohi said the LNG export sector aligned with the country’s goals when Canada announced a $275-million investment in support of LNG Canada in 2019.  

“Well-planned projects have the potential to strengthen regional, local, Indigenous and national economic development objectives,” Sohi said at the time. “The LNG development has the potential to help the world build a low carbon energy future.”

Waddington said the opportunity to meet demand for the fossil fuel — which she says isn’t going away anytime soon — with gas extracted and liquefied in B.C. sets an example to the rest of the world. She said the public needs to think about it from a global perspective, not just in terms of provincial or even national climate targets.

Supporters of the sector maintain that LNG produced in Canada is subject to tighter environmental and emissions regulations than other gas-producing jurisdictions around the world. Both B.C. and the federal government are working on strengthening methane regulations, and the province’s access to hydroelectricity could reduce the overall carbon footprint of getting the gas to markets, if projects are electrified.

Proponents say all this makes B.C.’s gas a hot commodity to buyers in countries like Japan and South Korea, both of which are heavily dependent on imports and working towards ambitious climate targets.

Can B.C. gas replace Asia’s dependence on coal?

When Waddington says the Kitimat facility will produce LNG that is cleaner than other liquefaction plants, that’s comparing it to operating facilities in places like Australia and the United States. Which is to say, it’s a lesser of evils — not a field of roses. 

At the smokestack, it is less emissions-intensive and cleaner to burn gas to produce electricity than coal, especially in terms of particulate matter it releases into the air. Using coal for energy production creates large amounts of carbon emissions and a nasty soup of pollutants. Picture a blanket of thick smog obscuring the skyline of a city in China and you get the idea. But the smokestack is just one small part of a long, complicated and emissions-intensive process. 

And while population increase does mean corresponding increases in energy demand, how that energy is produced depends on a lot of factors. 

Take Japan, for example. While the country is one of the world’s largest importers of gas, its demand for the fossil fuel has been steadily decreasing over the past decade, according to the U.S. Energy Information Administration. And China, a global leader in zero-emissions energy projects, is driving a massive change in renewables. According to Reuters, the Chinese central government recently said wind and solar will start to replace coal and gas as the country’s main source of power over the coming years, with fossil fuels being relegated to backup sources of energy.

If Waddington’s claims that B.C. gas will displace coal in Asian countries, repeated widely by her peers in the oil and gas sector, are true, they haven’t offered any proof. 

As The Narwhal recently reported, the federal government is looking for evidence to back up claims that B.C. gas could help lower international emissions, but has yet to find any. Critics say that could be because no evidence exists.

Jonathan Wilkinson, federal minister of energy and natural resources, noted Canada’s general support for LNG in the short-term but he wasn’t shy about where the sector is heading.

“Climate change is altering our world’s environments in a myriad of harmful ways,” he said in Prince George. “The planet is increasingly, effectively burning up.”

“At the end of the day, the most significant cause of climate change, as you know very well, is carbon emissions from the production and the combustion of fossil fuels,” he continued as the hundreds of attendees listened in silence. “We need to reduce and largely eliminate the unabated combustion of fossil fuels over the period between now and 2050.”

Wilkinson cautiously said the LNG export sector has a role to play in the coming years but stressed the importance of making sure the gas is actually used to help countries eliminate the use of other fuel sources like coal.

“To be clear, it can’t be displacing renewables,” he said. “It actually has to be displacing coal if it’s going to have the kinds of climate benefits that people think.”