British Columbia is unlikely to develop the three liquefied natural gas (LNG) plants the provincial government hopes to see in operation by 2020, the International Energy Agency reported last week.
“Prospects for [Canadian] LNG projects have deteriorated and no plant is expected to be operational over the time horizon of this report,” the Paris-based agency stated. “Proceeding with such large cost items is challenging under any market condition, but the plunge in oil prices will certainly make companies think twice before pushing ahead…further curtailment seems likely when judging from the pipeline of new projects.”
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Late last month, an Oxford Institute for Economic Studies report reached a similar conclusion. “Despite large volumes of shale gas and government hype over the industry, the study found that changing energy markets, global price volatility, increased competition, and LNG cost overruns have dramatically changed the demand picture for high-risk and capital intensive LNG projects around the world,” reported Tyee correspondent Andrew Nikiforuk.
Four years ago, the Financial Post notes, the IEA was confidently predicting a “golden age” of natural gas. Now, “the belief that Asia will take whatever quantity of gas at whatever price is no longer a given,” said Executive Director Maria van der Hoeven.
“The experience of the last two years has opened the gas industry’s eyes to a harsh reality: In a world of very cheap coal and falling costs for renewables, it is difficult for gas to compete.”
