Gretchen Fitzerald, national program director at the Sierra Club of Canada Foundation (SCCF), said the federal Building Canada Act “may prompt all kinds of these types of proposals.” But “given the summer we’ve had in Atlantic Canada, leaders at all levels should be looking at renewable resources like wind, solar, and storage, not more fossil fuel projects like this one which will fuel the fires of climate change,” she told The Mix in an email.
“This represents yet another attempt by oil and gas interests to try and pitch an economically unavailable project to Newfoundlanders and Labradorians that only distracts from the need to transition rapidly to renewable energy,” added SCCF Head of Communications Conor Curtis. “There will not be the necessary demand in the [European Union] or elsewhere for projects like these to be viable, as demand will peak and start to decline this decade with a global oversupply of LNG set to happen. Like Bay du Nord, this is a lot of hype over something of limited economic substance.”
Kataria said Carney’s trip to Berlin last week, where he and Energy and Natural Resources Minister Tim Hodgson announced plans to send Canada’s first LNG shipments to Germany in “as little as five years”, showed “symbolic” support for a project like Fermeuse.
“We feel that Canada is now waking up, that they have to start building the country with pipelines, and connecting it to the world outside the United states,” he told The Mix. On top of the regulatory changes in the Building Canada Act, the new federal government’s most recent statement of intent “gives us the confidence to develop this, because it’s much easier to build a project in Fermeuse and connect it with Europe than to bring [gas] all the way from Alberta to Nova Scotia and load it on a vessel. I think both need to be done, but this is much faster to market…this one will start now.”
So far, he added, the project has assembled just enough investment capital to get it through the permitting process. “When we develop projects, there’s no point raising $15 billion and starting to pay interest on it today. The project is not creating any cash flow.” But “once we are permitted, after that the pathway is much easier, and there’s a lot of confidence in the investment community to participate.”
In the wake of Hodgson’s announcements in Berlin, independent analysts cast serious doubt on Europe’s future need for LNG. They noted the EU relied on energy efficiency and accelerated renewable energy deployment to reduce gas demand 17% between 2021 and 2024, spurred on by Vladimir Putin’s invasion of Ukraine, and that the continent is continuing to electrify its energy use.
“In the medium and long term, we’re not anticipating an increase in gas demand, certainly not in Western Europe,” Pawel Czyzak, Europe programme director at the Ember energy think tank, said in an email. The continent “is already heavily oversupplied towards 2030,” and “that oversupply will get even more severe if the questionable fossil fuel imports from the EU-U.S. trade [and tariff deal] are implemented.”
“Cutting dependency on gas from Russia or any other country can be achieved if gas consumption reduction measures continue in place,” added Ana Maria Jaller-Makarewicz, lead energy analyst, Europe with the Institute for Energy Economics and Financial Analysis. With the EU’s affordable energy action plan set to replace up to 100 billion cubic metres (more than 3,500 billion cubic feet) of gas by 2030, she added, “the bloc could satisfy demand without additional gas infrastructure or increased imports.”
Other analyses have warned of an oversupplied global market for LNG, where prices could soon begin to drop.
Kataria said that’s not the future he sees ahead.
“Every time somebody tells me that demand for gas is going to go down, every statistic shows it has already gone up,” he said. With more than 3.5 billion people in China, India, Vietnam, Indonesia, Pakistan, and Bangladesh, and projections that those countries will need a million tonnes of gas per year for every five million population, “getting LNG into the mix was primarily whether the gas is available, and whether the technology is available to build those pipelines. Markets can sustain the pricing—if you look at the next 10 or 11 years, you’ll see the project’s stability is not in question.”
That’s why “politically it was the perfect time,” he added. “Canada has a new government which is stable, and there is a huge effort going into nation-building. If I did not have confidence in Mark Carney’s vision of building the nation, we would not have initiated this project.”
Kataria said it’s too soon to say whether the project will need any form of support, but—unlike some of its counterparts in Alberta—Crown LNG has never relied on government subsidies.
“If the project cannot hold its own feet on its own ground for its commercial existence, then it doesn’t deserve to exist,” he told The Mix. It might be a different story, for example, if a 50% U.S. tariff on a large share of the project’s construction supplies drove up costs. But “starting from the ground up, we’ve never gone to any government asking for any support in 3½ years.”
