LNG is large growth market as more and more countries look at alternatives to coal for electrical power generation. There are two large players fighting it out in the LNG market and that is United States and Russia.

1. Policy – Liquefied Natural Gas (LNG)
By: Paul Young, CPA, CGA
Date: May 9, 2017

2. Agenda
 What is Liquefied Natural Gas
 Market Size
 Government Policies

3. What is Liquefied Natural Gas
 LNG is a clear, colourless and non-toxic liquid which forms when
natural gas is cooled to -162ºC (-260ºF). The cooling process shrinks
the volume of the gas 600 times, making it easier and safer to store
and ship. In its liquid state, LNG will not ignite.
 When LNG reaches its destination, it is turned back into a gas at
regasification plants. It is then piped to homes, businesses and
industries where it is burnt for heat or to generate electricity. LNG
is now also emerging as a cost-competitive and cleaner fuel,
especially for shipping heavy-duty road transport.

4.  For the past 30 years, China has tapped coal for about two-thirds of its energy
needs, resulting in carbon dioxide and particulate emissions that have
significantly degraded the nation’s air quality and impacted the global climate.
In an effort to address both concerns and provide a backup fuel for intermittent
renewables, China is working to increasingly replace coal with cleaner-burning
natural gas. As a first step, the government aims to boost the share of natural
gas in its primary energy supply from 6 to 10 percent by 2020 (the current
global average is about 25 percent). However, to affect a large-scale transition
from coal to natural gas in China will be far more difficult than it has been in
the U.S., where the price of natural gas per unit of energy output is much lower
than that of coal. In China, the situation is reversed.
 Source - http://news.mit.edu/2016/enabling-china-to-shift-from-coal-to-natural-
gas-1118
Chinese Market

5. Commodity Prices/Natural Gas
Source - BMO

6. Natural Gas Consumption

7. Power Generation/Natural Gas

8. Power Generation/Natural Gas

9. GHG/Natural Gas

10. Government Policies
 Prime Minister Harper, made the announcement recently while at a
technical university in Surrey, B.C. He said companies will receive a
capital cost allowance of 30 per cent for equipment used in natural
gas liquefaction and 10 per cent for buildings at a facility that
liquefies natural gas.
 Tax relief will be available for capital assets acquired between now
and 2025.
 The Prime Minister also said the tax incentives will provide the
right conditions for the LNG industry to succeed and compete in
the global economy while spurring job growth.

11.  Canada needs to build more pipelines. Our oil pipeline network can move four million barrels of crude oil a day from
Western Canada. This is too close to the average 3.981 million barrels a day in supply , which will continue to grow. Not only
is the system unable to handle day-to-day changes in global demand, but supply continues to grow. More than 850,000 barrels
a day of oil sands supply will come on stream by 2021, and without energy-transportation infrastructure, Canada will be
constrained. The United States is our industry’s largest customer, but also our largest competitor. President-elect Donald
Trump’s platform for energy independence makes it all the more urgent to diversify our customer base and get our product to
those who need it globally. Canada’s economy is suffering and the situation is critical. That is why there are several major
pipeline proposals to move more Canadian oil, both to Canadians and to the world. For example, Kinder Morgan Inc. is
looking to expand its Trans Mountain pipeline from Edmonton to Vancouver to export oil to Pacific Rim nations. This
pipeline has been operating at capacity since 2010 and the demand for transportation has exceeded the room to move it at all.
Source - http://www.capp.ca/media/commentary/canada-needs-pipelines-built-the-canadian-way
 Carr's comments show that the Keystone XL project is no longer the only option or even the best option, according to Jennifer
Winter, scientific director of energy and environmental policy at the University of Calgary. She thinks the priority for the
Canadian government now is focusing on pipeline projects on its own soil and the markets it wants "Oil producers would
prefer to have Keystone rather than no Keystone, the issue is where do Canadian producers want to send oil?" she said in an
interview with CBC. "The change is the idea Asia is a much more important market, and a few years ago when [prime
minister] Stephen Harper was talking about Keystone, the U.S. looked like the best market for Canadian oil," Winter said.
"China is going to be a much bigger growth market and therefore substantially more attractive." Source -
http://www.cbc.ca/news/politics/keystone-xl-trump-carr-1.3852682
Pipelines

12.  U.S. LNG has already reached southern Europe and will next month
arrive in Poland, the first delivery to a former Soviet Bloc country.
European LNG supply is set to increase this year, spurring Russia’s
Gazprom PJSC to compete, according to a Citigroup report last month.
 That also applies to the rest of Europe’s main foreign suppliers --
Norway, Algeria and Qatar -- faced with emerging exporters from U.S.
LNG to pipeline gas from the Caspian region, according to Bloomberg
Intelligence.
 Norway, Europe’s second-biggest source of gas, will likely produce more
this summer compared with a year earlier because of a lighter
maintenance schedule, increased production capacity and positive price
spreads, Bloomberg New Energy Finance said in a report last month.
Russia and United States
Industry Week – May 8, 2017

13.  Turkey’s Anadolu News Agency, though government-run, is
providing remarkably clear and reliable diagrammatic descriptions
of the current status of the U.S - and - fundamentalist - Sunni,
versus Russia - and - Shia - and - NON - fundamentalist - Sunni,
sides, in the current oil-and-gas war in the Middle East, for control
over territory in Syria, for construction of oil-and-gas pipelines
through Syria supplying fuel into the world’s largest energy-
market: Europe. Russia is now the dominant supplier of both oil
and gas, but its ally Iran is a Shiite gas-powerhouse that wants to
share the market there, and Russia has no objection.
Syria Civil War

14. Key Provinces
 British Columbia
 New Brunswick
 Nova Scotia
 Saskatchewan
 Alberta

15. Issues
 Natural Gas Pricing
 Port Expansion/Exports (Sydney, Prince Rupert)
 Regulatory approval
 Pipelines
 LNG Plants