Ottawa is moving towards an America-not-first approach and is determined to cut red tape to drive project development, write Yulia Golub and Brett Holmes
Canada must build infrastructure to expand energy exports beyond the US and reduce reliance on foreign oil in eastern provinces, the country's new energy minister, Tim Hodgson, said late last month. "We need infrastructure that gets our energy to tidewater and to trusted allies, diversifying beyond the US," Hodgson told oil and gas executives in Calgary on 23 May.
Western Canadian leaders are backing a new cross-country energy corridor linking the Pacific to Hudson Bay, seeking federal support to move more oil, natural gas and LPG to global markets. "Canada should trade more with countries that share our values — not just our borders," Hodgson said, who was sworn in on 20 May. The federal government plans to fast-track projects of national interest with a two-year review cap and a centralised "major projects office" to reduce bureaucratic delays caused by functions being scattered across multiple departments. "Canada will no longer be defined by delay. We will be defined by delivery," Hodgson said. "Less red tape, more certainty, better outcomes."
The Canadian Propane Association in April urged the incoming federal government to streamline regulatory approvals for LPG export projects. "It's more critical than ever that goods and services move seamlessly within Canada and beyond [in the wake of US tariffs]," it said, adding that the government needed to facilitate access to international markets, speed up regulatory approvals and promote Canadian LPG as a cleaner and reliable energy source.
Canadian LPG producers and exporters echoed the need for help building export infrastructure in their financial results releases last month. "We have to have policies, permitting and regulations in place so that we can build more [export] capacity on the west coast, build more LNG projects so that we have more customers to sell our products to versus being so captive to the US," midstream firm Keyera's chief executive Dean Setoguchi said on 15 May. "We just have to have better policies to get resources to markets."
Pacific intent
Midstream companies are mainly looking at exporting more LPG to Asia-Pacific from the expanding Pacific coast terminal capacity. But they are also exploring other markets as they await greater policy clarity. Discussions around exporting more LPG to Mexico by rail have resurfaced, although volumes have declined significantly — to just 1,000 railcars/month today from 5,000 railcars/month in 2019–20, according to shippers — given the 60-day turnaround for deliveries and higher costs.
Midstream firm Pembina said on 9 May that it was prioritising markets outside North America for its LPG exports, citing robust international demand amid ongoing tariff uncertainty. Pembina operates the 25,000 b/d Prince Rupert export terminal in British Columbia and is evaluating additional propane and butane export opportunities from the west coast to Asia as part of its diversification strategy.
AltaGas is following suit. "Demand for Canadian propane has remained very strong through this entire period," chief executive Vern Yu said on 1 May. The US-China trade war meant China is sourcing less propane from the US, prompting US exports to move to other parts of Asia-Pacific and Europe, he said. The company expects demand for LPG in Asia to grow, with China and India driving this.
Keyera anticipates continued growth in oil and gas production in western Canada but warns of infrastructure limitations and an over-dependence on US demand. Rising LNG exports and increasing power consumption from AI data centres will be additional drivers of natural gas production growth, the firm said. Canada has at least six LNG projects lined up for the west coast, government data show. The hope among the industry is that Ottawa will expedite project approvals, potentially cutting approval times to six months from the current five years.
