There are regulatory and pricing issues currently holding up the development of liquefied natural gas for export, Prentice told the Canada LNG Export Forum in Calgary. But unless the industry acts soon to develop a system to ship to Asia, it will lose out to competitors in the U.S. and Australia, he said.
Prentice is currently the executive vice-president and vice-chairman of CIBC but served, variously, as minister of industry, environment and Indian and northern affairs during his time in the Conservative government of Stephen Harper.
"Given the scope of the opportunity before us and given the speed with which other countries around the world are rushing to get into the game and fill LNG demand, we in Canada need to push ahead with a much greater sense of urgency," Prentice said in his speech.
"There is a window of opportunity, and it is closing. If Canada is ultimately to win in liquefied natural gas, we need to pull together and seize that opportunity before it passes us by."
There are at least five LNG export projects proposed for the B.C. coast, including terminals in Kitimat and Prince Rupert. The B.C. government has said it wants to develop an LNG export industry and wants three terminals in place by 2020.
But each project involves an investment of billions of dollars, and Prentice says there is regulatory and structural uncertainty holding up the projects.
He laid out some key hurdles that must be cleared:
- Establish a royalty regime that promotes the establishment of an LNG industry in Canada.
- Ensure there is sufficient skilled labour to build these facilities and pipelines under tight timelines.
- The federal government, the province and coastal First Nations need to develop a co-management regime for B.C.’s coastal waters that protects the environment but "takes into account the rewards [of LNG development]."
- Decide how LNG facilities in B.C. will be powered.
He acknowledged that project developers in Canada are struggling with potential customers in Asia over the cost of LNG, which requires technology to liquefy the gas.
And he says the U.S. may beat Canada to grab this market, unless the industry acts quickly.
"The Americans are eager to get into LNG in a big and aggressive way," Prentice said. "That could have real implications for our ability to do the same.
"If we're hesitant, if we continue to move slowly, we could wake up to discover that our competitive opportunity has vanished. For Canada, nothing is more urgent right now than getting in the game."
One of the most promising customers for LNG is Japan, which is looking at alternatives to nuclear power after the devastating tsunami and earthquake that caused a meltdown at the Fukushima Daiichi plant and raised questions about the safety of the country's nuclear energy infrastructure.
Canada is "one of the most promising" supply regions for Japan, said Shinji Fujino, with Japan Oil, Gas and Metals National Corp., a government agency.
Fujino said Canada has some advantages over other suppliers, such as its transparent regulatory framework and geographic proximity to Asia. However, he said he has "serious concerns" about workforce shortages and taxes.
In August, the Norwegian-based International Gas Union (IGU) warned that project costs in Canada far exceed those in the United States because of the longer distances and lack of pipeline grid or other connections.
The high costs associated with transporting gas up to BC's remote coast makes the benefits of fetching a higher price overseas "difficult to financially justify," the IGU said in its study.