Russia is threatening Europe’s natural gas supply. Can Canada help?

OTTAWA—It’s not nothing. But there’s only so much Canada can do.

That’s the reality of this country’s capacity to crank out more natural gas for Europe, experts say, as allies on the continent face the rising danger that Russia will cut off vital energy supplies amid the war in Ukraine.

On Tuesday, Russia halted natural gas exports to Poland and Bulgaria, both NATO members, prompting accusations from European leaders that the Kremlin is using energy exports to “blackmail” countries supporting Ukraine’s defense against the Russian invasion.

The move also sparked a spike in European gas prices and added to the existing urgency for countries across the Atlantic to stop relying on Russian fossil fuels — a crucial lifeline for the sanction-stricken Russian economy — and find other suppliers for the energy they need.

Enter Canada? Sort of.

The federal government already beat the bushes in March, canvassing oil and gas companies to drum up as much extra production as possible. And while Canadian oil production is now slated to jump about five per cent by the end of this year — roughly 200,000 extra barrels per day — the additional gas production was smaller: about 16 million cubic meters per day, an increase of 1.3 per cent over 2020 levels.

To put that in perspective, the European Union (EU) bought 158 ​​billion cubic meters of Russian gas in 2021, according to the International Energy Agency. Canada’s extra capacity would cover less than four per cent of that.

Ian Cameron, a spokesperson for Natural Resources Minister Jonathan Wilkinson, said Wednesday there is no capacity for Canada to increase gas production beyond that this year.

So what’s holding us back from doing more?

Experts say it’s a combination of factors, from limited pipeline capacity to a dearth of coastal export terminals for natural gas, which must be compressed and liquified before it is shipped overseas.

“The only real market for Canadian natural gas is the United States, meaning direct supplies to Europe are not really possible at the moment,” RBC Capital Markets analyst Chris Louney told the Star by email.

That’s where the government’s planned extra production is heading, with the goal of adding to overall supplies exported from the US to countries abroad and help ease pressure as the EU looks for new sources of energy.

This is basically the only option at the moment, given how Canada has only one minor liquified natural gas (LNG) export terminal that is “not even worth mentioning” while construction continues on the LNG Canada facility in Kitimat, BC, said Werner Antweiler, a business professor at the University of British Columbia who specializes in energy economics and international trade.

That terminal isn’t slated to be ready until about 2025. In the meantime, Antweiler said, “the most we can do, essentially, is crank up our production and send it to the United States.”

But there’s also a limit to how much Canada sends south: existing pipelines can only carry so much.

“That is the big obstacle,” Antweiler said, stating that space is already booked up through existing sales contracts.

“There’s just no physical capacity to deliver the gas beyond what is there.”

Another issue is export capacity in the US According to the US Energy Information Administrationaverage liquefied natural gas exports from the US last year were about 275 million cubic meters per day, while export terminals worked at an average of 102 per cent of their export capacity.

“There has to be capacity to get that gas out of our countries, out of North America and into Europe, and right now there’s just not,” said Samantha Gross, director of energy security and climate initiative at the Brookings Institute in Washington, DC

The federal government has also tried to walk a political tightrope on this issue: Wilkinson, the natural resources minister, has spoken of the need to help Europe in its time of need, while at the same time stressing that increased fossil fuel production won’t harm Canada’s efforts to reduce national greenhouse gas emissions that cause climate change.

In a recent interview with the Star, Wilkinson described Europe’s reliance on Russian energy as “an enormous political liability,” and said Canada is considering how new LNG export terminals in Atlantic Canada could help — but only if they run on clean power and ship gas that displaces existing fossil fuels instead of burning more of them.

Christopher Clarkson, a geosciences professor at the University of Calgary, said any new pipelines or export terminals will obviously have “no effect on supply to Europe in the short term” because they would take years to construct.

He also said there is a risk that demand for natural gas will decline as countries around the world, including in Europe, boost renewable energy like wind and solar generation.

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