Prime Minister Mark Carney emphasized the significant role of Canadian natural gas exports in driving American economic growth in his recent address. His comments have sparked discussions on the potential consequences if Canada were to cease sending gas across the border.
While energy resources like oil and natural gas have not been used as bargaining chips in the ongoing trade tensions between Canada and the U.S., the idea remains contentious. Alberta Premier Danielle Smith has consistently opposed the notion, whereas Ontario’s Doug Ford believes all options should be considered.
Carney highlighted the dependency of the U.S. on Canadian energy, stating that Canada supplies 99% of their natural gas imports, 85% of their electricity imports, and 60% of their crude oil imports. However, despite the significant natural gas imports from Canada, data from the U.S. Energy Information Administration shows that it only constitutes a small portion, around 8%, of total U.S. natural gas consumption.
Dulles Wang, the director of Americas gas and LNG at Wood Mackenzie, pointed out that the actual percentage of Canadian natural gas imports to the U.S. may be as low as five percent. He emphasized the intricate network of natural gas pipelines that crisscross North America, facilitating continuous gas flow between the two countries.
Enbridge, headquartered in Calgary, stands as the largest natural gas provider in North America. The company recently finalized a series of acquisitions totaling $19 billion to bolster its presence in the U.S. market.
Wang highlighted the bi-directional flow of gas between the U.S. and Canada, with Western and Midwest U.S. markets predominantly importing Canadian gas while the U.S. also exports gas to Canadian markets, notably in the eastern regions.
While the volume of Canadian natural gas shipments to the U.S. may seem modest compared to domestic production, Wang stressed the significance of these deliveries in specific regions, such as the Pacific Northwest, where over 90% of gas originates from Canada.
The rise in data center construction in regions driven by artificial intelligence technologies has increased the demand for natural gas as a primary power source. These facilities, often supported by tech giants like Amazon and Google, rely on natural gas alongside clean energy sources.
Halting natural gas exports to the U.S. would have adverse effects on the Canadian industry, leading to oversupply and price drops due to storage capacity constraints. Wang warned against such a move, indicating that it would harm Canada economically by eliminating a key market and causing price instability.
Canada’s federal government aims to diversify its energy export markets, with recent shipments of liquefied natural gas to Asian markets from the LNG Canada facility in Kitimat, B.C. Efforts are underway to support further LNG projects to reduce reliance on the U.S. market and enhance export opportunities.