Canada may have the U.S. to thank for its first-ever LNG exports

NEW YORK (Bloomberg) -- Canada’s first exports of LNG may soon be heading overseas from a port in Louisiana.

A year ago, Cheniere Energy built an LNG export terminal along Louisiana’s coast and became the only company shipping U.S. shale gas by tanker. Now it’s looking for supplies to send abroad from as far off as the Montney shale play, which straddles Canada’s Alberta and British Columbia provinces.

“We’re able to build a portfolio of supply from domestic gas producers and take full advantage of the cost-competitive basins across the U.S.,” Cheniere’s chief commercial officer, Anatol Feygin, said to investors. “In fact, it doesn’t stop at the U.S., as we recently entered into our first supply deal to receive Montney gas.”

The deal underscores the great lengths Canada’s gas explorers are having to go to get their fuel to market as they face escalating competition from U.S. shale drillers at home. While several LNG export terminals have been proposed along Canada’s West Coast, it will be years before any are up and running. In some ways, Cheniere is doing what environmentalists feared the controversial Keystone XL oil pipeline would do: Bring Canada’s energy resources into the U.S. only to export them from the Gulf Coast.

“This is a great potential outlet” for Canada, Madeline Jowdy, senior director of global gas and LNG at Pira Energy Group in New York, said of the deal with Cheniere. Export projects planned for Canada’s coast “look like they are going to be a long time coming, if ever, in my opinion.”

The U.S. shale boom has cut the volume of gas being imported from Canada. Pipeline flows into the lower 48 states fell 39% to 7.38 bcfpd in November from the record high reached in 2007, U.S. EIA data show.

No Canadian gas has ever been exported as LNG, according to Victoria Zaretskaya, an analyst with the EIA. The pipelines feeding Cheniere’s landmark export terminal at Sabine Pass, Louisiana, have gathered gas from Texas’s Eagle Ford shale play and other parts of the state, she said. It doesn’t appear as if they’re bringing in gas from Canada, she said.