In a recent speech, Prime Minister Mark Carney emphasized the significant role Canada plays in fueling American growth through natural gas exports to the U.S. This raises the question of what would occur if Canada ceased these shipments.
Despite the ongoing Canada-U.S. trade tensions, energy products like oil and natural gas have not been utilized as bargaining tools. The matter remains contentious, with Alberta Premier Danielle Smith opposing the idea while Ontario’s Doug Ford advocates for exploring all options.
Carney highlighted that the U.S.’s reliance on Canadian energy is substantial, as Canada supplies 99% of their natural gas imports, 85% of electricity imports, and 60% of crude oil imports. Natural gas imports from Canada to the U.S. are crucial, accounting for nearly all non-domestic supply. However, this represents only about 8% of total U.S. natural gas consumption.
Dulles Wang, the director of Americas gas and LNG at Wood Mackenzie, indicated that the U.S. imports Canadian gas primarily for the western and Midwest markets while also exporting gas to Canada, especially in the eastern regions. The cross-border flow of gas is constant, underscoring the interconnectedness of the North American energy market.
Although Canadian natural gas shipments to the U.S. are relatively small compared to domestic production, the geographical distribution of these deliveries is significant. For instance, over 90% of gas in the Pacific Northwest regions like Seattle, Oregon, and Northern California originates from Canada.
Halting natural gas exports to the U.S. would have severe repercussions for Canada’s energy industry, leading to a surplus of gas, plummeting prices, and economic challenges. Wang emphasized that diversifying export markets beyond the U.S. is crucial, as demonstrated by recent LNG shipments to Asian markets from facilities in British Columbia.
The Canadian government’s support for expanding energy exports to non-U.S. destinations, including the backing of new LNG projects, aims to reduce dependence on the U.S. market and ensure long-term sustainability for the Canadian energy sector.