Steve MacLellan

While cheap natural gas continues to take market share from coal in the electricity sector, supply of the fuel has far outstripped demand. As a result, once-booming gas fields in Arkansas, Louisiana and Texas have become quiet backwaters. The number of gas rigs deployed nationwide has dropped to 132, from 184 last year.

“In the short term the gas market is oversupplied and is likely to remain so for the next few years,” said Andy Brogan, oil and gas global sector leader at EY, the firm formerly known as Ernst & Young. “It’s a cyclical business, and we’re at the bottom of the cycle.”

Unfortunately for Canada. it seems they still think the LNG market is booming. There’s been quite a bit of discussion on how article 6 of the Paris-Canada agreement can be interpreted as to allow Canada to count credit for LNG exported to other countries. These carbon credits would be applied to Canada’s emissions and in fact allow Canada to extract an increasing amount of oil. For more information see the article Canada Counts.

Naturally, if Canada can’t move the LNG they won’t be able to count the credits. But in dispute over the interpretation of article 6 it would mean that the receiving country would have to be using the LNG to displace oil or coal. If the country still planned on using oil and coal and the LNG was an addition to fossil fuels already being used, then Canada wouldn’t be eligible for the credit. It’s pretty hard to tell exactly how the LNG will be used in another country.

However, if Canada can’t move its LNG because of a glut on the market, the interpretation of Article 6, more or less. becomes a moot point.