The Canadian LNG Gold-Rush

A Wonderful Long-Term Compounding Investment Opportunity Just About To Start

LNG Canada, located in Kitimat, British Columbia - Canada's first large-scale LNG export facility (AI generated image)

Recent assessments have revealed significant increases in both Canadian natural gas and oil reserves, fundamentally altering the country's energy landscape and solidifying its position as a global energy powerhouse.

The Canadian government are fully behind diversifying its export base and becoming a major player on the global stage.

This is a great opportunity for investors and this post highlights a great opportunity on how best to play it.

Why Should I Care About This?

Alberta's Energy Minister Brian Jean described the reserves as "Texas-sized," emphasizing their scale and potential, but this almost certainly understates the size and significance of Canada’s reserves.

On the oil side, preliminary estimates indicate that Alberta's proven oil reserves have increased from 159 billion barrels to 167 billion barrels - a gain of 7 billion barrels. These figures reinforce Alberta's position as a global leader in oil reserves, ranking fourth worldwide. Final numbers are expected soon following audits of all basins.

For comparison, Texas' proven oil reserves stood at 20 billion barrels in 2023.

Alberta's vast resource base ensures long-term energy security for Canada and its trading partners, with new opportunities emerging in areas like the Clearwater Basin.

However, the excitement pertains to natural gas.

A new study commissioned by the Alberta Energy Regulator (AER) and conducted by McDaniel & Associates Consultants Ltd. has dramatically revised Alberta's proven natural gas reserves.

The province now holds 130 trillion cubic feet (TCF) of proven recoverable gas reserves, compared to a previous estimate of just 24 TCF - a sixfold increase. When probable reserves are included, Alberta's total rises to 144 TCF.

This revision has propelled Canada into the global top ten for natural gas reserves, moving from 15th to 9th place globally.

Exploration advancements in formations such as the Montney, Duvernay, and Deep Basin, along with improved extraction technologies, have been credited for these gains.

The abundance of natural gas is expected to attract investment in manufacturing, petrochemicals, and data centers due to its affordability and reliability.

“Long term, we are the best place to invest in the world because as other resources dry up, Alberta is not going anywhere for a long time”

Alberta's Energy Minister Brian Jean

Canada's liquefied natural gas (LNG) sector is entering a transformative phase in 2025, marked by the completion of major projects and the start of exports. This will happen via the Shell-led LNG Canada project, set to begin operations this summer. This development positions Alberta as a key player in meeting growing global LNG demand.

LNG Canada, located in Kitimat, British Columbia, is Canada's first large-scale LNG export facility and represents one of the largest private investments in Canadian history, valued at $30 billion. The facility will initially produce 14 million tonnes per annum (MTPA) of LNG in Phase 1, with plans to double capacity to 28 MTPA in Phase 2 through hydroelectric power.

The plant is more than 95% complete, with commissioning activities underway. A cooldown cargo arrived on April 1, 2025, marking a critical step in preparing the facility for its first shipment of LNG by mid-2025:

The majority of LNG from this facility will be exported to Asia, particularly Japan and South Korea. This diversification is vital for Canada, which has relied heavily on the U.S. as its primary energy customer - something that worked well for the U.S. but was sub-optimal for Canada.

For instance, Canada exported approximately 4 million barrels per day of crude oil to U.S. refiners in 2024, accounting for nearly half of total U.S. crude imports, but much of this was sold at a discount of $11–$15 per barrel relative to West Texas Intermediate (WTI). Industry experts argue that building new pipelines and export terminals is crucial to diversify markets and achieve better pricing for Canadian energy products.

Recent infrastructure projects like the Trans Mountain Expansion (TMX) and Coastal GasLink pipelines have enhanced export capacity. TMX added 590,000 barrels per day of crude oil capacity to reach international markets via British Columbia's coast, while Coastal GasLink provides direct access for natural gas exports through LNG Canada. However, further pipeline capacity is needed to support long-term growth in Western Canada's oil and gas production.

Other LNG projects include:

• Cedar LNG, a floating liquefaction and export facility majority-owned by the Haisla Nation. It is located near LNG Canada and aims to produce 3 MTPA of LNG annually. Construction began in July 2024, with activities expected to peak in 2026. Foreign-built components are scheduled to arrive by 2028.

• Woodfibre LNG is a smaller project near Squamish, British Columbia, owned by Pacific Energy Corporation. It plans to produce 2.1 MTPA of LNG annually. Construction began in late 2024 but has faced compliance issues with environmental regulations and worker transport protocols.

• Canada has seven additional export projects under development, including FortisBC's Tilbury LNG expansion and Ksi Lisims LNG. Together, these projects could add up to 50.3 MTPA of production capacity by 2030

Big things are happening on Canada’s west coast. The LNG Canada consortium - featuring heavyweights like Shell and Petronas - is just months away from sending out its first shipments of liquefied natural gas. And once that’s underway, all eyes will be on their next move: a final investment decision on Phase 2 of the project.

To put things in perspective, LNG Canada is already one of the largest private sector investments in Canadian history, with tens of billions already committed. If Phase 2 gets the green light, capacity would double to 28 million metric tons per year - a massive scale-up with equally massive implications.

And the timing? Couldn't be better.

Cost Advantages

Canada is a cost-effective LNG producer for several reasons:

1. Lower Ambient Temperatures: British Columbia's cooler climate reduces the energy required for liquefaction, making the process more efficient. This provides an energy efficiency advantage of 34% over Australia, 32% over Qatar, and 26% over the U.S. Gulf Coast.

2. Shorter Shipping Distances: Canada's West Coast LNG facilities, such as Kitimat, are geographically closer to key markets in Asia than competitors like Qatar or the U.S. Gulf Coast. For example, Kitimat is approximately 7,698 km from Japan's Himeji port, compared to Qatar's 11,773 km. This translates to lower shipping costs - 96 cents per mmbtu from Canada versus $2.22 per mmbtu from the U.S. Gulf Coast.

3. Abundant Low-Cost Natural Gas: Western Canada has vast natural gas reserves with high productivity rates and low feedstock costs. AECO-C natural gas prices in Canada have historically traded at a significant discount compared to Henry Hub prices in the U.S., further reducing LNG production costs.

4. Competitive Fiscal Environment: Canada offers favourable tax policies for LNG developers, including accelerated capital cost allowances and reduced corporate tax rates. These measures help lower overall project costs.

These factors will propel Canada into a major player on the global stage in the supply of LNG and underpin its economy moving forward.

Canada Wants To Drive Harder

In its 2025 Annual LNG Outlook, oil major, Royal Dutch Shell (SHELL) states that it expects a 60% increase in global LNG Demand by 2040, driven largely by economic growth, the AI impact and efforts to cut greenhouse gas emissions as the world transitions to cleaner fuels. It forecasts LNG demand to reach between 630m and 718m metric tons a year by 2040.

Now consider that Canada produces the cheapest natural gas by a wide margin and has enormous reserves - so Canada is in poll position to be the primary beneficiary of this macro trend.

With growing geopolitical instability and rising tensions with the U.S. - including the threat of new tariffs on Canadian energy - Canada is highly motivated to diversify its export markets. Becoming a major global LNG supplier is no longer just a good idea - it's a strategic necessity.

“LNG Canada is a project of national significance.”

Mark Carney, Canadian Prime Minsiter

Natural Resources and Energy Minister Jonathan Wilkinson recently confirmed that the Canadian government sees Phase 2 as "likely", underscoring their commitment to support and expand this project.¹

This is more than just a business story - it’s a historic turning point for Canada’s energy sector, with the potential to unlock massive economic growth and reshape trade relationships on a global scale.

How Do You Play This Trend?

The Canadian LNG boom is set to benefit many - from the federal government to major oil and gas giants. But for these global players, Canadian LNG is just one piece of a massive puzzle. It’s not likely to have a big impact on their overall performance.

The real opportunity for investors? Look further down the supply chain - at companies with focused exposure to this trend.

One standout is Enterprise Group. The stock is currently trading at an attractive price, following a temporary dip. This drop was triggered by a single quarter of expected softer earnings and broader market jitters caused by Trump-era tariff news. But that short-term volatility could be your long-term gain.

Enterprise Group was trading at $2.35 CAD when I first analyzed it last October and it looked like good long-term value then. Raymond James initiated coverage on Enterprise in February this year with a price target of $3.75 CAD.² Following the recent turmoil in the markets, it is trading at $1.20 CAD today - an absolute steal. The company itself issued a normal course issuer bid (NCIB) last week to repurchase up to 10% of the shares outstanding because of the ridiculous discount to intrinsic value.

See a deep dive on Enterprise and an interview with Des O’Kell lasting ~90 minutes at the foot of this analysis:

With the LNG wave set to hit in just a few months, now could be a smart time to jump in.

Of course, this isn’t the only way to play the LNG trend. If you have ideas or know of other potential winners in the Canadian LNG space, drop them in the comments! Let’s turn this into a community brainstorm and help each other uncover great opportunities.

1. https://financialpost.com/pmn/business-pmn/canada-minister-wants-lng-canada-doubled-eyes-western-pipeline-upgrade

2. Raymond James coverage:

Enterprise Group Initiating Coverage (Raymond James)

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