BMO's LNG Strategic Positioning BMO sees major investment opportunity as Canada ramps up LNG production
BMO analyst Ben Pham sees extensive investment opportunity as domestic energy producers ramp up LNG (liquefied natural gas) capacity,
“We believe the renewed interest in Canadian liquefied natural gas (LNG) facilities is once again shaping up as a major investment opportunity for Canadian energy infrastructure companies. Companies that might participate include ALA, ENB, FTS, KEY, PPL, and TRP, where we’ve identified close to $15B of potential investment opportunity (most of which is not yet in our financial models). We believe ENB, PPL, and TRP (all rated Outperform) are on solid inside tracks to win the LNG business given strategic positioning, scale, stakeholder relations, and strong development expertise … Demand for Canadian LNG has come back given the Ukraine situation, the surge in natural gas prices (and spreads), and an energy security focus. Shell indicated in April that it was studying the feasibility of a major expansion of its LNG Canada project. Subsequently, Woodfibre LNG issued a notice to proceed with its main contractor, and there have been positive developments related to East Coast LNG. There are just shy of 30 Canadian LNG projects with aggregate proposed capacity of ~350M tonnes per annum (~46bcf/d), but only a small portion will see the light of day. We are optimistic on a second phase of LNG Canada as well as smaller-scale LNG facilities Woodfibre and Port Edward, all on the Canadian West Coast. East Coast and Hudson Bay LNG are compelling areas for LNG facilities, but politics, access to supply, lengthy permitting, stakeholder pushback, and large price tags create challenges to formal sanctioning.”