Shell recently released its annual LNG outlook, and if you read the headlines, the future looks bright for Canada’s LNG industry. Shell argues global demand will continue to grow strongly through 2050, implying the world needs billions of dollars of new investment in LNG export projects, including projects like LNG Canada Phase 2 in Kitimat.
There’s just one problem.
Not everyone who studies LNG markets believes Shell’s forecast.
My guest today is Seb Kennedy, founder of Energy Flux and one of the sharpest LNG analysts I’ve interviewed. He’s built his own demand model for Asian LNG markets, and after comparing it with Shell’s assumptions, he reached a very different conclusion.
He argues Shell’s forecast depends on a long list of optimistic assumptions all coming true at the same time: strong economic growth, low enough prices to stimulate demand, continued fuel switching away from coal, sufficient infrastructure, and geopolitical stability. If even a few of those assumptions don’t hold, global LNG demand could fall well short of Shell’s projections.
That’s a critically important debate for Canadians.
Governments, investors and the natural gas industry are making multi-billion-dollar decisions based on expectations of future LNG demand. If Shell is right, Canada probably needs more export capacity. If Seb Kennedy is right, however, the world could soon find itself with far more LNG than customers are willing—or able—to buy.
In this interview, we dig into the assumptions behind Shell’s forecast, examine what’s really happening in Asian gas markets, discuss how falling battery costs and electrification could reshape future LNG demand, and ask perhaps the most important question of all: if Shell is so confident its demand forecast is correct, will it approve LNG Canada Phase 2?
Let’s get into it.
