It’s always interesting to see how other people look at you. I’m in Australia this week and have been watching the papers here for mentions of the Yukon, or at least Western Canada.
I have to admit that I was surprised that it was our friends in Fort Nelson who made the headlines first. The Australian, the paper with the biggest circulation here, had a prominent story entitled “Japan and Canada in shale gas supply deal.” It mentioned the Cordova Embayment just south of the Yukon border, the Cutbank Ridge shale gas project near Dawson Creek and the natural gas export terminal being built near Kitimat.
There are no prizes for guessing why Australian papers are writing about Fort Nelson. Australia exports a huge amount of natural gas to Asia, and the development of fracking has turned the gas fields of northeastern British Columbia into major new competition.
Australian companies have made huge bets on gas. The Gorgon project alone in Western Australia has an investment budget in the $30-billion range, making some Fort McMurray projects look small.
Australia exports so much gas that there is a looming shortage in New South Wales and Victoria.
One gas market analyst told The Australian that the deal between Canada and Japan “should send a shudder down the spines” of natural gas executives here.
Meanwhile, The Australian’s Tokyo correspondent reports that the Nikkei Shimbun predicts that 10 per cent of Japan’s massive gas appetite will be fed by Western Canadian gas by 2020.
Japan’s demand for natural gas is expected to grow even more now that the country is shutting down its nuclear reactors following the Fukushima disaster last year. Japanese Prime Minister Abe made Ottawa the first stop on his recent North American tour, saying that Japan wanted to “secure a stable supply of LNG (liquefied natural gas) at competitive prices.”
Plenty of Australians have qualms about the environmental impact of natural gas extraction, and the risk that the economy will become too reliant on gas exports. Some politicians have complained about exporting so much Australian gas to Asia that local prices have gone up. The Australian Financial Review reports that households in the state of Victoria will see $300 spikes in their annual gas bills, and that Australian manufacturers are struggling under the double whammy of a high dollar and high energy costs.
The Australian papers have also been full of news about the most recent scientific reports on climate change. Dry and hot weather has made bush fires a top news item.
The newly elected coalition government, led by right-winger Tony Abbott, doesn’t look worried. They are pushing hard on energy production. On the day the government was sworn in, Abbott ordered an end to Australia’s carbon tax. It’s not clear he has the votes in the Senate to kill the tax, but his intentions are clear. The coalition government has also made coal-bed methane a priority, much to the horror of Australian environmentalists.
It looks like Canadian and Australian gas will be competing for Asian buyers, along with gas from Russia, Central Asia, Burma and maybe even Vietnam. Northwestern North America’s huge gas reserves are attracting attention from around the Pacific. Big name energy companies from Korea, Japan and China have made big investments in northern British Columbia already.
Our corner of North America can expect plenty more attention from global energy markets in the years to come. We might hope to be known for our mountains, rivers and northern lights. But at the moment the world seems more interested in our fracking.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. You can follow him on Twitter @hallidaykeith