(EnergyAsia, June 1 2015, Monday) — The US is well ahead of its resource-rich northern neighbour in developing projects to liquefy and export natural gas projects to Asia, said consultant Wood Mackenzie.

“While North America’s huge gas resource base offers significant potential for LNG exports, 50 million tonnes per annum (mmtpa) of LNG production capacity is now under construction in the US, compared to none in Canada,” it said.

Canada’s slow pace of development is due largely to the high cost of building expensive infrastructure in remote, pristine parts of the country to support LNG projects. Investors also face fierce opposition from aboriginal and environmental groups, making it difficult for the projects to yield viable commercial returns.

By contrast, in the US, LNG developers are focused on low-cost brownfield expansion. Wood Mackenzie said the only incremental expenditure for many US projects is the price of adding  liquefaction trains and making some modifications to existing facilities.

While US costs are rising, particularl in the active Gulf Coast area, LNG projects close to sanction like Corpus Christi will likely proceed with a second wave of investment expected to follow.

“The availability of cheap gas feedstock has created a resurgence in gas industry developments, pushing up demand for craft labour and leading to wage pressures. We believe it could be 18-24 months before capital costs for new LNG developments return to the level they were prior to the gas-fed construction boom,” it noted.

Meanwhile in Canada, the oil price collapse offers the potential for a lowering of LNG-related costs. Oil companies are slowing down investment in Alberta, freeing up capital and labour to the emerging LNG sector.

Wood Mackenzie believes Malaysia’s Petronas will sanction its 62%-held Pacific North West LNG project in 2015 after squeezing contractors of discounts of at least 15%.

“It remains to be seen whether contractors will oblige. If they do not, then the worry will be that a rising oil price will push the costs of Canadian LNG back up,” it said.