LNG expansion could boost Canadian oilsands and petrochemical industries

Canada aims to produce up to 100 megatonnes of LNG annually by 2040, potentially positioning the nation as the third-largest global supplier. Currently, projections estimate reaching 36 megatonnes per year by 2050.

Achieving this ambitious goal necessitates substantial investment in infrastructure, including pipelines, and a threefold increase in drilling activity within Alberta and British Columbia’s natural gas fields. “Canada’s position in the energy world still falls far short of its competitive strengths…it can be a great power,” stated Daniel Yergin, vice chairman at S&P.

Increased drilling would also lead to a rise in natural gas liquids (NGLs), valuable materials like propane, butane, and ethane. These NGLs serve as feedstocks for petrochemicals and fertilizers, as well as fuels for cooking and transportation. They are also crucial for diluting bitumen from the oilsands, enabling pipeline transport.

“The export story for LNG is not just an LNG export story,” explained Kevin Birn, S&P’s chief Canadian energy analyst. “It is a very powerful NGL story. It is also a diluent blending story for the oilsands.”

The study highlights a symbiotic relationship: growth in LNG and oilsands sectors are mutually beneficial. NGLs typically account for roughly a quarter of a gas well’s physical output in Canada, yet contribute nearly half of its revenue.

Under an accelerated development scenario, increased condensate supply could support 1.2 million barrels per day of oilsands production by 2040. Overall NGL production is projected to nearly triple by 2050, generating $300 million in value, according to S&P.

This report was first published by The Canadian Press on November 12, 2026.