By Patti Domm
Canada is jumping on an unexpected opportunity presented by the war in Iran to gain more market share in global energy markets.
"With Iran closing the Strait of Hormuz, it has truly never been clearer that oil and gas from reliable producers like Canada is what our allies need," Canadian Minister of Energy and Natural Resources Tim Hodgson said Monday. Hodgson was speaking at S&P Global's annual energy conference in Houston and was flanked by Canadian government officials and industry executives.
The vast majority of Canada's energy exports head to the U.S. But in recent years, Canada has also been sending shipments of liquefied natural gas and oil to Asian countries, including China.
Jackie Forrest, executive director at Arc Energy Institute, told Barron's at the energy conference that there is a "good chance" Canadian LNG companies will score long-term contracts this year with new customers.
"I think they are doable and that gets done, especially in light of the shortage of LNG," she said of the contracts.
Asian countries, which sourced majority of their energy from the Middle East before the war, could be prime buyers now that the Strait of Hormuz is effectively closed and critical LNG facilities in the Middle East are damaged.
Canada is geographically advantaged to sell to Asia. Ships from the U.S. must pass through the Panama Canals. Ships departing Canada's west coast can reach Asia's east coast, without obstructions, in less time.
Canada first started shipping LNG to Asia last summer as part of a national LNG project to develop the country's export facilities. By 2030, the Canadian industry is expected to have 6.1 billion cubic feet a day of LNG export capacity. Canadian Prime Minister Mark Carney aims to double that by 2040.
Canada has also been working to boost its oil exports over the past year. The infrastructure buildout needed to do that at scale, however, will take time.
The Carney government and Alberta are currently working out the details required to begin the application process for a pipeline that would take at least 1 million barrels of crude a day from the oil sands in Alberta to the west coast for export. That application is expected to be submitted summer.
Alberta Minister of Energy and Mines Brian Jean said at the conference that Canada is having "good discussions with Asia and different jurisdictions" about funding the pipelines. If and when they materialize, Canadian oil production and exports will increase.
"By 2030, we are probably going to be around 6 or 6.1 million barrels" in daily oil production, Jean said. He projected production could reach 8 million barrels a day by 2035.
Most of Canada's crude oil comes from the oil sands, an unconventional but vast energy source. To produce oil there, the industry separates heavy oil, or bitumen, from the sands through an underground process that uses steam.
In a high oil price environment like the present, companies producing from oil sands stand to benefit more than their rivals. That is because the break-even production cost for oil from the sands is relatively low, around $30 to $40 per barrel, according to Enverus senior energy analyst Michael Berger.
The stocks of Canadian oil sands producers, including Imperial Oil, Canadian Natural Resources, Cenovus, and Suncor have shot up more than 12% since the war started. They were already outperforming the S&P Energy Sector, a widely watched U.S. energy stock index, before the Iran war. The State Street Energy Select SPDR ETF, which is based on that index, is up 36% so far this year, while the Canadian sands companies are all up 45% or more.
Global energy companies that bet on the Canadian energy sector early stand to benefit. ConocoPhillips is heavily invested in Canadian oil sands. Shell was an investor in the Phase I LNG project and is likely to invest in the next phase.
"It was a long, long-running investment thing that started over a decade ago," Shell CEO Wael Sawan said at the conference. "But the thesis of it played to, unfortunately, what is happening at the moment, which is you need diversity of supply."
Write to editors@barrons.com.
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(END) Dow Jones Newswires
March 24, 2026 18:48 ET (22:48 GMT)
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