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While the Petronas-led consortium and the smaller Woodfibre Ltd. are expected to make that decision this year, deferrals are likely if oil and gas prices do not improve, the IEA said.

Japanese LNG prices, which are loosely linked to oil prices, have fallen 50 per cent in the past 12 months, trading at US$7.12 per million British thermal units, far lower than the US$10-US$13 per mBtu needed for most LNG projects. Global LNG supply is also set to rise 40 per cent during the next five years, leading to a global glut that will likely keeping prices lower for longer.

Although Canada’s LNG projects would be closer to Asia than projects in the United States, they suffer from higher capital costs and follow the traditional integrated upstream model; their remote location is also adding to the investment bill.

“Procuring the required skilled labour is more difficult and costlier in this environment,” the IEA warned in a section on Canadian gas entitled ‘A darkened outlook.’ “Proceeding with such large cost items is challenging under any market condition, but the plunge in oil prices will certainly make companies think twice before pushing ahead.”

Further displacement seems likely when judging from the pipeline of new projects

While Canadian natural gas’s growth potential may be evaporating, it is also facing a major fight on its home turf amid the march of U.S. shale gas.

Canadian natural gas exports to the U.S. have contracted 30 per cent over the past seven years, but Alberta gas also finds itself being displaced by U.S. Marcellus shale producers in its core market of central and eastern Canada and U.S. midwest.