While big Asian liquefied natural gas (LNG) export projects stall on the Pacific and Atlantic coasts, a distinctive national pattern of remote industries and settlements is enabling an inland start on Canadian LNG supply and distribution development.

The niche market -- known as off-grid energy -- is small compared to overseas LNG tanker traffic: truck, train and barge deliveries to mines, power plants and villages in forests, mountains and tundra. But the dispersed demand adds up.

A new study done for the Canadian Gas Association by the Ottawa branch of Fairfax VA-based ICF International discovered C$1.4 billion (US$1.1 billion) in current investment in LNG for 58 industrial sites and 23 communities.

“These projects are just the beginning of the potential for LNG adoption,” according to the report. “Approximately 200,000 people live in nearly 300 remote communities spread across Canada that are disconnected from central energy supplies. These remote energy markets are ‘off-grid’ regions of Canada that are not connected to the North American electrical grid or to natural gas distribution pipelines.”

The sponsors of the initial LNG operations are chiefly household names in Canadian energy supplies: AltaGas, Fortis, Northeast Midstream, Gaz Metro, Ferus and Union Gas.

Markets include obvious Arctic regions of the Yukon and Northwest Territories. But most off-grid LNG destinations are within difficult but usable industrial road, rail and river barge networks across vast northern tracts of Alberta, British Columbia, Manitoba, Ontario, Quebec and Saskatchewan, far beyond Canada’s main population clusters along the border with the United States.

Total forecast deliveries for the initial batch of off-grid LNG are about 27 Bcf per year or 73 MMcf/d as of the 2020s. The modest volumes enable construction of supply plants on established transmission and distribution networks.

The 81 community and industrial customers are forecast to save more than C$2 billion (US$1.6 billion) over 10 years by substituting LNG for fuel oil and especially diesel, which is notoriously prone to large and rapid price hikes in Canada.

The budding trade in small-scale LNG is also poised to sprout an international dimension under a gas export approval that Florida-based Crowley Maritime Corp. is seeking from the National Energy Board (NEB).

An Alaska arm of the marine services firm, Crowley LNG Inc., is awaiting approval of a 25-year license to ship out 287.5 Bcf at an average annual rate of 10 Bcf, or 27.4 MMcf/d. Supply agreements have been made with FortisBC Energy Inc. and Ferus Natural Gas Fuels Inc., which are building utility and regional market-scale LNG plants in BC and Alberta. Target customers are U.S. versions of Canadian off-grid energy consumers in Alaska, Hawaii and the U.S. Pacific Northwest.

Crowley has told the NEB that although adequate supplies could be obtained with routine two-year export permits the long license would enable synchronization of long contracts and financing arrangements for LNG delivery and storage hardware.

Off-grid LNG development is a silver lining to chronically low gas prices owed to shale supply abundance.

Evolving Canadian carbon taxes and cap-and-trade emissions reductions policies also favor clean-burning liquefied gas, ICF said. BC and Alberta have enacted environmental levies. Ontario and Quebec are enacting policies. All Canadian provinces and territories have agreed to co-operate with the federal government on creating at least a “framework” for a national climate change policy this fall.

By replacing fuel oil and diesel, the consulting firm predicts the first batch of LNG conversion customers alone will achieve cuts of greenhouse gas exhaust equivalent to more than 500,000 tons per year. “After accounting for additional emissions from the LNG conversion processes of liquefaction and regasification, LNG represents around a 22% improvement over diesel.”