Canada’s New Nation-Building Projects and the IEA 2025 Outlook
This week on the podcast, Jackie and Peter break down the Canadian government’s latest release of nation-building projects. The second tranche includes a major LNG export development, Ksi Lisims LNG, along with a new electricity transmission line in Northwest B.C., three mining projects, and plans for a Northwest Critical Conservation Corridor.
They then turn to the IEA’s World Energy Outlook (WEO) 2025, which reintroduces the Current Policies Scenario (CPS) after a five-year hiatus. The CPS examines how global energy demand evolves under existing policies and shows oil and gas consumption continuing to grow through 2050. The report also highlights the energy requirements of rapidly expanding AI data centers. Jackie and Peter debate how this surge in load will be met—and which energy sources are most likely to power it.
Content referenced in this podcast includes:
- Prime Minister Carney announces second tranche of nation-building projects referred to the Major Projects Office (November 13, 2025)
- IEA World Energy Outlook 2025 (November 12, 2025)
- Open Circuit Podcast (November 7, 2025)
- The Stargate Project (January 2025)
- How Meta’s Data Centers Drive Economic Growth Across the US (November 7, 2025)
- US electric vehicle sales slow as Trump champions petrol (November 13, 2025)
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Episode 303 transcript
Disclosure:
The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.
Announcer:
This is the ARC Energy Ideas podcast, with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.
Jackie Forrest:
Welcome to the ARC Energy Ideas Podcast. I’m Jackie Forrest.
Peter Tertzakian:
And I’m Peter Tertzakian. So Jackie, Grey Cup.
Jackie Forrest:
I didn’t watch Grey Cup. I actually went skiing this weekend.
Peter Tertzakian:
Oh, wow, the hills are open.
Jackie Forrest:
Yeah, I’ve been out a few weekends already. Sunshine and most of the other ones are starting up soon, or if they haven’t started up, it’s still early season skiing, but better than this time last year.
Peter Tertzakian:
Yeah, well, from my mountain view, I could see that this mountains had a lot of snow and it was in Canmore this weekend, so you could see at higher elevations. So that’s great news.
Jackie Forrest:
Yeah. But as always, we’re still praying for more snow.
Peter Tertzakian:
Yeah, we’re going to need it.
Jackie Forrest:
In the mountains at least.
Peter Tertzakian:
Yeah. Okay, well, speaking of coming out of the cold, we have some more announcements from the major projects office or from directly from the top. The Prime Minister.
Jackie Forrest:
Yeah. Seven additional projects were announced. One was a concept, six were actual projects. So if we add that to the five already, we’re up to 12 projects that the Major Projects Office is shepherding forward. But first, let’s talk about what wasn’t there, talking about Grey Cup. There was an expectation from the Alberta Premier that there would be a West Coast oil pipeline on the list, we didn’t see that, although she seemed to take it quite well. She said they’re working on an agreement that includes the removing of several damaging laws, and she still feels optimistic that there’ll be some sort of agreement here.
Peter Tertzakian:
Yeah, there’s upbeat noise in the background for sure. I’m not certain why people were expecting a pipeline announcement given that these sort of projects are supposed to have a proponent, and while the Alberta government is a proponent, all they’ve done to this point is allocate $14 million to have the pipeline companies, the consortia of pipeline companies, Examine, study and decide what the best pipeline route is. So in the absence of a route, I’m not clear how you’re supposed to have an announcement about a pipeline.
Jackie Forrest:
Well, the Premier did set that expectation, but it is interesting when you look at the list that came out last week, there’s one thing called a concept, which is a pretty high level description of some sort of a corridor that they want in Northwest British Columbia and into the Yukon. So I would say that concepts seem to make the list and I think that’s what this would be if it does make the list at this stage.
Peter Tertzakian:
Yeah, I think it’s important to keep the momentum going, but again, I think that it would be a little presumptuous to think that such an announcement would come so soon. I think it’s going to take several months still before the engineering studies are done and the route decided, because even having an announcement about a corridor requires a study of what corridor is the best.
Jackie Forrest:
Yeah, well, and I think that’s going to have to get pretty advanced because there’s so much political risk on it before any private developer would come into it. I did want to mention the Enbridge also late last week announced that they are going to add some capacity on the main line. The main line is the big pipeline that leaves Western Canada, goes to the Midwest and then other pipelines take oil all the way down to the Gulf Coast through the Enbridge system. They announced they’re going to add 250,000 barrels a day, and this could be complete by 2027 and would only cost, not only, but 1.4 billion in the world of pipelines. Adding that type of capacity is pretty reasonable, pretty low cost.
I’ve noticed over the weekend some like, “Well, does this mean we don’t need the West Coast pipeline?” Well, 250,000 barrels a day is helpful, but it certainly doesn’t replace the idea of a West Coast pipeline. I think you can and should do both.
Peter Tertzakian:
Yeah, and it has to feed into the Premier’s mandate letter, which wants to add another couple million barrels per day. So 250 is a far cry from a couple million barrels per day, and if we really want to diversify and get top dollar for our commodities and ensure we don’t endure more price discounts, then getting our oil off the West Coast and into the Asian markets is really the strategic play.
Jackie Forrest:
Yeah. Well, let’s switch to these new seven projects that came on the list. Like as I said, the first one is a concept, it’s called the Northwest Critical Conservation Corridor, but the idea is to build electricity infrastructure and other infrastructure to develop critical minerals in Yukon and BC. That one’s a little bit more opaque. And that’s where I was saying I think this West Coast pipeline for oil could fit into a category like that.
But the more tangible projects, one is a big transmission line in the north coast of BC eventually could be 2.2 gigawatts. This project was already under the BC fast tracking process, so now it’s got the federal and the BC fast tracking process, and I think it was well expected to be done. In fact, BC had already expected that shovels could be in the ground by 2026. But the interesting thing about this, this will bring power from Prince George to Terrace and could provide some power for LNG projects as well.
Peter Tertzakian:
And for those of you who can’t remember your British Columbia geography, Terrace is right next door to Kitimat, which is the big port from which the LNG tankers go. There’s a big aluminum smelter there now as well. And so it’s quite an industrialized area and definitely will need more power. So going from Prince George, which is inland, we’ll probably tap into Site C and those sorts of power sources and potentially enter ties to Alberta.
Jackie Forrest:
Well, and the thing is, the next project on the list, the Ksi Lisims LNG project, it was great to see that that project made the list. That also would need a little bit more transmission, but it may help bring electricity to that project as well. So good news, this project was supported by the Nisga’a Nation, but also has equity ownership from a consortium of producers and also a group from the US. This will be Canada’s second-largest LNG facility. And if you consider LNG Canada, phase one right now is 14 million tons. This would be 12 million tons. Of course, we’re hoping that LNG Canada phase two will come along with 14 million tons as well. The idea is that it will be fully electrified eventually when these power lines show up.
The Prime Minister’s notice talked about a $30 billion investment when you consider not only the liquefaction plant, but also considers this 800 kilometer pipeline that will go from the oil and gas production fields all the way to the West Coast. So this is exciting news when you add it all together, the LNG Canada Phase 1, Phase 2, which is not final investment decision, but is on the major projects list, the Ksi Lisims, and then the other projects like cedar and wood fiber that are under construction that gets us all the way to 50 million tons per annum. And so Prime Minister was in Asia talking about that. It seems possible that we could get that done by 2030.
Peter Tertzakian:
Yeah, 50 million tons per annum gets us to the stage where we don’t have to worry about being hostage to market discounts here in Western Canada. Really, what we have is a world-class natural gas production potential reserves here in Western Canada, and we’re hostage to two major markets, our own domestic market and the American market, if you think about it on a continental scale. And so when you’re hostage to two markets, you’re hostage to similar weather patterns, continental weather patterns, you’re hostage to the vagaries of policy uncertainties and surprise policies and so on. So really to break out of the continental bottleneck and also we compete aggressively with the American natural gas reserves, which are also pretty vast. We need to break out of the North American bottle, I’ll call it. And to do that, I estimate that 50 million tons per annum is probably the minimum you need to really consider yourself diversified and open up to the Asian Pacific markets, which would include China, South Korea, Japan, Taiwan, and all the way around the bend to India.
Jackie Forrest:
Yeah. Well, and if you asked me a year ago, if I’d be sitting here a year later and saying that, “Oh, I think it’s highly likely that we’re going to have 50 million tons,” which was the equivalent by the way of over six PCF per day of LNG exports off our West Coast by before 2030 or around 2030, I would’ve said, “No, that’s not going to happen.” So I’m happy to see this change in support from our federal government because it certainly is going to need federal leadership.
There’s been some criticism with all of these projects. Well, they’re pretty far along, so what is the Major Projects Office doing? For example, this one actually has its environmental certificate. It received it earlier this year, but there’s a lot of political risk on these, and to me, if you’re trying to raise capital from folks around the world showing that the prime minister and a Major Project Office is supporting this, I think is very helpful for making sure these projects actually make it through all the gates that are needed to get to final investment decision and then ultimately construction and shipping.
Peter Tertzakian:
Well, it’s not only make it through all the gates, it’s make it through all the gates in a timely manner because time is money and also the competition globally isn’t going to wait for Canada. So if we want to be in the game, and also if we want to diversify and show leverage in this economic warfare that we’re being subject to globally, then we got to get on with it.
Jackie Forrest:
Yes, put it in perspective, six BCF per day is about one third of total Western Canadian sedimentary base and gas production right now, so the 30 billion I think really understates the economic benefits to this country because it doesn’t account for the fact that we’re going to have to grow the gas production, we’re have to build gas plants and infrastructure. This is massive. And then of course, these are 40 year assets, so there’ll be operating costs and impacting GDP as well as generating a product that we sell for 40 years. Huge economic benefits when we’re talking about growing our GDP, it has that benefit as well as the geopolitical benefit that you talked about as well.
Peter Tertzakian:
Yeah, I think that 40 years is understated. I mean, a lot of our infrastructure for energy in this country, some of it goes back 100 plus years. The main lines, both the natural gas line and what is now the Enbridge main line, elements of those go back to the 1950s so I mean you’re talking 75 years.
Jackie Forrest:
Well, we’re going to get to the long-term outlook for oil and gas, though. I think there’s a view that maybe 75 years from now, we won’t be using as much, but we’ll get to that because the world energy outlook came out and it has some differing views. But before we get to that, we’ll talk about the other projects. There were three critical mineral projects. There was a tungsten mine, a graphite mine, and a nickel mine. We also have a hydro project in Iqaluit. Those are the other projects. But when I look at the capital cost associated with those projects, four of them actually had stated what the capital cost would be. The four that were listed add up to 13 billion, and the LNG project is 30 billion, so it just shows you how massive these LNG projects are. Not to say that those other projects aren’t important and that we shouldn’t develop them, but these LNG projects are quite large when we look at the potential projects that you could build in Canada.
Peter Tertzakian:
Yeah. Oh, I think we have to develop them, and I do think they need governmental support to get going. I mean, we’re not in a situation right now where people are banging the door down and saying they want to invest here, so these things do need to be kickstarted. And we are in a world that’s deglobalizing, where supply chains are being repatriated, where the value of things like critical minerals is becoming acute if we want to be globally relevant in terms of our resources and being able to leverage those resources for some sense of influence in things like trade negotiations, it’s like we have to support these things.
Jackie Forrest:
Okay, well, on that, one of the reasons that people debate this in this country is there’s a view that oil and gas demand is going away quickly and therefore these will be stranded assets. But we did have some news from the World Energy Outlook. This is the IEA, very influential group who came out with their new outlooks. They’re actually scenarios that they put forward about how oil and gas will evolve as well as the whole energy system, including renewables and how much power is going to be needed for various things including AI. These were closely watched because after a five-year break, they brought back what is called the current policy scenario, and this scenario looks at the policies that are actually in place today by governments and what would the outlook be for energy in that scenario.
They also have one called the stated policies, which is governments have said they’re going to do things like we’ve said that we’re going to force all electric cars by 2035. They look at those sorts of things and say, “What would that mean for the outlook of the energy systems?” And then they have this net-zero by 2050 scenario. So over the last five years by not putting out the current policy scenario, I think it’s created a lot of confusion because policymakers have felt that the messaging has been more around net-zero or the stated policies, that that’s the more likely scenario, I would say, based on the way things are going today.
You don’t see a lot of governments adding more carbon policy right now that the current policies is a real potential outcome, and it shows growth for oil demand all the way to 2050. In fact, oil demand grows from 100 million barrels a day last year to 113 million barrels a day by 2050. That’s 13% increase. And natural gas demand actually grows 30% over that same time period. This is a world where there still would be need for growth in projects like our LNG projects or our West Coast oil pipeline.
Peter Tertzakian:
Yeah, we’ve been hearing about this story about end of oil for a long time. In fact, I can show you articles that go back to as early as 1914 on the eve of the First World War where the article basically says, “Coal is dead, oil is in.” Coal is [inaudible 00:13:51], it’s a dead fuel and so on. Well, coal consumption grew seven times since 1914 to today because it found different markets to operate in. And I think this is one of the prime mistakes that people make when analyzing the oil markets. They think that oil, A, is a homogeneous commodity and that it’s all used for vehicle transport, particularly cars, and it’s going to be completely displaced by electric vehicles. I mean, it’s just not true. Oil is a multifaceted commodity that has extremely high utility in many markets at a very low price.
For example, the petrochemical growth is really substantial and coming from Asia where they have tooled up a whole bunch of new refineries that are very modern and that can take any kind of hydrocarbon in and make all sorts of products coming out. And so yes, whereas some loss of oil demand will come from the vehicle market when 1.2 billion vehicles or how many there are turned over eventually, but there’s growth in other markets. I mean, this is a thing that happened with coal in 1914. It forfeited the transportation market in things like locomotives and steam ships, but found new markets at that time in power generation. This is what we’re seeing with oil is okay, it’s forfeiting some of the transportation market. Not all because we still need oil and airplanes and big equipment and stuff, but in other markets, it’s starting to grow and grow quite substantially. And this is where our opportunity is as Canadians because the heavy oils that we have are what the Asian refineries want.
Jackie Forrest:
Right, and we’re seeing that in terms of where the oil is going when we finally have oil off our West Coast, so that’s important. Also, I think the electric cars and this report speaks to that. They’re going to grow quite a lot in some regions, but they really pulled back their expectations in certain regions like North America. I want to come back to that stated policies, because that’s even one with more aggressive policy than today. And even then oil demands pretty much flat. It’s basically still 97 million barrels a day in 2050.
The other thing is that overall, people are getting more wealthy, they’re using more energy per person, and so that even in a scenario where we start to move oil out of certain sectors like transportation, we still have growth in some of those other areas like you talked to. For a reminder, they still had that net-zero. To achieve that oil demand would need to drop 75% by 2050. That’s just such a big gap here between what looks likely and what you need to get to net-zero. It reiterates to me that net-zero is looking very, very difficult to achieve and impossible.
Peter Tertzakian:
Well, 75 million barrels per day in 25 years is 3 million barrels per day per year, and it’s not showing any signs of doing that. In fact, during the pandemic, what was the loss when the whole globe immobilized?
Jackie Forrest:
At its worst, it was down 30%.
Peter Tertzakian:
Yeah, at first it was down 30%, but it was not down 100% when everybody was immobilized.
Jackie Forrest:
No, it was down 30% at the very worst.
Peter Tertzakian:
And so 3 million barrels per day per year is a huge amount, and it’s actually growing by one and a half. Arguably it’s going to grow faster is my projection because of all this AI stuff. And you’re going to say, “Well, oh, AI uses electrical power generated by nuclear and renewables and natural gas.”
The reality is I’m looking at the numbers and saying there’s no way that even those categories are going to be able to power in the timeframe that all these data centers need power. And my prediction, a theme for 2026, which we’ll come back to in our December podcast, is that we’re going back to diesel engines to generate power for these facilities.
Jackie Forrest:
Yeah, we’ll talk a little bit about AI because they have some forecasts for that. I will say that clean electricity still grows a lot in these scenarios because-
Peter Tertzakian:
Well, it has to.
Jackie Forrest:
… people are still getting more wealthy and their primary energy use is still going up. And so oil demand is actually flat when you look at the history of the growth of oil demand, the next 20 years looks much, much slower. And that’s because clean energy is as filling in the void there.
Peter Tertzakian:
I just want to caution, I mean nobody has a perfect crystal ball, but people have been saying that for the last 10 years and it’s not happening. That clean energy is just helping to take the edge off of top-line demand growth and that we’re diversifying into renewable energy power sources and that things certainly like natural gas and even oil are not retreating in their growth profile.
Jackie Forrest:
Well, they are slowing. There is a slowdown in the demand growth.
Peter Tertzakian:
Okay, but they’re not going away.
Jackie Forrest:
No, but we are seeing the additions for solar and wind last year we’re quite significant.
Peter Tertzakian:
But this dynamic has happened in the last, we’ll call it five to seven years at a time when this whole AI dynamic at the time when this whole reshoring and repatriation of industrial capacity was not happening. As I look forward, the combination of this AI growth and repatriation of industrial capacity into countries like the United States where it takes a tremendous amount of energy, you can’t fulfill the energy needs of these dynamics with the existing complex of energy supply sources, which necessarily means one of two things. Either you’re going to have to go back into some aggressive Hydrocarbon growth, or two, the whole story is going to have to fall apart.
Jackie Forrest:
Right. Well, and the IEA will agree with that when it comes to the AI in North America before we switch to electricity, I did want to make one more point before we leave oil and gas, that the IEA, they came up with that messaging in 2021 that no new investment in new oil and gas plays, and that created a lot of confusion. We shouldn’t be investing in upstream oil and gas.
But interestingly enough, for both of the new scenarios, they talk about the current policy or the stated policy scenario, they think that a lot of investment needs to continue to go into oil and gas for the current policy. They actually think it needs to be over $100 billion more than what’s being spent today. And they’re actually predicting higher oil prices by the 203s, like the $80 to $90 per barrel level for international oil because-
Peter Tertzakian:
2035.
Jackie Forrest:
Yeah, because they’re saying we need more investment. Now, I know they’re very conservative, but the fact that a group like this is saying that we need more investment in oil and gas, oil prices are going up if we don’t invest more to me is a real change in messaging.
Peter Tertzakian:
Right. Well, don’t forget that the International Energy Agency was commissioned because of the oil price shocks of the Nineteen-seventies and its mandate was to actually encourage the development of energy resources, especially oil as a consequence of that because the IEA is a consortia, I don’t know how many it is. I think it’s 30 some western countries that got together to create the agency to monitor the world’s energy situation, but particularly the western countries. And for most of the existence of the IEA, it has been there to encourage the development of energy, and also, the other part of it was to encourage the development of storage strategic petroleum reserves. So it’s just basically back to the future here.
Jackie Forrest:
Going back to their roots, yeah. And I think there is a real issue here. We’re on a track that looks like we’re going to have higher demand, and so more investment is needed. Let’s talk about electricity. They talk about this being the age of electricity is here with global electricity demand rising by 40% to 2035, and saying that we’re not putting nearly enough money into the grid and all of the infrastructure needed to support that. They describe AI electricity demand growth as explosive and say it will be focused on the US, Europe, and China, where 85% of new capacity additions they predict are going to be in those locations. And this was really interesting point. The annual investment in data centers in 2025, they think will be 580 billion. This is the capital spent on building these things. And just to put it in comparison, the oil industry is spending about 540 billion on oil and gas supply. We’re spending more money building these data centers than in oil and gas so that’s how significant of an industry it’s becoming.
Peter Tertzakian:
Well, what is a data center? It’s a collection of servers, which underneath the hood is a whole bunch of semiconductors of various sorts to do all these specialized AI computations and storage of data and whatnot. A semiconductor is basically a heater. 100% of the electricity that goes in goes to creating heat and information, which is an abstract commodity. These are heaters, and then on top of that, you need another 20% on average to cool these things. For every unit of energy of electrical energy that goes in, you need another 0.2 units to cool these things because otherwise they’ll burn up like a light bulb. I mean, the amount of energy requirement and energy investment is just massive. You’re telling me that the amount of spending on basically installing light bulbs is greater than the amount you’re spending on building out a grid tells me there’s something wrong.
Jackie Forrest:
Well, this is the oil and gas only. Just the oil and gas piece.
Peter Tertzakian:
Well, yeah. It’s necessarily, as I said earlier, going to require oil and gas because when you look at hydro dams, they’re either drying up or there’s no more big rivers to dam. You look at nuclear power plants, they’re expensive and take a long time. You look at natural gas, there’s a four or five year backlog on turbines. You look at renewables, they’re great, they can scale up, but they’re not as reliable. It’s more intermittent so you have to make battery backup or otherwise. So what’s left? What’s left is coal and oil.
Jackie Forrest:
I would argue that we are going to see some wind, solar, and battery backup because the marginal price of electricity I think is going to go to these little gensets like you talk about whether they’re fed by gas or oil. But just to give you a number, and this is actually often Open Circuit podcast, Jigar Shah had talked about Caterpillar has these 30 megawatt little natural gas gensets. His view is a levelized cost of electricity is $140 per megawatt hour. Well, wind solar with battery backup can compete with that. So I actually think we’re going to see every type of generation come on, including clean energy, because if you can’t get the big cogen natural gas plants, they’re backordered to 2030. In the meantime, I think that these are going to be the solutions, and I think wind and solar, they can be built quickly and they are competitive even if you want to back them up with some of the other options.
Peter Tertzakian:
Well, we’re already seeing this dynamic where back to the future, we’re going to be generating electricity from reciprocating engines. In other words, pistons. I mean you look at the manufacturers of big reciprocating engines, or small for that matter, for the purposes of electric power, you’ve got the actual engine manufacturer. There’s Caterpillar, there’s Cummins. You look at their stock charts, they’re at all time highs. They’ve doubled in the last year. And so that’s basically the market saying, “Okay, well this is where the supply for the electrical power generating equipment has to come from.”
We’ll say, “Well, what powers those things? What powers those things are either natural gas and/or diesel?”
Jackie Forrest:
Yeah, no, and I think you’re going to see increase in those, but I also think you’re going to see some of these clean energy options come out.
Peter Tertzakian:
I’m not saying we’re not going to see clean energy. Clean energy has to be part of it. It’s just that you can’t keep up with 80 gigawatts of data centers with just clean energy, which does not have the 99 point, I don’t know how many nine reliability factors that these hyperscalers demand.
Jackie Forrest:
Yeah. Well, and I think there might be some change in that too because I think if they’re going to build this much, they’re not going to have all of that power 9999, and I think they’re going to have to have some flexibility. Hey, before we move on though, I wanted to just highlight that 580 billion of investment, just the magnitude of it. First of all, the oil and gas industry spends about the same, a little bit less, but we actually know how people make money. I question the 580 billion of CapEx if it’s really clear how people are going to get a return on that, and are we going to continue to see that type of investment year after year?
Peter Tertzakian:
Right, well, lots of people are talking about that. Is it a bubble? Isn’t it a bubble? But that’s talking about the equities of these companies, these AI companies. The capital that has already been raised that has been allocated to building these data centers, and there’s been a lot of debt that’s taken on and there’s hundreds of billions of dollars of capital that’s been raised and allocated towards building these things, which necessarily means building out the energy infrastructure. Here’s the point. I think the numbers actually even higher if you factor in that this is a global AI race, and you’ve got China, you’ve got the EU, okay, Canada chipped in a measly, what? How much did we chip in?
Jackie Forrest:
Actually, that’s a good point. The budget a few weeks ago talked about 1.3 billion over five years for the Canadian government. Of course, they want some private capital too, but that is just very small. For example, Trump’s Stargate that he announced earlier in the year is a 500 billion joint venture with industry so of course it’s not all government money. But Meta announced in a blog last week that they plan to spend 600 billion by 2028 just in the US. I agree, the number in 2025 globally looks like in the United States alone next year could even be surpassed that, and our 1.3 billion to get in the game looks fairly small.
Peter Tertzakian:
It does look small if you want to be in this game. And there is a push. It’s really not our story and energy story, but it’s an important one. And that is that you want to have the data centers and your national data on your own soil. You don’t want it up in a cloud that’s in some different country where you don’t know where it is.
Jackie Forrest:
Americans are obviously moving in a big way that way. Canada in a very small way I mean, but my question just comes back to is are we going to see growth for this year, next year, following years? I mean, these companies do need to figure a way to make money. This is not cheap.
Peter Tertzakian:
The World Series is over, but the baseball analogy comes to mind if I look at the capital spending numbers, we’re in the first inning. By ’26, you’re really going to start to see it move, ’27, ’28. Okay, this capital that has been raised by all these companies, large and small, being put to work to build these data centers. I mean this juggernaut has just started and it’s going to have profound implications to the energy complex. And I don’t think it’s fully baked into either the commodity prices or the ultimate realization here that the pace of development is not sustainable.
Jackie Forrest:
Well, I think there could be constraints to the growth. Sure, they want to spend this money, but are we going to be able to build power plants and generators?
Peter Tertzakian:
There’s already in the last month or two already, there’s quite a few articles that are starting to come out that say that the electrical power and needs cannot be satisfied with the grid, cannot be satisfied, as I said, with the backlog and gas fired turbines and everything else, transformers and everything that you need that something’s going to fall apart, but follow, what does that mean fall apart? It’s not black and white. There’s still going to be a big build out, and that big build out has to be satisfied somehow and going to take all the forms of energy and the easiest forms of energy to quickly ramp up our renewables, although they lack, as I said, that reliability factor. But you go all the way down the list of things and you’re back to things like reciprocating engines to generate electricity, and that’s what we’re seeing.
Jackie Forrest:
But I mean, okay, Meta’s planned project, this one, it’s going to be five gigawatts of energy demand. They actually have a picture of it over top of Manhattan Island. It’s actually going to be a Louisiana. But just to give the scale, it’s so large that it takes a large piece of Manhattan Island. Just to give you a sense of the scale of this thing, I mean, are you going to back this up with 30 megawatt natural gas gensets from Caterpillar? No, you’re not. There’s going to be some limits, I think, right?
Peter Tertzakian:
Well, yeah. Five gigawatts is like five nuclear power plants.
Jackie Forrest:
Right, yeah.
Peter Tertzakian:
But some of these big marine engines that go into big ships that are diesel, they’re huge. I don’t know what, they’re probably at least 100 megawatts. You got 50 of these things lined up and you’ve got your five gigawatts, right?
Jackie Forrest:
Yeah. Well, it’ll be interesting to see. Now the report from the World Energy Outlook, the 2025, it had a figure 8.7, which I will just highlight of our listeners want to go check that out. I will put a link to the full report in the show notes. But that figure actually does have a prediction under current policy scenario on what electricity generation for data centers will look like in the United States, and more than half of the growth comes from natural gas. There’s quite a bit. Nuclear maybe is the next grow as they have pretty modest amount from winds and solar. I actually think that that will be higher. If you look at other groups like Bloomberg New Energy Outlook, they actually see wind and solar contributing in a bigger way to the data centers. But no doubt, natural gas and coal, they actually don’t have oil here in the types of energy that will support the data centers. But natural gas is going to be huge, so this comes back to this whole thesis around natural gas in North America.
Peter Tertzakian:
Well, I’m telling you, it’s going to oil. That’s my prediction. It’s going to diesel and don’t underestimate the ability to make these massive reciprocating engines. I just looked it up. The largest marine engine is 80 megawatts, so you probably need, what is that? 60 of these things to make five gigawatts. So you look at that photo of Meta’s thing over in Manhattan, you go, that blows your mind. How are they going to build this thing in services? Well, don’t underestimate the scale and don’t underestimate the conflict. This AI race is actually, it’s a war between America and China to achieve human level intelligence first and the implications of that. This is like a national mega priority that is multiples in terms of its grandeur compared to the moonshot.
Jackie Forrest:
You’ve got me thinking of these big data centers with these diesel engines all lined up outside of it. Are we not going to have stakeholders complain about this and other barriers that stopped these from going forward?
Peter Tertzakian:
You’re sort of misquoting me. I’m trying to give a sense of scale. I’m not saying that they’re all diesel engines. I’m saying we’re already seeing it. I’m not talking off the top of my head. You can see it, if nothing else in the stock charts of the companies that supply diesel engines, that they are going to be part of the mix and that the pull on these things once they’re installed is probably forthcoming in the next 18 months. So it’s not black and white one energy source. It’s all of the above. What we thought was going to power these data centers is insufficient.
Jackie Forrest:
Yeah, no, these natural gas cogens, you can’t buy more of them.
Peter Tertzakian:
And by the way, look at the coal prices, the coal equities. I mean they’ve outperformed.
Jackie Forrest:
Well, it’s interesting. They show coal as very, very tiny here in their outlook in terms of the fuel source for data sector.
Peter Tertzakian:
It’s not reflective in what’s actually happening in the market. I think 2026 is going to be the year where the realization is going to set in that we are going to need every jewel of energy from every single source to power these things because the capital expenditures and the capital that’s been allocated to building these things out is now probably unstoppable.
Jackie Forrest:
Okay. Well, let’s move on to some of the other topics quickly that they covered. There’s so much in this report, but I actually believe this based on what you just told me. They believe that for other uses for electricity, wind and solar really take off, and I think it’s because there won’t be a lot of other types of sources that can meet that growing demand because we have demand for other things other than AI data centers like load growth is expected to be very diverse, whether it be for air conditioning units, they’re saying air conditioning becomes a big source of new demand because we’re having warmer temperatures, but also more people are becoming wealthy. The first thing you do when you’re wealthy is you try to be more comfortable, right? Industrialization, which like you said, bringing all these factories home takes electricity. And of course, EVs.
I want to talk about EVs because they’re actually quite pessimistic for EV growth in certain regions. In Europe and the United States, under their current policy scenarios so their more conservative one, they actually have by 2035, those two markets reaching close to 90% to 100% of new car sales being electric. That was the outlook before. But North America, they have it staying at 10%. We’re about United States right now is about 10% of new car sales are electric and it’s plateaus all the way out to 2035. India, they have even at a lower level, maybe it’s under 5%.
Peter Tertzakian:
See, I don’t agree with that actually. So now I’m going to argue the other side here that I mean having driven electric vehicles for over 10 years now, the technology is just going to get better and better, and by 2030 there’s going to be another step change in terms of the battery and also the infrastructure is growing out. So I actually think the 10 percent’s too low. I don’t know why they go from one end of the spectrum, 90% to 10%, come on.
Jackie Forrest:
Well, and if the Europeans have such great electric cars, hopefully we could get them too. I mean, we can’t get the Chinese ones right now, but interestingly enough, the CEO of Ford is even more pessimistic. Last week he was quoted in the FT saying that he thinks EV adoption will now only be about 5% in the US market so he’s even more pessimistic.
Peter Tertzakian:
Well, in the near term, he may be right, okay? In the near term, but what is the near term? I think the near term to me is five years.
Jackie Forrest:
Yeah. I’m a believer too, Peter. I wanted to tell you that. My Tesla Y, we finally had 100,000 kilometers on it. We’ve had it about five years. All we’ve really done is change the tires on it. We’ve hardly put any money into this thing. This has been the best car we’ve ever owned in terms of maintenance costs and of course fuel costs because we normally just charge it at home, which is really cheap in terms of fuel costs as well. So I think they’re a superior technology.
The problem is, as I look to our next car, there’s very little options in the North American market now, and it’s getting worse. All these automakers were supposed to bring all these different great cars out, and actually there’s not that much to choose from. I actually think in the near term it might be low just because there’s not enough options. Unless we can get European, and if we could get Chinese cars here, then I think electric cars would just take off because they’re reasonable and from everything I’ve read are really superior vehicles as well. But in the near term, I think it might be slowed just through lack of options.
Okay. One other thing it talked about is LNG. LNG is obviously very important to Canada. We’re talking about being a major supplier here by the 2030s. It talked about, there’s two scenarios. Under the current policy scenario where demand for gas is quite high, that the global market actually stays tight all the way into the 2030s because there is a whole bunch of projects coming on, not only ours, but the Americans, the Qataris, are all bringing a lot of supply on in the late 2020s into early 2030, same time we’re planning to bring it on.
But it’s saying in the current policy scenario, we need all that gas. There’s no oversupply in that stated policy scenario, which is the one that’s just a little bit more less aggressive in terms of the demand for hydrocarbons. There would be a bit of an oversupply in the period of time where we want to bring our projects out. I just look at that and I think of everything going on right now, I think that for gas at least, there’s a good chance that even though all the supply is coming on, that it could be absorbed because we’re going to have a lot of demands for energy.
Peter Tertzakian:
Well, my response to that is five years is not considered the long game. The long game is like 10, 20 years and beyond, and we got to start thinking long game. What happens in the next five years in the ups and downs of supply demand, balance as the build out occurs and as the demand poll occurs and there’s going to be mismatches and so on, you got to keep your eye on the long game. Are we in this for the long game or not?
Jackie Forrest:
Yeah, we are building a 40-year plus, you just convinced me. Maybe even plus plus asset. You have to think of the long term for sure. And I do think that gas will be in demand because we haven’t even talked about data centers in China, but that according to the IEA is going to be another big source of data centers and they’re going to need energy to supply that as well.
Peter Tertzakian:
Sure. Okay. Well, I don’t know. I’m exhausted by this conversation, but it was a good one.
Jackie Forrest:
Yeah, we covered a lot. Thanks to our listeners. If you enjoyed this podcast, please rate us on the app that you listen to and tell someone else about us.
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