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No quit in BC premier; shrugs off idea LNG chance going away
In the three years since she was elected leader of British Columbia’s governing Liberal Party, Christy Clark has delivered a robust message on LNG’s potential for riches — notably her claim of 100,000 jobs and a C$100 billion fund to wipe out the provincial debt.
She started out in 2011 telling British Columbians they had no time to waste if they hoped to beat out rival countries seeking Asian markets. “If we don’t fight for this, we could lose it.”
Then two years ago, she had upped the stakes, declaring that LNG was on a fast track. “Three lines up and running by 2020, the first by 2015. They are clearing the land for the first one already. This is on its way to becoming a reality.”
A year ago her government opened a pre-election session of the provincial legislature with a renewed warning. “Fellow British Columbians, this is the opportunity before us, but only if we seize it. It is not years away; it is now. Our province faces fierce competition from Australia and other natural gas producers. If we do not win this opportunity now, there may be no opportunity to win tomorrow.”
Earlier in February, after launching a new legislative session, she was emphatic that the window of opportunity remains open. “No, we are not getting ourselves behind. Every day I get more confident that the likelihood that an LNG industry will be created in British Columbia is stronger.”
There is little doubt that Clark’s resolute pitch in last year’s provincial election, when she wiped out a 20 point deficit in the polls to post a landslide victory, reflects her relentlessly upbeat style.
Province’s moon shot Lieutenant-Governor Judith Guichon, in delivering the Clark government’s agenda for the new session, compared the administration’s pursuit of LNG to President John Kennedy’s challenge to put an American on the moon before the 1960s ended.
“We choose to do this not because it will be easy, but because it is hard,” Guichon said. “Because it will serve to organize and measure the best of our energies and skills, because that challenge is one we are willing to accept, one we are unwilling to postpone, and one which we intend to win.”
Clark agreed the LNG challenge may fall short of Kennedy’s moon challenge for drama, but said the hard path ahead needs a government that is ambitious and unafraid.
She insisted, despite two delays, that an LNG framework will be unveiled this year and will include tax policies, benefits for First Nations and environmental measures to make the industry the cleanest in the world.
Adrian Dix, leader of the opposition New Democratic Party, scoffed at the parallel with Kennedy.
“To quote someone who had a broader vision of the future only serves to emphasize the lack of it on the part of the premier,” he said.
A spokesman for Finance Minister Mike deJong said the fiscal framework, which has been delayed twice and is now promised for this year, includes an exhaustive review of tax regimes in other jurisdictions — not least the United States — and leaves the British Columbia government certain that it “will be highly competitive.”
Lack of accord But industry observers hint that the delay in reaching an accord with LNG proponents may reflect the province’s high construction costs and the prospect of taxes tied to the government’s environmental goal of producing the world’s “cleanest” LNG.
Geoff Morrison, British Columbia manager for the Canadian Association of Petroleum Producers, said the fiscal regime, including royalties on gas produced in British Columbia and corporate taxes, and the construction costs will be weighed together before final investment decisions are made.
“Clarity and certainty and transparency are good, but getting it right is also important,” he said.
Natural Gas Development Minister Rich Coleman has suggested the tax will likely cover a percentage of revenue or profits, while sheltering the LNG owners from commodity price fluctuations and ensuring the province benefits from the sale of its gas resources.
Acknowledging these concerns, Clark has said she will freeze British Columbia’s current carbon tax until other North American jurisdictions get in line with the province.
Currently, British Columbia charges C$30 per metric ton of carbon emitted from all combustion engines — while Alberta collected C$15 per metric ton from companies that emit more than 100,000 metric tons of greenhouse gases a year.
Additional costs are likely to be associated with obtaining a “social license” in British Columbia, including benefits to First Nations in particular and other affected communities.
But the Clark government bases its confidence on the fact that a dozen sizeable LNG projects are on the drawing boards and, for many, have involved hefty investments in drilling for feedstock gas, acquisition and preparation of sites and planning for pipelines from northeastern British Columbia’s shale gas deposits to LNG terminals on the coast.
Pending US projects However, if British Columbia wants to check on what Clark has been implying about competition, it doesn’t have to check any closer than the United States, where the American Petroleum Institute estimates there are 22 pending applications to process LNG for export beyond North America.
Where British Columbia and Canada hold an edge is in their greater latitude in issuing export permits.
When the Department of Energy, on Feb. 13, approved an application for Sempra Energy to export 1.7 billion cubic feet per day from its Louisiana it raised to six the prospective shipments to non-FTA countries and lift the level of authorized exports to 8.7 bcf per day.
Among economists there is a broad consensus that once those volumes reach 12 bcf per day they will be at a tipping point that could see domestic U.S. gas prices start to rise.
Analysts with Clearview Energy Partners said that approvals above 12 bcf per day would exceed the “upper bound of the range of economic outcomes” studied by the U.S. Energy Information Administration and NERA Economic Associates.
Paula Gant, the Department of Energy’s deputy assistant secretary of energy for oil and natural gas, said the agency had not yet changed its approval process and expected to continue issuing non-FTA permits about every six to eight weeks.
In comparison, Canada’s National Energy Board has approved seven export permits that probably surpass the 100 million metric tons per year, with two applications filed for another 44 million metric tons per year, with the federal regulator giving no hint of unease over whether Canada has the gas resources to meet these levels and cover its own domestic needs for well into the future.
—Gary Park
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