|
Downturn could aid LNG Canadian Natural Resources Minister Rickford cites opportunities in Japan, China, Europe for British Columbia gas development Gary Park For Petroleum News
Holding firm to the belief that whatever is lost on the swings is gained on the roundabouts, the Canadian government is delivering a message that the downturn sweeping across the traditional oil and gas industry could have its reward in the LNG sector.
Federal Natural Resources Minister Greg Rickford, after meeting with officials from Shell-led LNG Canada, Petronas-operated Pacific NorthWest LNG and potential pipeline operator TransCanada, said languishing oil and gas prices and demand could solve prospects of a labor squeeze if LNG projects go ahead.
He also said Canada will continue working to establish the economic conditions that spur on multibillion-dollar investments in LNG projects.
“Everything I’ve heard from Japan and China and some new opportunities in Europe” suggest that Canada and British Columbia are right to pursue LNG development, Rickford told reporters in Vancouver.
His appearance in British Columbia came amidst a steady stream of layoffs and stalled projects in the Alberta oil patch and struggles in the mining sector stemming from a drop in demand in Asia.
No new commitments But Rickford gave no sign of any new commitments from his government beyond the previously announced promise of a tax break for the LNG sector through an acceleration of capital cost allowances on equipment used for LNG to the 30 percent level enjoyed by manufacturers compared with 8 percent available to other resource sectors.
He said that matching suitable workers with LNG jobs is a top priority now that the slowdown in the oil sector has “created opportunities to solve labor shortages.”
The onus is on Canada to “mobilize and ensure we have the labor supply” to strengthen Canada’s reputation in Asia as a stable economic and political regime that offers secure long-term supplies of natural gas as LNG feedstock.
Rickford said his discussions with Shell, Petronas and TransCanada focused on ways to move one or more projects “past the starting line.”
Gloomy Scotiabank report However, his effort to send out positive signals coincided with a gloomy report by Scotiabank, whose vice president of commercial and commodity research, Patricia Mohr, said Canada is grappling with a “still lackluster global economy” and the deflationary impact of a strong U.S. dollar.
On other negative issues, Rickford shrugged off a declaration by seven mayors in Metropolitan Vancouver that they will boycott a National Energy Board review of Kinder Morgan’s plan to expand its Trans Mountain oil sands crude pipeline to 890,000 barrels per day to open export markets in Asia.
He also said the federal government is making progress in addressing First Nations’ concerns around energy projects through a recently established major-projects management office to build partnerships with aboriginal communities to benefit from natural resource development.
Latest test case The latest test case for LNG in British Columbia is shaping up on an emerging battleground between utility company FortisBC and the municipal council in Squamish, near Vancouver, over plans by Singapore-based Pacific Oil & Gas Group for the Woodfibre LNG project.
FortisBC has filed a petition with the British Columbia Supreme Court against the Squamish rejection of an application to study the feasibility of a C$520 million natural gas pipeline to service Woodfibre, as part of its opposition to fossil fuel development.
The utility company said Squamish “unlawfully refused to issue a development permit,” arguing there has never been a proven case of water contamination from hydraulic fracturing used to extract the gas.
Former British Columbia Premier Mike Harcourt, who is a member of the socialist New Democratic Party, has surprisingly added his weight to Woodfibre.
He said the proponent has established itself as a good steward of the environment by removing 500 truckloads of contaminated wood waste from the LNG site which was home to a pulp mill and promising to remove 3,000 creosote-coated piles from the waterfront.
Harcourt also said Woodfibre’s plan to use electricity rather than natural gas to power its plant will reduce greenhouse gas emissions by 80 percent.
In addition, he noted that Woodfibre will create 600 construction jobs over two years and 100 permanent jobs and create C$85 million in tax revenue a year.
| 