LNG industry in B.C. no slam-dunk

“The new LNG industry in British Columbia is not a forgone conclusion,” David Keane, president of the brand new BC LNG Alliance, told the Vancouver Board of Trade October 8.

“If LNG is to be viable in this province, our industry, along with each level of government, will have to make some difficult decisions in order to cross the finish line.”

The new alliance represents six LNG projects, most of which are being developed by consortia of oil and gas companies.

They are:

• Pacific NorthWest LNG, Prince Rupert (Petronas, JAPEX, Indian Oil Corp., Sinopec and PetroleumBRUNEI);
• Kitimat LNG, Kitimat (Chevron Canada, Apache Canada);
• LNG Canada, Kitimat (Shell Canada Energy, PetroChina, KOGAS and Mitsubishi Corporation);
• Prince Rupert LNG, Prince Rupert (BG Canada);
• Triton LNG, Kitimat (AltaGas and Idemitsu Canada); and
• Woodfibre LNG, Squamish (Pacific Oil and Gas).

Keane’s warning comes at a time when B.C. lawmakers are busy hashing out new taxes and emissions regulations for the LNG industry.

It also comes on the heels of a warning from the CEO of Petronas two weeks ago that the company could pull the plug on its $36 billion plan to develop gas fields, build a pipeline and new LNG plant in Prince Rupert.

Keane, who is a former vice president of corporate affairs for BG, said the biggest concern for the industry right now is simply the uncertainty.

The consortia his alliance represents can’t make final investment decisions until they know how much they will have to pay in taxes or what kind of regulations the province plans to implement with respect to controlling greenhouse gas emissions.

“It’s uncertainty and lack of clarity around the entire fiscal regime,” Keane told Business in Vancouver.

There is some urgency in getting new policies in place because the investment decisions are based on inking long-term contracts with Asian customers. Many of those contracts are for 20-year terms and many are coming up for renewal soon.

“If we can get the certainty and the clarity, we will develop a viable LNG industry in B.C. that will provides tens (of) thousands of long-term, good-paying jobs well into the future,” Keane said.

Keane said a single large LNG plant would create 4,000 jobs during construction. There are now 19 applications for LNG export permits in B.C., but most analysts agree B.C. is unlikely to see more than two or three large LNG plants built here.

Keane said the alliance was created to create a “common industry voice” that will advocate with municipal, provincial, federal and First Nations governments and inform the public about the LNG industry.

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