Are B.C.’s LNG Ambitions Already in Jeopardy?

B.C. could miss out on its LNG ambitions, concludes report

If B.C. doesn’t act fast, it could be “crowded out” of an intensely competitive export market in its ambition to become a global hub for liqueified natural gas (LNG), according to a report released Thursday from the University of Calgary’s School of Public Policy.
“Producers around the world—including in the newly gas-rich U.S.—are racing to lock up market-share in the Asia-Pacific region, in many cases much more aggressively than Canada, argue the authors of the report. “While this market is robust and growing, the nature of the contracts for delivery will favour actors that are earliest in the queue.”
The provincial government’s goal of having an LNG export facility in Kitimat operational by 2015 is bogged by “disagreements over standards, process and compensation,” not to mention regulatory issues such as “taxing and royalty charges, locating facilities and marine safety standards.”
The authors—University of Calgary researchers Michael Moore, Dave Hackett, Leigh Noda, Jennifer Winter, Roman Karski and Mark Pilcher—save particular contempt for B.C.’s would-be “LNG tax.” Proposed in the 2014 budget, the two-tier 1.5 per cent tax—in conjunction with corporate income taxes and royalties—could render a potential LNG projects’ rate of return too low to be a “a feasible investment.”
The highest risks to the province’s LNG agenda are for the most part, all regulatory in form: lengthy project approval timelines, shifting marine safety standards, environmental regulations on fuels, and the fights over pipeline rights of way.
But when it comes to the economic viability of B.C.’s prospective LNG industry, its conclusions are overall positive. “If Canadian natural gas is sold on the open market, its cost and performance are economically competitive with projects elsewhere in the world.”