Premier promotes LNG

PREMIER CHRISTY Clark says she remains confident of hitting one goal of her plan to turn the province into a LNG export powerhouse

PREMIER CHRISTY Clark says she remains confident of hitting one goal of her plan to turn the province into a liquefied natural gas (LNG) export powerhouse.

And that’s to have one LNG plant up and running by 2015, a key provision of her BC Jobs Plan first announced in September 2011.

“We can make the deadline for the first one,” said Clark on a campaign stop in Terrace April 19.

The 2011 plan also calls for three LNG plants to be in operation by 2020.

Hitting those marks is a also a key requirement of a BC Liberal promise to establish a $100 billion Prosperity Fund using tax and revenues tied to a provincial LNG export industry.

Money from the fund would be used to eliminate the provincial debt, lower taxes and pay for social and other programs, the BC Liberals have promised.

Speaking to a partisan gathering at Skeena BC Liberal Carol Leclerc’s campaign office, Clark said revenues would be based on prices five times higher than those being realized in North America which is awash in the commodity.

Those higher prices are being realized from Asian customers hungry for LNG to fuel economic growth.

For the moment, those prices are linked to the cost of oil, a factor Asian customers are increasingly rejecting as they now prefer to pay rates closer to those in North America.

Clark expressed confidence on achieving higher prices, saying the BC Liberal Prosperity Fund $100 billion figure was based on conservative estimates.

The crucial aspect to a successful Prosperity Fund plan is to sell LNG beyond North America, she said.

“It’s better to have more than one customer,” Clark added.

The premier acknowledged that Asian customers want a better pricing deal than one linked to the cost of oil.

“That’s how business works,” she said.

And having more than one customer will provide a provincial LNG industry with a better ability to set prices, Clark continued.

Clark’s 2011 BC Jobs Plan was released at a time when there were two active proposals, both based in Kitimat.

Each of those proposals, Kitimat LNG and BC LNG Export Co-op, now has full environmental clearance and federal approval to export LNG.

Both continue to work on finding customers in advance of making final development decisions.

Kitimat LNG, owned by Chevron and Apache, continues to work on site preparations for its planned facility at Bish Cove near Kitimat.

Since 2011, the number of LNG proposals has increased with Shell, along with Asian partners, also wanting to build at Kitimat under the Canada LNG proposal.

At the same time, the Malaysian state energy company called Petronas and an international energy giant called the BG Group have set on the Prince Rupert area as a location for their own facilities.

Natural gas pipelines stretching across the north from northeastern gas fields would also be needed to feed the plants.

But pricing remains a concern among companies wanting to build LNG plants.

Speaking last week at an energy conference in Houston, Texas, an Apache senior vice president referred to the situation.

“The price expectations now do not support the development of those greenfield projects in British Columbia,” said Janine McArdle, Apache’s senior vice president of gas monetisation.

Clark also promised to establish what she called a rural dividend for communities affected by large scale industrial development so they can better cope with their impact.

Clark said smaller municipalities will be under pressure to provide roads and other infrastructure as people move in to take advantage of resource industry employment.

“You’re going to pay a little bit of a price,” Clark told the gathering at Leclerc’s headquarters.

By providing money, Clark said her government would recognize the cost of dealing with growing populations and associated demand.

Just as important, she said, was the idea of keeping some money where it is generated.

“It is not good enough to produce the resource here and send all the money down south,” she said.

Initial expectations would have the Prosperity Fund paying out $25 million a year beginning in three or four years.

The province already has a program in northeastern B.C. whereby local governments receive money each year taken from natural gas and oil royalties.

A similar program for the northwest would have to be tailored for regional needs, Clark told reporters afterward.

“We would have to work out a fair return for those communities,” she said.

“We just don’t want to come and take. We want to build communities,” Clark added.

Still to be decided are details such as what is a rural community and what is not and what communities will qualify based on impacts to them, said the premier.

“I’m sure Vancouver will probably try and make an argument,” she said.

Although the rural dividend program is being framed largely around the promise of a substantial liquefied natural gas export industry, there are other industrial developments underway.

The northwest is also set to benefit from the construction of BC Hydro’s Northwest Transmission Line.

One mine, the Red Chris copper and gold mine owned by Imperial Metals, is already under construction and is scheduled to be the transmission line’s first customer beginning next year.

 

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