Pacific Northwest LNG suspended its federal environmental review to substitute a suspension bridge over Flora Bank at its Lelu Island tanker docking site

Is B.C. LNG industry real? Yes

Petronas project at Prince Rupert is poised to go ahead, as opposition finds it can't call the industry as fantasy any more

VICTORIA – The B.C. legislature is back in session this week, a rare summer sitting to approve a 25-year project agreement for the first large-scale liquefied natural gas project in northern B.C.

Finance Minister Mike de Jong released the lengthy legal agreement prior to the debate, saying this step should remove any doubt that an international investment group led by Petronas of Malaysia intends to go ahead.

With billions invested in upstream resources and buyers waiting at home, the Pacific Northwest LNG group includes Chinese state corporation Sinopec, Indian Oil Corp., Japan Petroleum Exploration Corp. and Petroleum Brunei.

The most contentious issue is the government’s intention to protect the investors from “discriminatory” tax and regulations for the life of the project. The government insists these sorts of long-term cost certainty agreements are commonplace, and don’t affect provincial and federal taxes or environmental regulations unless they single out LNG operations.

Future governments can raise corporate tax rates, carbon tax or enter into a cap and trade system. Ottawa can scrap capital cost allowances that were recently extended to LNG producers, which is significant because Liberal leader Justin Trudeau has indicated he would get rid of what he calls subsidies to fossil fuels.

Both the province and Ottawa allow capital cost write-offs against corporate tax, to attract investment. B.C. attracted a lot of gas drilling rigs from Alberta with tax breaks for deep drilling.

The B.C. government invited comparisons with Western Australia LNG producers, and NDP researchers did just that. They noted that Australia’s Gorgon and North West Shelf LNG projects have written provisions that local employment and local suppliers will get preference.

Those are absent in B.C., along with apprenticeship guarantees for LNG.

“There was hard bargaining by the companies, and certainly the premier went into this negotiation in a very weak position, having to deliver on her extravagant and grandiose promises from the election,” NDP critic Bruce Ralston said. “The companies did well. Whether the citizens of British Columbia did well is certainly an open question.”

Green Party MLA Andrew Weaver painted himself into a corner, having spent the last two years dismissing the B.C. LNG industry as a fantasy that will never come to pass, strictly on economic grounds. He has since branded the Petronas deal, a template for any future projects, a “generational sellout.”

Another big player with gas well investments in northeast B.C. is Shell, with a proposal for Kitimat. Its prospects have improved since it took over British Gas Group, which had its own LNG intentions here. Another group led by Altagas remains on track to ship LNG from its Douglas Channel site before the end of the decade.

It’s important to remember that without LNG exports, B.C.’s natural gas industry will shrink rapidly after 50 years of increasingly significant revenues from sales to the U.S. Leaving aside all the political positioning around the province’s largest private investment to date, if this doesn’t go ahead we will all feel the effects.

De Jong had a blunt response when asked what the province gets in return for all its guarantees of low tax environment: “Their money.”

At peak construction, Pacific Northwest LNG will need as many as 4,500 workers, with 500 or more operations jobs depending on how far it expands.

The finance ministry forecasts that once Pacific Northwest LNG is up and running, it represents $9 billion in revenues to the province over 10 years, including gas royalties and taxes. That’s more than taxpayers can expect from the entire forest industry.

Tom Fletcher is legislature reporter and columnist for Black Press. Twitter: @tomfletcherbc

 

Just Posted

UPDATE: Rockslide keeps Coquihalla northbound lane closed

Highway 5 is closed in one direction.

UPDATE: Wind warning ends for Metro Vancouver after thousands lose power

More than 34,000 BC Hydro customers in the dark on Sunday morning in the Lower Mainland and Sunshine Coast

Downtown Mission: Ready to revitalize

With the bidding process underway, construction could start by mid-March

Guilty plea issued in case where man, 86, was assaulted and robbed

Hughie Stump pleads guilty to break-and-enter in relation to Abbotsford incident

WIND WARNING: Metro Vancouver expecting 100 km/h gusts Saturday night

Environment Canada issues warns of possibly dangerous conditions

VIDEO: Mission City Indoor Farmers Market returns

Market kicks off 2018 schedule on Saturday

Coal dust escaping rail cars spurs B.C. petition

Local governments are on board with Shuswap resident’s request for better control of escaping particulate

Lawyers slam ‘de facto expulsion’ of student guilty of sexual interference

Calgary student guilty of sexual assault of a minor allowed to finish semester

B.C. NDP set to restructure union bargaining

School trustees to regain control over employer group

A new development surrounding plane that went missing around Revelstoke in November

The family of Ashley Bourgeault believe they have found a new clue

$130K could get you on a dive to the Titanic

Hot summer ticket: $130K could get you on a dive to the Titanic off Newfoundland

UK’s Princess Eugenie, daughter of Prince Andrew, engaged

Princess Eugenie, the daughter of Prince Andrew and his ex-wife Sarah Ferguson, will marry Jack Brooksbank in Autumn 2018

German nurse charged with 97 more murders

Niels Hoegel, serving a life sentence for two murders, has been indicted in nearly 100 more killings.

Two men guilty in murders of Alberta family could face 75 years

The pair were found guilty of first-degree murder in the shooting deaths of Klaus’s parents and sister in a rural home near Castor, Alberta

Most Read