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

Bella Coola to benefit from massive investment in coastal internet

A combined investment of $45.4 million will bring new and updated high-speed internet on the coast

Nearly $500,000 available for internships with First Nations government

Funds announced through partnership with Northern Development and Government of Canada

O’Reilly trial scheduled to start January 15 for Anahim Lake murders

O’Reilly is charged with first-degree murder

School District 49 to re-open Nusatsum Elementary in September 2018

SD49 says increasing enrollment is driving its decision to re-open the school

B.C. cougar kitten rescued after mother struck by vehicle

Conservation Officers find home for young kitten found dehydrated and frostbitten near Williams Lake

WestJet appeals lost bid to scrap harassment lawsuit

Airline argues judge was wrong to have dismissed the company’s application to strike the legal action

Can U.S. border guards search your phone? Yes, and here’s how

Secretary of homeland security explains a new policy that let’s border guards check phones

‘Beautiful writer’ Nancy Richler dies of cancer in Vancouver hospital

Montreal-born author spent most of her adult life in B.C. as a fiction writer and novelist

B.C. commuters vote to rename bus service to ‘Jeff’

The company asked and the people of Facebook answered

Students frustrated by UBCO response to harassment allegations

Students on the Kelowna campus were unaware of resources and worried about lack of communication

Opinion: Dare to be smarter

Just say no works for more than just substance abuse

‘Sing Me a Song’ about B.C. for a chance at $1,000 contest prize

Entries due by March 30 for lieutenant-governor’s British Columbia-themed competition

Facing reality of death, B.C. man learns real meaning of life

Even while preparing for the end, something inside Keven Drews won’t let him stop living

Most Read