BC’s LNG hopes take a hit

Vancouver, BC, Canada / (CKNW AM) AM980

BC’s finance minister is downplaying some bad news on his government’s favourite file, the loss of a major player in the still-unborn liquid natural gas industry.

Mike de Jong says Apache’s withdrawal from the Kitimat LNG project is no surprise in a busy start-up industry with a host of players.

“We’ll probably see some, some more of that.”

But what about the Liberal’s election pledge last year to eliminate the provincial debt with a 100 billion dollar LNG prosperity fund?

De Jong makes no apologies.

“The fact that we as an organization and the Premier as the leader of government are saying we want to reduce the debt that burdens British Columbians, I think is entirely appropriate.”

Still for all the proposals on the drawing board not one company has so far committed to building an LNG plant in BC.

Comments

  1. Hey, anyone else starting to think that this guy is the real acting Premier of BC ?
    I have seen in other provinces and countries that woman can be excellent leaders, but that excludes Trixy Clark.
    Trixy, time to pass the torch to someone with real intelligence and real leadership skills. Stop making this about you, do what is best for the citizens of BC.

  2. If anyone was paying attention, pending news of Apache’s exit from the most -advanced BC LNG project was out there nearly two weeks ago.

    But the government announcement was timed to coincide with the latest poke in the eye delivered to the BCTF by Mike deJong. Guess which story will get bigger play and response.

    Apache’s withdrawl is most troubling to British Columbians. It demonstrates that investors are very skittish over the prospects of a viable BC LNG industry where more than a dozen projects are competing for the investment dollar (in excess of $10 billion for each project. Do the math.

    More troubling is the fact that Apache is bailing out on an project in Australia whwere LNG development is years ahead of BC.

    A $400 billion Russia-China gas deal, a Russian-China deal to build floating nuclear power stations, shale gas development plans by China who probably has the largest shale gas resources on earth, restarting of Japanese nuclear plants (2 have been authorized to restart), signing of LNG delivery contracts by Asian countries with suppliers far more advanced than BC will put pressure on the long-term pricing structure of LNG.

    Add to the uncertainty whether BC’s yet-to-be-announced tax regime will be adequate to finalize investment decisions as well as the demand of LNG proponents for an accelerated tax write-off of LNG plants. The Feds would tread lightly on a accelerated tax write-off proposal similar to that enjoyed by the manufacturing sector. This is because a LNG plant is not regarded as a manufacturing process-LNG plants simply convert natural gas to a state convenient to allow it to be shipped efficiently.

    British columbians should worry that LNG will not create a $100 billion heritage fund and elimination of provincial debt so that healthcare, education and lower hydro rate increases may be accommodated. The smart money suggests only a fraction of the dozen projects will become a reality.

    Having said that, there is no reason that an election promise of a $100 billion heritage fund and a debt-free BC cannot be taken to the bank.

  3. Apache is getting out of the LNG business everywhere, not just here. This happened because a new major shareholder, a hedge fund, has made the decision to invest elsewhere.

    To read the comments on this, you would think this is “good news” for BC. But those opposed to LNG, petroleum, mining, pipelines, etc have zero in the way of plans to grow the BC economy. And no matter who is the government, major dollars are needed. What ideas do the NDP have? The greens? Nothing but NIMBY and aginnerism.

    This kind of investment decision is made every day in the real world. Companies make investment decisions based on many factors. There are plenty of companies that have invested in Australia’s LNG and in fact Apache is counting on making some money on selling their stake their in order to finance other purchases they are interested in. Now, to be honest, if I were advising any resource based company, my advice would be to invest elsewhere. The environment in BC is just too negative. The plan of the aginners is to study every project to death-companies who want to invest need to get on with it eventually. Only people in government get paid for no results.

    Sean Leslie is a NDP friendly journalist, so of course he is happy to write this story-and the tone of the story is pretty clear in that direction.

  4. When is BC going to realize that LNG is just a fairy tale pipe dream (pun intended) that Clark trotted out to get herself reelected.

    She created her “jobs, jobs, jobs” campaign slogan — which as we saw last week means TFW jobs for Chinese and not for Canadians.

    She trotted out a “Debt Free BC” slogan — which has INCREASED 30+% to over $60 BILLION in only 3 years under her “leadership.”

    And yet, the populace of BC continues to fall for photo op after photo op. Has no one noticed that she sends out her minions (Fassbender, De Jong) to do the dirty work for her?

    Wake up, BC!

    • Wake UP Bob . . .

      How would you grow the BC economy?
      We have an abundance of Natural Gas . . . there are markets all around the Pacific Rim. Do we take advantage of these markets . . . or in true Manitoba fashion just raise everyone’s taxes so the government can support more “Passengers” on the big BC bus?

      We also have TWO pipelines on the drawing board . . . construction should start today, which would employ thousands. But, I am sure you and the NDP are just dead set against progress. You are much happier selling oil to the US petroleum giants and a 30% discount, costing Canadians 10s of Billions in lost Revenue.

      The so-called Greens and Socialists have failed everywhere . . . look at Spain and Ontario, Canada and their Disasterous windmill adventures.
      Spain lost 5 or 6 Real jobs for every Green job created . . . Ontario has the highest power rates in North America and manufacturing plants are leaving the province, over 300,000 jobs lost in the last decade.

      What are your ideas for BC Bob?

      • @Dale.

        At present we both must agree that the future of LNG is in the hands of private corporations and their financial backers. The government can only create the environment such as taxes and regulations. Those who outright oppose or question the promise of a $100 billion prosperity fund and a debt-free BC are not going to stop LNG. Nor are proponents such as you are going to compel corporations to proceed with LNG. The investors will decide.

        So both opponents and proponents must come up with Plan B in the event LNG does not proceed as envisioned.

        Inplicit in the proposed tax regime is that a BC tax of 7 percent of LNG export terminal profits will generate the necessary revenue to create a $100 billion prosperity fund and a debt-free BC ( as long as a sufficient number of LNG projects proceed).

        But to satisfy you, BC should Issue an ultimatum to Shell, Chevron, Steelhead, Petronas, Mitsubishi and the likes to “fish or cut bait.”

        To back up such an ultimatum, BC might threaten to take over the entire LNG industry by setting up a crown or public corporation. Since a public corporation is exempt from paying income tax, BC will get to keep 100 percent of the profits from exporting LNG. why should we be satisfied with receiving 7 percent in the form of an income tax when we can have it all?

        If a 7 percent income tax on private corporation profit will create a $100 billion and retire $60 billion of debt (assuming debt rises no further), a public company will return 100 percent (after paying off capital and operating costs) to British Columbians.

        Doing the math: Adding to $160 billion ($100 billion plus $60 billion), a public corporation will return the other 93 percent of profit for a total of $2,285,000,000,000.00 (That’s $2.285 trillion to the BC treasury!!!!!)

        Anyone , such as you, who has so much confidence in the LNG industry and its potential for huge revenue cannot disagree with a state-run LNG industry. My numbers are based on CC’s projections. Perhaps we need to follow the lead of Malaysia and China who operate state-run Petronas and CNOC respectively.

        If private corporations are dragging their feet, BC should go it alone. Then all obstacles to LNG development can be eliminated. Then Asian customers will be knocking at our door and we can grow the economy and pay for healthcare and education.

        …..Pipes offer so much to dream about…..

    • @Bob: Great Comments!

      Many would have BC start fracking to further increase the North American natural gas surplus. The end result? Depress prices even further resulting in lower royalty payments to the provincial treasury.

      What is the point of “Drill Baby-Drill Baby Drill” when not a single long-term fixed-price contract has yet to be signed when a single LNG terminal and associated pipeline cost north of $10 billion what investor is going to step up? A proposed long term contract must make economic sense and provide an adequate ROI for the investor.

      Those who want to rush head long into fracking are being too free with money that is not theirs. Would they invest their savings under such uncertainty? Perhaps.

      I don’t want the corporation in which I own shares to risk my investment to rush into BC LNG unless it makes economic sense. It is not a charity and it has no obligation to invest in BC if better opportunity exists elsewhere.

      Apache has fired a shot across the bow of the MV Christy Clark. Unless the BC tax regime is attractive, long-term contracts are signed with Asian customers, capital costs are determined and affordable, skilled labour is available and FNs are on-side, private corporations will not invest.

      So we need to wait for events to unfold -rather than count our chickens before they hatch.

      Absolutely, wake up people!!!!!

  5. There is no viable LNG business in BC. It’s just a tool that the BC Lieberals used to get themselves re-elected. Wonder how many more times they’ll get away with it before voters wise up to them? Just wait and see what a mess they’ve made when we finally toss them out….

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