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

Autistic children in Hope face barriers to care

Mothers working together to improve access, connections

WATCH: Rally at MP’s office Friday in Chilliwack to stop KM pipeline

Water samples from Chilliwack rivers were delivered to MP Strahl’s office in a symbolic gesture

Editor’s view: A Hopeful start to the community’s first 10 km run

Good mix of pomp and circumstance, variable terrain and silliness at Sunday’s run

Lower Mainland could see spring flurries

Snow expected at higher elevations

Auditors couldn’t tell if Fraser Health executives bought booze on taxpayers’ dime

Review from 2014 says one administrator bought Bose headphones on company credit card

Vancouver Aquarium’s resident octopus released into ocean

Staff let the Giant Pacific octopus go into the waters near Bowen Island so she can reproduce

BREAKING: B.C. mother hit in truck rampage dies

Family confirms mother of four Kelly Sandoval dies almost two months after being hit.

B.C. officials failed to tell Kiwis Fraser Health CEO had been fired in 2014

New Zealand spending scandal exposes Dr. Nigel Murray 2014 exit from B.C. job

PHOTOS: Students exhibit stunning paper couture dresses

22 paper made gowns will be on display at Vancouver’s Oakridge Centre until March 27

BCHL Today: Prince George avoids elimination with game five win

BCHL Today is a (near) daily look at what’s going on around the league and the junior A world.

Suspect arrested and charged for assault on autistic man

Parmvir Chahil has strong B.C. ties; two others charged with accessory after the fact

Uber self-driving crash video calls safety, rules into question

Experts say footage shows that vehicle’s sensors should have spotted pedestrian, initiated braking

Installation complete for Alex Fraser Bridge cable collars

The collars will continue to be operated manually

UPDATED: MPs Elizabeth May, Kennedy Stewart arrested at B.C. anti-pipeline protest

The demonstration is part of a day of action against the Trans Mountain expansion

Most Read