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

 

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Four staff members at the Okanagan Men’s Centre have tested positive for COVID-19 since Oct. 23, 2020. (Adult and Teen Challenge OMC photo)
Four positive COVID-19 cases at Okanagan Men’s Centre

Those affected are staff and have been in isolation since Oct. 23

The Physicians of Golden are recommending to follow BC Centre for Disease Control guidelines this weekend and to have a safe Halloween celebration. (Physicians of Golden photo)
Physicians of Golden back up BC CDC Halloween guidelines

There’s a couple tips for how to safely celebrate Halloween at home

The intersection of Highway 95 and Park Drive is currently under construction as a part of this project. (Claire Palmer photo)
Traffic pattern changes and construction on Highway 95 in Golden

The work is a part of preliminary work for the final phase of the Kicking Horse Canyon Project

Kicking Horse Mountain Resort will be looking to crack the Top 10 Ski Resorts list by USA Today for the second straight year. (Claire Palmer photo)
Kicking Horse tapped as one of North America’s favourite ski resorts

The resort finished in tenth in the same poll last year

The Golden Food Bank will host its third annual Trick or Eat fundraiser this Halloween. The food bank has experienced a rise in clients since the onset of the pandemic. (File photo)
Golden Food Bank to hold third annual Trick or Eat fundraiser

The fundraiser will look a bit different from years past as the event is adjusted for COVID protocal

A woman wears a face mask and plastic gloves while browsing books as a sticker on the floor indicates a one-way direction of travel between shelves of books at the Vancouver Public Library’s central branch, after it and four other branches reopened with limited services, in Vancouver, on Tuesday, July 14, 2020. (THE CANADIAN PRESS/Darryl Dyck)
B.C. reports 234 new COVID cases, 1 death of senior who had attended small birthday party

Roughly 5,700 people are isolating due to being exposed to a confirmed case

Superintendent of the Kelowna RCMP, Kara Triance. (Capital News file)
Non-violent crime, small population contributes to Kelowna’s crime rate spike, says RCMP

Kelowna RCMP is assuring the public the city is a safe place

RCMP. (Phil McLachlan - Black Press Media)
Crime up 31 per cent in Vernon in 2019: Statistics Canada

Increase includes a 45 per cent rise in violent Criminal Code violations

A Tuesday Oct. 27, 2020 apartment fire in Penticton killed two and displaced dozens more. (Brennan Phillips - Western News)
Fatal Penticton apartment fire deemed accidental

The blaze gutted an apartment building on Tuesday morning, killing two people and displacing dozens

A nurse performs a test on a patient at a drive-in COVID-19 clinic in Montreal, on Wednesday, October 21, 2020. THE CANADIAN PRESS/Paul Chiasson
Interior Health reports seven more COVID-19 cases

Eighty-nine cases remain active, none of whom are currently hospitalized

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Burnaby RCMP responded to a dine-and-dash suspect who fell through a ceiling in March 2020. (RCMP handout)
VIDEO: Suspected dine-and-dasher falls through ceiling of Burnaby restaurant

A woman believed to be dashing on her restaurant bill fell through the kitchen ceiling

This Photoshopped version of the crosswalks near the entrance to the Salmon Arm Arts Centre on Hudson Avenue show what is proposed to help create safety for and show inclusivity to the LGBTQ2S+ community. (Salmon Arm Arts Centre image)
Tri-rainbow crosswalk and Progress flag requested to help make Salmon Arm safe

Council will consider budget requests to help make city inclusive to LBGTQ2S+ community

A can of Canada Dry Ginger Ale is shown in Toronto on Thursday Oct. 29, 2020. The maker of Canada Dry Ginger Ale has agreed to pay over $200,000 to settle a class-action lawsuit launched by a B.C. man who alleged he was misled by marketing suggesting the soda had medicinal benefits. THE CANADIAN PRESS/Joseph O’Connal
B.C. man’s lawsuit over marketing of Canada Dry ginger ale settled for $200K

Soda’s maker, Canada Dry Mott’s Inc., denied the allegations and any liability

Most Read