$80M annual power subsidy, one LNG proposal

Regular readers know that I focus attention on natural resource revenues earned – more often, not earned – by the citizens of British Columbia. Click here to read many articles on the subject. Information I use is usually from Finance Ministry documents such as Public Accounts, including audited financial statements, and from reports by Statistics Canada and BC Stats.

Natural resource revenues declined steadily in recent years and despite phoney claims of LNG riches to come, there will be few rewards without government gaining a willingness to secure them. For years, Liberals preferred boosting corporate profits to fair taxation of natural resources. Now, they’re preparing to spend billions on subsidies and for capital infrastructure demanded by mostly foreign owned LNG proponents.

You can bet the same model forced on BC Hydro for private power producers will be in play: taxpayers will absorb substantially all of the commercial risks while the profits accrue to private business.

The following letter was published by the Squamish Chief. It analyzes one LNG operation that is being fast-tracked so that Premier Photo Op has a backdrop for what she does best.

In his letter to the Squamish Chief (Letters, May 29), Woodfibre LNG VP Byng Giraud denies electrical subsidies for his proposed plant. He apparently needs help with his math and the basic definition of subsidy, because if Woodfibre “goes electric” from our B.C. Hydro grid, B.C. Hydro and all its residential customers will be subsiding the proposed operation to the extent of about $80 million per year. Here’s why:

All new/incremental private power is acquired and delivered at a cost of more than 12 cents per kilowatt-hour, while Woodfibre LNG is banking on only paying the bulk industrial rate of just over four cents per kWh, a subsidy of eight cents per kWh arranged through our B.C. Liberal government. (And government is desperate to get some of these LNG export operations going.)

Since liquid natural gas LNG plants are notorious power hogs, and this small operation alone would consume 120 megawatts (conservatively estimated from its 140 mw transformer, and known power consumption of LNG process “trains”), this comes to a subsidy of more than $80 million per year. Again, who will pay for this subsidy? The residential customers and small businesses of British Columbia.

It’s almost humorous that Giraud would quote private power lobby “Clean Energy Canada” frontman Merran Smith who says that “… Woodfibre LNG is off to a good start powering the plant with [subsidized B.C. Hydro] electricity, and that it sets the standard for others to follow,” because it’s also easy to see that if the rest of the proposed northern LNG export operations (50 megatons per year of LNG in total, compared to Woodfibre LNG’s two megatons/year) also “go electric” with B.C. Hydro grid power at the bulk industrial rate, our subsidy would then be $2 billion per year.

There’s much more out there on the economic disadvantages of LNG export, including the significant domestic price inflation (higher rates) for natural gas that we will be paying within B.C. for our own home heating if export moves ahead.

LNG export is an economically bad idea that only benefits the foreign corporations promoting it.

Doug Morrison

One person told me Woodfibre LNG will provide fewer permanent jobs at the Howe Sound facility than does the new Sea To Sky Gondola. Regardless of subsidized electricity and the capital needed to upgrade power and feedstock delivery, I wonder how many consider Woodfibre a good site for LNG, now or when Gordon Campbell’s friends subdivide ex-BCR lands on the eastern shores of Howe Sound.

Consider the following from my article, LNG facilities: siting, safety, regulation, keeping in mind the current BC Liberal Government believes that companies should “self-regulate” as was expected of Montreal, Maine and Atlantic Railway before it killed 47 residents of Lac Megantic. The folowing information is from a U.S. Government report,

“If LNG spills near an ignition source, evaporating gas will burn above the LNG pool. The resulting “pool fire” would spread as the LNG pool expanded away from its source and continued evaporating. A pool fire is intense, burning far more hotly and rapidly than oil or gasoline fires.

“It cannot be extinguished—all the LNG must be consumed before it goes out. Because an LNG pool fire is so hot, its thermal radiation may injure people and damage property a considerable distance from the fire itself. Many experts agree that a large pool fire, especially on water, is the most serious LNG hazard.

“If LNG spills but does not immediately ignite, the evaporating natural gas will form a vapor cloud that may drift some distance from the spill site. If the cloud subsequently encounters an ignition source, those portions of the cloud with a combustible gas-air concentration will burn. Because only a fraction of such a cloud would have a combustible gas-air concentration, the cloud would not likely ignite all at once, but the fire could still cause considerable damage.

“An LNG vapor cloud fire would gradually burn its way back to the LNG spill where the vapors originated and would continue to burn as a pool fire…”

Last year, my wife and I stopped briefly in Qatar, an Arab emirate on the Persian Gulf. They are major players in the business of LNG but this energy rich nation recognizes that a strong economy cannot be sustained on fossil fuels. Accordingly, Qatar is focusing on building a knowledge-based economy, aiming for extraordinary scientific and technological advancement. Cornerstones of the strategy are education and research.

I find it significant that a country made wealthy through oil and gas knows it must focus on a diverse economy. Qatar operates one of the world’s truly fine airlines and expects travel and tourism to be important contributors in the future. It is emphasizing educational reforms for both men and women and encouraging research and development of new technologies. The country is building great medical facilities and centres of higher learning. The Emir of Qatar stated that education is an essential tool in the social and economic development of any country.

Meanwhile, in British Columbia, we’re on the opposite path. We’re degrading knowledge based activites and waging war on educators. This sends messages to people outside British Columbia that we should be their at the bottom of their list of choices if they want to come here to educate or be educated. Most of the world is trying to address the problems associated with fossil fuels; we’re committing to add to the problems.

This is nothing more than self-destructive idiocy that results from political leadership consumed by desires for immediate enrichment of themselves and a circle of greedy friends. History will not be kind to these fools.


Categories: LNG, Natural Resources

18 replies »

  1. The spin is dizzying but is still gobbled up, like candy, by the masses.
    When it comes to shining a light on the flim flams, your columns of late have been very, very well done Norm.

    A pick pockets ethos:
    Human beings usually focus their attention on one thing, so if you give them anything interesting to focus on, they won't pay attention to their money and valuables.

    The Liberals are masters of distraction and right now the teacher’s dispute serves that purpose well as they pick our pockets with all the mega projects and high paid salaries.

    If LNG gets off the ground, it will be the biggest boondoggle yet.
    BC Place, Port Mann, Convention Centre and all the high priced projects over the past dozen years have just been rehearsals for the big event and we are asleep in our seats.



  2. Hugh don't you mean debt downfall.?
    liberal fire sale.Everything must go.!

    Maybe CSIS should look into all this subsidised resource export ,electricity bc hydro discounts, ie hydrocarbons,LNG,dilbit,- raw logs etc.Economic security equals/meets nat security mandate.?scarce oil for Burnaby refinery also.


  3. CSIS and agencies of Canada spend their time investigating people who complain about the resource giveaways and uncontrolled and dangerous developments. They won't cast an eye on the people who are doing it or allowing it.


  4. People must remember that the long term economic viability would matter if a fair process were underway. It is not. LNG is a new and larger version of the private power “run of river” scams: socialized risks, privatized profits.

    The people driving these projects forward care nothing about them being economic over time. The quick and certain money is in doing the deal. That's why the hands of people like Christy Clark's ex husband, her brother and other Liberal insiders (Where are you Paul Taylor?) are on files like this. They are deal makers and facilitators.


  5. The Guardian “Ukraine's deputy tax minister says fraud scams diverted $11bn from the country's budget over just three years”

    How Ukraine's tax cheats stole billions from the country's coffers

    Sleazy operators in British Columbia know exactly how these deals are done. Ever wonder how the former USSR suddenly was home to numerous billionaires? “Privatization” is a route to incredible riches for those with needed connections. What happened in Ukraine and other former Soviet republics happened because a fundamental element of human nature is greed. It is a human quality of people here too.

    Those nations of eastern Europe lacked a vigilant, objective and courageous fourth estate and deals for public assets were done behind closed doors. Couldn't happen here, right?

    Then again, all of the resource deals in BC are done in private and the MSM cheerleaders are sniffing for personal rewards, not breaking stories.


  6. If capital is not treated equally, political equality is an illusion, for capital buys political influence and power. Capital that can buy political power gains political protection of its extraordinary privileges to control rentier income streams, income which furthers its political power.


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