At times, I wonder if mainstream political journalism in BC is written by the uninformed for the uninformed. Gary Mason provided an example to consider when he commented on the latest threat directed at BC Liberals by Petronus, an Asian energy company:
While senior officials in the government tried to play down that threat, it had the desired effect. According to senior government sources, the province has dialled back its LNG tax revenue expectations. And it is also trying to find ways to relax environmental codes of practice that would add to the cost of doing business in the province for Petronas and others.
Anonymous government sources are occasionally useful but problematic when information conflicts. People whispering to Mason shouldn’t be playing down tactics of intimidation and admitting those same tactics are working. But, confusion is almost certain to arise when messages reflect immediate political expediency rather than carefully considered policy.
Mason’s article is less about examining the soundness of a policy set or the credibility of its political managers than it is about the newspaper facilitating whatever course Liberals may eventually take.
Premier Christy Clark has staked the economic future of the province on LNG development. Even if it doesn’t end up being the trillion-dollar opportunity she has touted, the one that is going to wipe out the provincial debt, some LNG development is better than nothing.
What Mason presents as inarguable is a consistent message of government. Any economic development is better than nothing. That’s similar to the logic presented unpaid interns churned through modern enterprises when they are told they might gain nothing today but they’ll be better positioned for good times in the future, if and when those days arrive.
The Globe and Mail columnist does not examine the economic road Christy Clark and her associates travel upon nor does he consider alternatives. In the online version of Mason’s column is a link to Justine Hunter’s B.C. touts LNG’s critical importance to provincial economy.
An inquiring reader might expect one of Toronto’s national newspapers to test the credibility of BC government statements. Is LNG critically important if its existence would be dependent on untaxed feedstock, subsidized energy inputs, transmission and transportation infrastructure paid for by taxpayers, capital equipment financed through tax credits, exemption from carbon taxes, waivers of environmental and labour regulations and unlimited permits for foreign workers?
Is it a fact that “some LNG development is better than nothing?”
Mason goes on, excusing government uncertainty and misdirection,
But the world of LNG has also changed since the last election when a thriving industry in B.C. was being imagined by the Premier. Prices have dropped. Competition has surged. The economic future of the commodity is unclear.
Those statements are disingenuous because the gas market has been undergoing change since well before 2013. Along with new energy transmission lines in Asia, production technologies that led to an oversupply of gas in North America are being implemented there, particularly in the region dubbed Pipelinestan by writer Pepe Escobar. The globe-trotting reporter wrote in 2010:
Future historians may well agree that the twenty-first century Silk Road first opened for business on December 14, 2009. That was the day a crucial stretch of pipeline officially went into operation linking the fabulously energy-rich state of Turkmenistan (via Kazakhstan and Uzbekistan) to Xinjiang Province in China’s far west…
The bottom line is that, by 2013, Shanghai, Guangzhou, and Hong Kong will be cruising to ever more dizzying economic heights courtesy of natural gas supplied by the 1,833-kilometer-long Central Asia Pipeline, then projected to be operating at full capacity…
Almost a year before the BC general election, I published “Our pending meltdown” at In-Sights. The only thing certain about the prospects for trading natural gas was uncertainty. The article, now more than two years old, is repeated here:
Are BC Liberals about to drag taxpayers into another economic calamity? Something akin to BC Hydro’s private power initiative, where government has taken near $50 billion of financial risk and guaranteed abundant profits to private energy promoters.
[Russia’s] Gazprom Biggest Loser as Shale Gas Upends World Markets, Bloomberg Businessweek, June 21, 2012
…The U.S. no longer needs Russia’s gas, leaving President Vladimir Putin fighting to salvage Gazprom’s $20 billion Shtokman project in the Arctic. China, the biggest energy consumer, is exploring its own shale reserves and hesitating to accept a pipeline from Russia. Gazprom’s shipments fell about 14 percent so far in 2012…
Russia, with about $13 trillion of gas deposits, has the most at stake in the energy revolution that’s blasting shale from Pennsylvania to China in rocks impossible to drill just a decade ago…
China shale gas boom could surpass U.S., Reuters, Dec. 7, 2011
China is set for a shale gas revolution which will surpass that seen in the United States, the chairman of Sinopec, the country’s second-largest oil company, said a day after Reuters revealed Royal Dutch Shell Plc had begun shale gas production in China.
Fu Chengyu, chairman of state-controlled China Petroleum & Chemical Corp (Sinopec) , said it could take five to 10 years but that China’s output would exceed that of the United States.
“I think the total reserves are even more than the U.S. so production is not less than the U.S., but it is a matter of timing,” he told reporters at the sidelines of the World Petroleum Congress.
U.S. energy markets were fundamentally changed by the development of shale gas. In the space of several years, the country went from natural gas shortages to a point where companies are planning to export gas to Asia…
Site C and the Kitimat LNG Export Terminal: Christy Clark’s Program for Income Redistribution, Jim Quail’s Blog, February 8, 2012:
…[Producers] are in a mad rush to suck the gas out of the ground and get it to China before the Chinese start exploiting their own huge shale gas reserves on a major scale: once that happens, there will be no Asian market for tankers full of LNG. That gives the Canadian developers maybe a bit over a decade to make their money and run.
It takes a lot of energy to liquefy natural gas. Almost universally, around the world, LNG plants use a portion of their own natural gas supply to provide that energy. It appears, however, that BC Hydro is prepared to supply electricity, at BC’s below-cost industrial bulk energy rates, to the Kitimat LNG consortium, for their liquefaction operations.
So what’s the big deal, you ask?
The initial phase of the Encana plant would require about 250 MW of electrical generation capacity to provide it with sufficient energy. The three projected Kitimat LNG plants would require about 1,600 Megawatts of power to liquefy its billions of cubic feet of gas for export.
How much power is 1,600 MW?
About one-and-a-half Site C dams is how much power.
Hydro would sell that much power to one corporate mega-project, at industrial tariff rates of around $35 per megawatt hour. That same power would cost Hydro at least $80 per MWh, assuming they built one-and-a-half Site C dams for that purpose, or around $129 per MWh if they bought it from Independent Power Producers. So we’d pay for Site C, through our Hydro bills, to sell the electricity it produces for less than half what it cost us…
H/T Bob Makin, by Twitter, for the Bloomberg Businessweek article
Energy critics roast Clark’s LNG strategy, Frank Luba, The Province, June 22, 2012:
NDP energy critic John Horgan believes Clark’s changes should have been debated in the legislature.
“She’s going to amend the Clean Energy Act by regulation,” said Horgan.
“These are detailed and generational changes we are making and we should do that with a thoughtful eye, not with an expedient political eye and that’s what she did,” he said.