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It is now clear that LNG claims made by Liberals before the 2013 BC election were wild fantasies and carefully planned deceit. The Canadian Centre for Policy Alternatives — an organization targeted for a tax audit by the Harper Government — recently published A Clear Look at LNG. The main conclusions:
Liquefied natural gas (LNG) exports from the west coast of Canada have been heralded as economic salvation for the province of British Columbia. This report undertakes a reality check that reveals several major problems with this narrative, both in the stewardship of finite non-renewable resources by provincial and federal governments, and in the environmental implications of largescale development.
- The NEB has, to date, approved 12 terminals with a total capacity of 251 trillion cubic feet (tcf) of LNG exports over 20-25 years. However, the NEB’s own modeling shows that only a small percentage of that amount — 18 tcf — is available for export, even with a three-fold ramp-up in BC production.
- Medium to high levels of LNG exports from BC would require Canada to become a net importer of natural gas, simply to meet domestic needs.
The BC government’s claims of available gas supplies for export are greatly exaggerated:
- The BC Oil and Gas Commission estimates BC’s raw gas reserves at 42.3 tcf, with a total “marketable resource” of 442 tcf. (Reserves have been proven through drilling or are close to drilled areas, and are considered recoverable with current technology and economic conditions. Resources are much less certain, as they are probabilistic estimates based on broad extrapolations with limited drilling.)
- The BC government has publicly stated that marketable resources are six times higher than the Commission’s estimate: 2,900 tcf available for export. This is not a credible claim.
- The amount of gas that must be produced at the well head is considerably greater than the amount that would be sold, due to losses in the conversion of raw gas to marketable gas, and to gas consumed in the extraction, liquefaction and transportation processes. About 1.44 units of raw gas must be extracted to deliver 1 unit to Asia.
Were the BC government to realize its hoped-for export target, the scale-up in drilling and associated infrastructure required would be massive, and would fundamentally alter the landscape of northern BC.
- The gas required for export would come mainly from fracked wells in BC’s Northeast. (Almost all of BC’s future gas production is expected to involve fracking, which requires much more water and produces much more greenhouse gas emissions than conventional drilling).
- An extraordinary 37,800 to 43,700 new wells would need to be drilled by 2040, more than doubling to nearly tripling the number of wells drilled since 1954 in northeast BC.
- BC gas production would need to increase by four to five times. This would require the production of between 4.1 and 4.6 times BC’s current proven raw gas reserves of 42.3 tcf by 2040.
A major public concern is the amount of water and the chemicals and other additives used in the fracking process, as well as the potential for contamination of surface water through surface casing failures and improper disposal of fracking wastewater:
- The rate of water consumption is a function of the play (area) the wells are drilled in. About 25 million gallons of water per well are required in the Horn River Basin, from which a large portion of BC gas will be sourced.
- This requires some 2,300 truck trips per well, followed by a further 700 truck trips to remove the fracking waste water produced in the process.
- In the BC government’s proposed export target, water consumed in the ramp-up phase of drilling would equal about 22,000 Olympic-sized swimming pools per year, or about half of the annual consumption of Vancouver or Calgary.
- While the BC government has argued that water use will be a very small amount of the total runoff in northern BC, actual water use will be much more localized and therefore comprise a much larger proportion of available surface water in each drilling area.
- Water supply impacts can vary markedly with the seasons, with increased stress during dry periods or droughts.
The BC government is understating the amount and intensity of land disturbance and water consumption in the development of upstream supply for LNG exports:
- Land use disturbance is significant, and includes well pads, roads, pipelines and facilities. It also includes seismic impacts…
Exporting BC LNG will not reduce global greenhouse gas emissions:
- LNG is an energy-intensive way to move gas, requiring some 20 per cent of the gas to be consumed in the liquefaction, transport and regasification process (assuming gas-drive facilities which are the most common).
- From wellhead to final combustion, there are substantial leakages of methane, a much more potent greenhouse gas than CO2. Given this, liquefied fracked gas from BC actually has GHG emission rates similar to coal.
- Contrary to the notion that BC LNG would be “doing the world a favor” by displacing coal use in Asia, BC LNG exports to China would increase GHG emissions over at least the next fifty years, compared to building state-of-the-art coal plants. Considered on a 100-year basis, burning imported LNG would provide only a marginal improvement compared to best technology coal.
There are considerable risks to companies entering BC’s nascent LNG industry.
- Chief among them are the potential for rising domestic gas prices and lowering international prices, eliminating the arbitrage needed to pay off the multi-billion dollar investments required.
- The structure of BC’s LNG Tax, recently halved, means that British Columbians, the public owners of the resource, will not see peak revenue flows until these capital investments are paid off, making them the back stoppers of these risks, as well as the recipients of the impacts on public infrastructure and the environment.
- It is unlikely that anything close to the revenue projected by the BC government for its coffers will ever be realized.
Oil and gas represent a one-time legacy that underpins virtually every aspect of modern society. Notwithstanding the desirability of replacing fossil fuels with lower emitting alternatives, it is highly likely that fossil fuels will be needed at some level for the foreseeable future. Canada and British Columbia have adopted a de facto strategy of liquidating these resources as quickly as possible in the name of the economic prospects of the government of the day. These resources are precious, non-renewable and come with collateral environmental impacts. They demand more balanced stewardship in view of the needs of future generations of Canadians.
The CCPA document is lengthy and filled with technical analyses. As a whole, the report sends a caution that should not be ignored. Instead, the British Columbia government is moving imprudently. They have been negotiating in secret, guided by economic globalists who believe natural resources should belong to industry and jobs should go to the lowest paid, even if they are temporary foreign workers. Staff and advisors were recruited from industry and will return to industry through the revolving door. A Greenpeace report titled Who’s Holding us Back included:
Carbon-intensive corporations and their networks of trade associations are blocking policies that aim to transition our societies into green, sustainable, low-risk economies. These polluting corporations often exert their influence behind the scenes, employing a variety of techniques, including using trade associations and think tanks as front groups; confusing the public through climate denial or advertising campaigns; making corporate political donations; as well as making use of the ‘revolving door’ between public servants and carbon-intensive corporations.
Later this month, Christy Clark intends to pass legislation that will bind the hands of future government for decades with guarantees that would require taxpayers to pay damages if subsidies or production conditions are altered. No groups of manufacturers, builders or service providers in British Columbia are offered a protected and guaranteed future. Nor is any individual citizen.