BC Liberals

Wild fantasies and planned deceit

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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.

Categories: BC Liberals, LNG, Natural Gas

15 replies »

  1. Points made in the report demonstrate effects similar to the North American oil market. Because of surplus stocks, crude oil prices in Canada and the U.S.A. are less than in Europe and Asia. Multinational companies producing oil want to export it from the continent and create shortages that drive up prices.

    Similarly, gas producers hope to send gas stocks overseas so that domestic prices will rise considerably because of shortages. Our prices will go up but Liberals will ensure that royalties do not.

    As a society, we are losers when it comes to getting a fair share of the value of oil and gas produced. (Norm has demonstrated that clearly in other articles here.) But, we ARE guaranteed something. Unfortunately, it is higher priced natural gas, which will not only drive up costs for our homes but also also for the small, medium and large businesses that consume gas. That will result in higher costs beyond home heating and, inevitably, reduced employment in non-resource sectors of the economy. One example would involve sawmills that are already suffering cost pressures. They consume gas in drying kilns and higher energy bills will result in closures.

    Current B.C. residents and descendants will lose out on future tax revenues from gas producers. Relatively few permanent jobs will be created – probably fewer than will be lost elsewhere in the economy. Additionally, we will suffer enormous environmental costs within B.C.

    The CCPA make a strong point that government is intentionally overestimated gas reserves. This is cover because they will allow the LNG producers to recover full capital costs before significant taxes become effective. That might be reasonable if there is a 50 year supply. However, if there is only a 20 year supply recoverable, the higher LNG taxes will never be paid and the liquefaction plants will be scrapped.


  2. When I was a young boy in the early 1960s, we had a coal and wood-burning furnace in our home in North Vancouver. Natural gas would soon make its way into most homes… but that's just over 50 years that it's been a popular heating source in BC.

    I'd like my sons and my grandchildren to be able to enjoy using natural gas for most of their lives — not be cut off because we've sent it all offshore… or be forced to switch to another technology because the price of natural gas has risen to crazy levels, due to the BC Liberal-induced shortage.

    I say keep it for BCers to use. We are depleting it quickly enough as it is.


  3. British Columbians' life expectancy from birth climbed to 81.4 years, according to statistics collected from 2006 through 2008.

    I've been told I'm 'Average', therefore my life span will end in 10 years. It will be eight years before the Massey Tunnel is replaced with a Bridge tolled forever. I'll be 140 yeas short of seeing the last of the Natural Gas extracted from British Columbia. I'll be 342,124 years short of ridding the pollution that fracking causes to give 150 years of Natural Gas overseas to line the pockets of snake oil salesmen here who will live twenty years longer, ….. will pass their assets onto their children's children. Christy passing legislation that will last decades???

    B.C. was followed closely by Ontario (81.3 years) and Quebec (81 years).

    Nationwide, life expectancy is now 78.5 for men and 83.1 for women – an average of 80.9 years.


  4. Maybe readers can explain one other item. How the hell is the leader of B.C.'s Green Party telling people that if they can't vote for Green, they ought to vote Liberal?

    I noticed Norm referred to Janet Fraser, the Green on Vancouver School Board, as a Manchurian Candidate. Urban Dictionary defines that as “a candidate running for office who publicly supports one group to win election, but uses his executive or legislative powers to assist an opposing group.”

    Is Andrew Weaver also a Manchurian Candidate? Are Liberals manipulating the Greens in BC the way they tried to takeover the Conservative Party of B.C. before the last election?


  5. The way the NDP has fared in the past two elections, makes me suspect the BC Liberals have infiltrated the provincial NDP!


  6. Reports say that Marc Dalton (Maple Ridge-Mission), Doug Horne (Coquitlam-Burke Mountain) and Gordon Hogg (Surrey-White Rock) are planning to run in the October election. The first two for Conservatives, the third for Liberals.

    Also likely to leave early is Moira Stilwell (Vancouver-Langara). She was demoted by Clark in May 2013, perhaps because questions arose about how her son managed to get a coveted residency in cardiac surgery at St. Paul's Hospital, where Moira's husband Sam Lichtenstein, by sheer coincidence, was head of cardiac surgery. Ms. Stilwell doesn't need the job and I gather that life outside politics is looking more and more attractive.

    BC Minister's Son Beat Odds to Win Residency Spot

    With an 11 seat majority, Clark should be safe even with the loss of four MLAs. The Premier and Deputy Premier can concentrate for two more years on dishing out reward to friends and picking up whatever spoils fall off the money train along the way. Given their personalities, they will plant numerous traps for successors and their futures can then focus on managing whatever wealth they find in private foreign banks and tax shelters.

    The polls show voter dissatisfaction with Clark is running high (30% approval according to a June Angus-Reid survey) but she's been there before. However, her last recovery involved big lies, including a debt-free BC, Prosperity Fund, LNG revenues & extraordinary employment growth through the BC Jobs Plan. Can they repeat those lies or create new ones? I suppose a few hundred spin doctors paid by taxpayers ought to be able to come up with some creative plans.

    However, remember the proverb, “Fool me once, shame on you; fool me twice, shame on me.” People of BC may deliver an appropriate verdict in 2017.


  7. I have a problem with a particular government being able to bind future generations with legislation, that is essentially an economic give away, and is not in the best interests of British Columbians, in light of the above report. First of all the next non Liberal government that comes to power has to launch a constitutional challenge, to that legislation, if it cannot be rescinded. Perhaps the legislation as it is being made can be challenged by special interest groups or taxpayer organizations.
    One simply cannot bind future generations in a democratic society, to an obvious manipulation of the legislative process in favor of so called economic benefits, especially in light of the above information. Future voters, in a democratic society, have to have some protection against what is being seen as pie in the sky, economic realities. That's called risk. Business risks on this scale are taken by investors, not future taxpayers, say 30 years down the road.
    The verdict…forget it Christy, this is a pipe dream whose time is done. Vote these clowns into oblivion in 2017.


  8. Anon 5:25 PM. I'm afraid 2017 is too late. But you're right – tying future generations to liberal free resources is tantamount to treason. And unlike BC Rail, we won't get it back in 999 years; because it'll be ALL GONE. Chrispy has to be gone NOW!


  9. Is not this a form of “collusion” between a government and an industry?
    Essentially a “cartel” that through favourable circumstance gains, rights of exclusivity, at the expense of the taxpayer?
    My understanding is that under the Competition act, any form of “Collusion” even between the supplier, “the province” and the extractor and/or marketer, that can be proven to cause damages to other ” interested” parties( taxpayers), can be and is illegal under this act.
    Perhaps this and a constitutional challenge to the proposed provincial legislation, could stop this “obvious abuse” and manipulation of legislative privileges from occurring.
    There has to be a way to stop this form of malfeasance, one would think…


  10. When Christy Clark passes legislation to hobble future governments and empower
    BC's future Asian overlords during the rare summer session, “an appropriate verdict in 2017” will be too late.
    Ah, but it will most certainly be challenged in court! Hopefully, but we've all seen how effective and expensive the judicial system is here in BC and across Canada. Law firms will be tripping over each other and wringing their hands at that inevitability. Kaching, kaching – THANK-YOU BC! THANK-YOU CANADA!


  11. I'm no rocket sugeon, obviously, but when I see things like this 'n' this 'n' this 'n' this…


    I have to suspect HypoChristy's & the Minister of Gas' hyperbole around the economics and sustainability of BC's LNG industry. And that's just the BS they chose to reveal. What of all the nefarious cloak 'n' dagger negotiations our venal politicians and foreign players are engaged in!


  12. Holy Cow! According to Wikipedia Canada has les than 1% of the world's known gas reserves. If that's all we have, why not et rid of it and concentrate on something else we can fuck up, Like what? Logging? Nope, done that. Fishing? Under way. Got it! Water export! Site C!


  13. What confounds me are the 18 other countries that have more proven natural gas reserves than Canada has, some of whom BC is hoping to sell our natural gas to.


  14. Not all other countries are ready to giveaway gas for decades long periods, guarantee protection from taxation, relief from liability for spills and other disasters, environmental and carbon regulations, provide almost free land, transport & port infrastructure, provide uninterruptible electric power at a fraction of cost, allow imported workers and a public-paid public relations program.

    As well, not all jurisdictions run by politicians who are motivated by personal greed and value personal gain above all else.


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