LNG

BC dodged a bullet

The lack of thoughtful analysis about LNG found in BC’s daily newspapers is disappointing but not surprising. In 2015, Rafe Mair told us what to expect in his article Canada’s biggest newspaper chain sold its soul to oil and gas:

oil 250Agreements between Postmedia – the country’s largest newspaper chain – and the Canadian Association of Petroleum Producers (CAPP), plus an equally disgraceful deal between the company’s Vancouver Province and the LNG industry have permanently stained the organization’s journalistic credibility…

Once a newspaper is committed to a controversial view, it’s like a clock that strikes 13 – it can never be trusted again. Even the mildest “puff” pieces may well contain propaganda. Unquestionably, Postmedia coverage of controversial issues relating to fossil fuels and the industry can never be accepted in light of their commitment to CAPP.

Happily, there are analysts not bound to the oil and gas industry. At PolicyNote.ca, economist Marc Lee has more to say about Pacific Northwest LNG:

British Columbians should not be lamenting Petronas’ decision to pull its Pacific Northwest Liquified Natural Gas (LNG) proposal. Instead, they should be celebrating the demise of a project built on bad economics, climate change denial and wishful thinking.

A few pundits have told the Petronas story as a tragedy. Some are blaming the brand new NDP government, others the BC Liberal predecessors for not moving faster to land a deal.

The real culprit is the abysmal economics of LNG—the need for expensive new pipelines and terminals, and the high costs to liquefy gas and transport it across the Pacific. These investments would only make sense if prices were way higher then they currently are…

Going back to 2013, those high Asian prices fuelled dreams of LNG riches in BC. It was a perfect Hail Mary pass for a tired government seeking re-election. Public resources were used to pay consultants to quickly manufacture electoral propaganda — 100,000 jobs! $100 billion Prosperity Fund!—for use in the 2013 campaign…

While Australia is now poised to become the world’s largest LNG exporter by 2020, “success” turned into a political crisis by early 2017. Just as the taps were turned on for three massive new export projects on the country’s east coast near Gladstone, Queensland, prices shot up for Aussie households and businesses in major urban areas like Sydney. Local prices for gas at one point cost more than the gas it exported to Japan…

Richard Denniss, Chief Economist of The Australia Institute, argues that the hidden objective of LNG exporters all along was to raise domestic gas prices. Abundant gas supplies and low prices might have been good for Aussie households and manufacturers, but not for the gas industry, which wants to sell its gas for the highest price possible…

As the Australian government tilted its tax and royalty regime towards encouraging new LNG investment, the return to the Treasury—for the development of the publicly owned gas resource—has been meagre. In spite of record gas production and exports, revenues from the federal Petroleum Resource Rent Tax fell dramatically in 2016 to their lowest level since 1999. Royalties at the state level (equivalent to Canadian provinces) are also incredibly small…

This is reminiscent of BC, which is getting a pittance for its own record gas production. To lure LNG investment, the BC government caved in to industry efforts for a better return to the public treasury…

Let’s recap: even if BC had an LNG industry today, it would be losing money on every tanker load sent to Asia. The people of BC would be paying higher prices for the gas they consume, while getting negligible public return for all that publicly owned gas. GHG emissions would go up instead of down, and there would be very few jobs…

 BC has wasted political capital, time and money on LNG instead of developing renewables and investing in energy efficiency and climate-friendly infrastructure…

British Columbians should be thankful that government efforts to quickly liquidate it for export have come to naught. Forget the laments in the mainstream media: Petronas’ decision to pull out of BC is a blessing.


gas contributions 375


At The Tyee, Andrew Nikiforuk explains How BC’s LNG Fiasco Went So Wrong:

…The B.C. government never had a coherent financial strategy, never did a proper cost-benefit analysis, and then got into bed with opaque, foreign-owned businesses, including one with links to tax evasion.

… Gwyn Morgan, the former CEO of Encana, one of North America’s largest gas producers, had become a financial backer and key political advisor to an ambitious Christy Clark…

Clark’s government began pumping out documents on the imagined bounty to be earned by extracting methane, liquefying the gas and exporting it to Asia in 2012.

The documents largely mirrored Morgan’s rhetoric expressed in his Globe and Mail columns and the industry’s claims that fracked methane is clean, green and wonderful — a bridge fuel to the future.

…B.C.’s sudden sprint to enter the LNG market faced strong competition, high costs and “was not guaranteed.”

But [Eoin] Finn says nobody in the B.C. government or the mainstream media was listening.

Nor did anyone in the government want to consider the ecological cost of LNG, including the cumulative impact of drilling and fracking thousands of methane-leaking wells in northeastern B.C., or the effect on First Nations’ treaty rights.

…But the giveaways could not conquer economics. In the end, the global LNG glut combined with slumping prices and persistent cost over-runs killed one project after another in B.C…

Categories: LNG, Postmedia

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5 replies »

  1. The same individuals driving the BC Liberal agenda put another bullet in the chamber and there is much evidence it was loaded with the same self-interested incompetence. Will BCUC apply a trigger-lock to prevent the Site C slug aimed at us from leaving the barrel?

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  2. Thank you for this useful counter, to those who are pumping Australia as a shining star of LNG leadership.

    Just because it “looks” like they’re doing something, it doesn’t mean they’re actually getting anywhere… like when you walk up a DOWN escalator and can’t keep the pace.

    I’m glad to keep our gas in our own hands, where it can be used more efficiently.

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  3. Maybe we dodged the last bullet, but we all be packing a bit of shrapnel around from the past quarter century.

    Beginning at the end of Socred premier Vander Zalm, forced to resign soon before his venerable party was wiped out at the polls, two NDP premiers were subsequently felled before their time and, under a third, the party itself was reduced to a near-death two seats;

    The MLA who whacked his Liberal opposition leader Gordon Wilson got whacked himself by his own party in his fourth term as premier, followed quickly by yet another opposition leader who’d been shooting at members of her own caucus in self defence. Her replacement was then unexpectedly taken out on election night 2013 by Wilson-whackin-Campbell’s replacement.

    And now another opposition leader, recently a premier, has been eight-sixed, which took slightly longer than the “801” process some of her party had in store for her if it’d lost on that fateful 2013 election night—at one minute after the polls closed. Her opponent fell upon his own sword upon conceding defeat in that very race —the one the official opposition party was supposed to have won.

    We BCers are probably too inured to partisan gun smoke and ideological blood splatters to appreciate that we’ve been living in what outsiders see as a political war zone at least ever since a certain premier lived in a theme-park castle. Let’s not forget, too, the divisive referenda and citizens’ initiatives (the ballot referendum authorizing the latter being the only one that wasn’t), including some 28 failed recalls and the Anti-HST petition (sponsored ironically by the same defeated fantasy premier whose party was ousted by the same ballots that included the Citizens’ Initiative Referendum twenty years earlier); and who wouldn’t want to forget the nasty “referendum” intended to show non-Aboriginals outnumber First Nation people? Add two more referenda to close the coffin lid on pro-rep, the second seeming to nail it shut (for a while, at least). And finally the precedent setting HST Referendum that, for the first time in 800 years of Commonwealth parliamentary history, forced a legislated tax to be rescinded by popular measure.

    Whew! It’s been some donnybrook! Normal provinces don’t appear so afflicted. Alberta only changes governing parties every few decades or so—over forty years last time. Makes the sixteen-year BCL regime seem like—well,—sixteen years of exceptionally frequent political carnage.

    Now, during this recuperative reload period, we walking wounded might finally catch enough wind to ask whether there’s a better way, and reflect that we really did just dodge a bullet—in an incessant hail of them— because, if we had allowed the sixteen year-old government to take as much licence again as they had since their last default victory by extending its cryptokleptic regime, we’d really be headed for the goo right now. Be like the last soldier killed before the struggle is lost forever. It was that close.

    Wish it was moot now to wonder why the public seems to trust proven journalistic charlatans for so long, even after they’re convincingly revealed—which’ll become especially evident now that the BC Liberals have lost the power to prevent investigation of how they ran the province into such heavy debt and degraded so much of the public apparatus.

    But even more I wonder if more citizens will finally get it that vigilant and ethical journalism has been available all along, some of the best right here on this site, for example.

    Won’t more remark that, jeez, those independent bloggers were actually right all along? Haven’t the BC Liberal government and their MSM friends been snowing us the whole time?

    It needs to be reminded frequently.

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  4. Scotty says: “And finally the precedent setting HST Referendum that, for the first time in 800 years of Commonwealth parliamentary history, forced a legislated tax to be rescinded by popular measure.”

    I love how Mr. van “Themeparkcastleman” was a driving force in the ant-HST movement. It was his best work, as a politician (though the property transfer tax has proved most lucrative for the government). For their work on the anti-HST, Bill V. and Bill T (Tieleman) should have gotten Orders of BC.

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