British Columbia Intent on Moving LNG Industry Forward

The province of British Columbia has recently expressed interest in the development of its liquefied natural gas (LNG) industry. The minister for natural gas and deputy premier Rich Coleman have traveled to South Korea, China and Malaysia to talk with Korea's Kogas; China's CNOOC Ltd, PetroChina and the Sinopec Group and Malaysia's Petronas in order to discuss the construction of plants to process the LNG and ship it to Asia.

To date, there are ten proposed developments planned for the north coast of the province. So far, the National Energy Board has given export licenses to three of these projects. British Columbia has estimated that if five of the proposed projects would proceed, this could result in over 100,000 new jobs and new revenue sources for the provincial government. In fact, the benefit in terms of the cumulative gross domestic product could translate to $1 trillion by the year 2046. This does not include the royalties that the province would gain from the production of natural gas and business and income taxes. The proceeds would allow BC to create a Prosperity Fund like that of the Heritage Fund in Alberta.

However the price may be an issue. While customers in Asia want lower prices compared to what they are paying in their local markets, LNG backers in Canada want to push up the prices. Canada would have to spend billions on pipelines and related facilities and thus would want to charge high prices to reflect this cost. Coleman, however, said the proponents of the project expressed optimism that they would be able to agree on the price.

Although no final investment decisions have been made by the companies on their LNG proposals in BC, companies have expressed their eagerness to pursue their projects in the province. BC Premier Christy Clark will continue to make trips to Asia this month to improve the province's LNG prospects.