VICTORIA B次元官网网址� The B.C. legislature is back in session this week, a rare summer sitting to approve a 25-year project agreement for the first large-scale liquefied natural gas project in northern B.C.
Finance Minister Mike de Jong released the lengthy legal agreement prior to the debate, saying this step should remove any doubt that an international investment group led by Petronas of Malaysia intends to go ahead.
With billions invested in upstream resources and buyers waiting at home, the Pacific Northwest LNG group includes Chinese state corporation Sinopec, Indian Oil Corp., Japan Petroleum Exploration Corp. and Petroleum Brunei.
The most contentious issue is the governmentB次元官网网址檚 intention to protect the investors from B次元官网网址渄iscriminatoryB次元官网网址� for the life of the project. The government insists these sorts of long-term cost certainty agreements are commonplace, and donB次元官网网址檛 affect provincial and federal taxes or environmental regulations unless they single out LNG operations.
Future governments can raise corporate tax rates, carbon tax or enter into a cap and trade system. Ottawa can scrap capital cost allowances that were recently extended to LNG producers, which is significant because Liberal leader Justin Trudeau has indicated he would get rid of what he calls subsidies to fossil fuels.
Both the province and Ottawa allow capital cost write-offs against corporate tax, to attract investment. B.C. attracted a lot of gas drilling rigs from Alberta with tax breaks for deep drilling.
The B.C. government invited comparisons with Western Australia LNG producers, and NDP researchers did just that. They noted that AustraliaB次元官网网址檚 Gorgon and North West Shelf LNG projects have written provisions that local employment and local suppliers will get preference.
Those are absent in B.C., along with apprenticeship guarantees for LNG.
B次元官网网址淭here was hard bargaining by the companies, and certainly the premier went into this negotiation in a very weak position, having to deliver on her extravagant and grandiose promises from the election,B次元官网网址� NDP critic Bruce Ralston said. B次元官网网址淭he companies did well. Whether the citizens of British Columbia did well is certainly an open question.B次元官网网址�
Green Party MLA Andrew Weaver painted himself into a corner, having spent the last two years dismissing the B.C. LNG industry as a fantasy that will never come to pass, strictly on economic grounds. He has since branded the Petronas deal, a template for any future projects, a B次元官网网址済enerational sellout.B次元官网网址�
Another big player with gas well investments in northeast B.C. is Shell, with a proposal for Kitimat. Its prospects have improved since it took over British Gas Group, which had its own LNG intentions here. Another group led by Altagas remains on track to ship LNG from its Douglas Channel site before the end of the decade.
ItB次元官网网址檚 important to remember that without LNG exports, B.C.B次元官网网址檚 natural gas industry will shrink rapidly after 50 years of increasingly significant revenues from sales to the U.S. Leaving aside all the political positioning around the provinceB次元官网网址檚 largest private investment to date, if this doesnB次元官网网址檛 go ahead we will all feel the effects.
De Jong had a blunt response when asked what the province gets in return for all its guarantees of low tax environment: B次元官网网址淭heir money.B次元官网网址�
At , Pacific Northwest LNG will need as many as 4,500 workers, with 500 or more operations jobs depending on how far it expands.
The finance ministry forecasts that once Pacific Northwest LNG is up and running, it represents $9 billion in revenues to the province over 10 years, including gas royalties and taxes. ThatB次元官网网址檚 more than taxpayers can expect from the entire forest industry.
Tom Fletcher is legislature reporter and columnist for Black Press. Twitter:
