Ottawa optimistic on LNG future
Federal Natural Resources Minister Greg Rickford vowed that government will continue working to set the economic conditions that encourage multibillion dollar investments in a British Columbia liquefied- natural- gas industry, even though prospects for the industry have cooled with the dramatic shift in energy- sector profits and profitability.
“Everything I’ve heard from Japan and China, and some new opportunities in Europe, Canada ( and B. C.) are on the right track,” Rickford told reporters Tuesday following a speech to a smallish luncheon audience.
Rickford made his trip to the West Coast amid the grim news of stalled projects and layoffs coming out of the Alberta oilpatch and while the mining sector is still struggling due to a slowdown of Asian economies, particularly China.
His speech to the Vancouver Board of Trade was a tightly scripted pre- election message, built around the mantra of responsible resource development, that leaned heavily on tying the Conservative government’s policies to the economic growth in Canada’s resource industries in the recent past, notwithstanding tougher times in energy and mining now.
The minister didn’t make any new commitments beyond the previously announced promise of a tax break to the LNG sector, the acceleration of capital cost allowance on equipment used in the industry to the 30- per- cent mark enjoyed by manufacturers ( compared with eight per cent given to other resource entities), and 15- per- cent tax credit on mineral exploration.
However, he said the purpose of the trip included meetings with executives of major proponents such as the Petronas- backed Pacific North West LNG, Shell- backed LNG Canada and pipeline company TransCanada to talk about moving one or more projects “past the starting line.”
In his meetings, LNG proponents have been appreciative of the capital-cost tax break, Rickford said, but have also conveyed that the downturn in the oil sector could alleviate some of the labour shortages that were factoring into their equations to making a decision.
“There are pools ( of labour) to draw from right now,” Rickford said, “although a rebound in oil prices will make that ( situation) more competitive.”
However, he spoke on the same day that the Scotiabank Commodity Bank Index for February was released showing still weak conditions in the sector, although the measure of resource- industry help did rally by 2.4 percentage points in February.
The index remains almost onethird below its levels from a year ago “amid a still lacklustre global economy and the deflationary impact of a strong U. S. dollar,” index author Patricia Mohr, vice- president of industrial and commodity research for Scotiabank, wrote in the report.
In a followup email exchange, Mohr said her forecast for B. C. is better than for other provinces thanks to a better- performing forest sector selling into an improving U. S. housing marker. Demand for B. C. lumber in China, however, is fading along with other commodities.
Rickford acknowledged that “there are market forces at play beyond Canada’s unilateral actions. I’m not going to apologize about offering hope and opportunity.”