Gas producers welcome B.C. LNG incentives
B.C. government tax incentives aimed at jumpstarting the much-delayed West Coast LNG industry are being welcomed by Western Canada’s hard-hit natural gas industry as a potential path to higher prices and better markets for their products. The government said Thursday it hopes its moves will result in a positive investment decision later this year for the $40-billion LNG Canada liquefied natural gas export terminal, pipelines and infrastructure which was delayed in 2016 by proponents led by Royal Dutch Shell.
“I’m pleased because it shows the B.C. government is being proactive and has come forward with some inducements for the project,” said CEO Dale Shwed of Calgary-based Crew Energy Inc., which produces liquidsrich natural gas in northeastern B.C.
“We need other routes to get hydrocarbons, both oil and natural gas, out of the country and that would be a big step. And once that first step is taken, hopefully others would follow. So it’s very meaningful.”
He said Friday he remains cautious about LNG prospects, pointing out that LNG Canada is still looking for relief from federal tariffs on fabricated steel modules it needs to import from Asia and adding Shell could still choose to build somewhere other than Canada.
Canadian Natural Resources Ltd., one of Canada’s largest natural gas producers, said in a statement Friday it is also encouraged by B.C.’s commitment to build its LNG industry.
“The advancement of LNG development will enable Canada’s responsibly produced natural gas to reach global markets, creating significant value for B.C. and Canada,” it said.
The natural gas investing community has been abuzz with LNG news since the announcement, said CIBC analysts in a report.
“The general consensus seems to be that an FID (final investment decision) by Shell would be positive for sentiment, if not necessarily result in any material nearterm shift to Canadian natural gas supply/demand fundamentals,” they wrote.
Investors are now analysing where the Shell facility would get the gas it will need to generate 13 million tonnes of LNG per year from the first two of four planned “trains” or LNG units, which could be on stream in 2024 if construction starts this year, it added.
Several Calgary-based companies producing gas in northeastern B.C. could be suppliers to the proposed Coastal GasLink pipeline leading to the LNG Canada project, including Crew, Canadian Natural Resources, Encana Corp. and Tourmaline Oil Corp., the report said.
Thursday’s announcement will provide a fair return for B.C. gas, create jobs, make partners of First Nations and protect the province’s air, land and water, said the Canadian Association of Petroleum Producers in a news release.
“The global window to build LNG is closing, but these changes will help get Canada into the game,” said CAPP CEO Tim McMillan.
“These changes will help ensure a level playing field for LNG proponents competing against other jurisdictions around the world.‚Äù
The western Canadian natural gas business remains in a deep funk due to low prices and tight pipeline capacity, according to a National Bank of Canada Financial Markets report issued earlier this week.
Alberta’s premier is warning that there will be no immediate tax windfall once recreational marijuana use becomes legal this year.
For the first time, cannabis revenue is being factored in to Alberta’s budget.
Alberta expects to take in $26 million in taxes once recreational marijuana is legalized.
But Premier Rachel Notley says Alberta expects to be in a net loss when it comes to marijuana revenue for at least two years.
Calgary Mayor Naheed Nenshi has expressed concern that, so far, there has been no mention of cannabis revenue sharing with municipalities.
Notley says any initial money will be used to adjust to the change in federal law and focus on community safety.
“We (will) focus on keeping the product away from kids and that we keep the black market out of the distribution of this product,” said Notley. “The distribution of any remaining funds after we’ve got the system in place, we will deal with then.”