B.C. PENSION GIANT PUMPS MILLIONS INTO U.S. LNG FIRM
Some of us buy into the resource with domestic development at a standstill
While B.C. continues to wait — and wait — for the first big liquefied natural gas project, the province’s public sector pensions have quietly been investing millions in a rival LNG exporter based in the U.S.
Cheniere Energy, operator of one LNG terminal in Louisiana and nearing completion of a second in Texas, reported the increased stake late last month.
“B.C. Investment Management Corporation grew its position by 37.6 per cent during the fourth quarter,” the company disclosed in an investment filing. “BCIMC now owns 109,417 shares valued at $5,894,000 after buying an additional 29,925 shares.”
BCIMC manages pension investments for public servants, teachers, college instructors, university professors, municipal workers and others in the public sector.
A corporation spokesperson this week confirmed the increased stake in Cheniere, though per long-standing policy declined to discuss either investment strategies or holdings.
The BCIMC website indicates the pension fund trustees appoint the majority of members to the board, which sets overall strategies but leaves actual investment decisions to a team of professional managers.
From the mission statement: “We deliver to our clients the highest return for a given level of risk at a reasonable cost, while recognizing our responsibility to the broader society through our governance, social and environmental-related activities.”
The Cheniere investment, while accounting for only a tiny fraction of the $135 billion in assets managed by the corporation, looks like a good bet in terms of anticipated returns.
The company took the plunge into the LNG-forex-port market in 2011, about the same time B.C. began talking up the possibilities under premier Christy Clark.
While the B.C. pace was glacial, Cheniere had its first production train up and running at Sabine Pass in Louisiana two years ago. The second terminal, in Corpus Christi, is scheduled to come online this spring.
Targeting the same Asian markets as B.C., the company signed a long-term export agreement with China this year and recently sent its first LNG shipment to India under a 20-year deal. With ready access to the expanded Panama Canal, it is poised to take advantage of a projected one-third growth in global LNG demand by early in the next decade.
The main driver behind the shift is China, busy weaning itself off coal by shifting to relatively cleaner natural gas, an opportunity cited many times by Clark to much mockery from political opponents.
As for B.C.’s current prospects, I asked Energy Minister Michelle Mungall if she expects we’ll see the opening of a multibillion-dollar LNG terminal in B.C. one of these days.
“I do,” she said. “As soon as I was given this portfolio, I instructed my ministry to move forward with looking at how do we be competitive in the current global market pricing. So we’ve done that work and identified ways in which we can increase our competitiveness.”
The New Democrats are staking their hopes to LNG Canada, the Kitimat-based project backed by Shell Canada and partners.
“LNG Canada is still very much committed to working in B.C.,” Mungall told me during an interview last week on Voice of B.C. on Shaw TV.
“They are anticipating to have a final investment decision within this calendar year, so they are still very much actively pursuing.”
Before the election, the New Democrats sided with a minority of First Nations in opposition to the chosen site near Port Edward on the northwest coast for an LNG project proposed by Malaysian-government owned Petronas. Petronas walked away from the project six days after the NDP took office, blaming market conditions. Mungall said the Kitimat project meets the New Democrats’ standards for support from First Nations.
“When I met many of the 21 First Nations that are along the line for LNG Canada from well to tidewater, many of them said, ‘We want to make sure that you’re going to see LNG Canada happen because it’s so important for our community and not just the economic development opportunities.’
“Many of them had community-wide votes after they did their own environmental assessment process, and those communities came out in strong support of LNG Canada.”
Soon to come from Mungall on the LNG file is her fulfilment of a promise the New Democrats made before the election for a scientific review of fracking, the water-driven process that releases natural gas from rocks deep in the earth. Most of B.C.’s natural gas is produced by fracking and Mungall has rejected calls from activists for a moratorium while the scientists do their work.
“I can’t imagine anybody in B.C. who relies on natural gas to heat their home and heat their water suddenly saying, ‘Yeah, sure, put a moratorium on it. I don’t want to have a warm home and I don’t want to have a nice hot shower in the morning,’” she told me.
She said the panel will be constructive in its approach to natural gas development: “Our scientific panel’s going to work with industry to incentivize them to do things better. There’s always room for improvement …
“And when I sit down with industry and talk to them about what our plans are, they agree there’s always learning opportunities for them to do better.”
Still, it remains to be seen whether the panel will add further uncertainties to natural gas development in B.C. while the province’s rivals go full speed ahead on LNG production.
Soon to come from Mungall on the LNG file is her fulfilment of a promise the NDP made before the election for a scientific review of fracking.