Fu­ture of LNG up in the air af­ter elec­tion in B.C.

LNG projects may face big hur­dles in the wake of B.C. elec­tion, writes Clau­dia Cattaneo.

Edmonton Journal - - FRONT PAGE - Fi­nan­cial Post ccat­ta­neo@na­tion­al­post.com

With vot­ers in Bri­tish Columbia de­mot­ing Christy Clark’s Lib­eral gov­ern­ment to a mi­nor­ity Tues­day and hand­ing the Green party the bal­ance of power, ma­jor en­ergy projects like the Trans Moun­tain pipe­line and liq­ue­fied nat­u­ral gas face more po­lit­i­cal un­cer­tainty — though not the im­me­di­ate disas­ter that would have come with an NDP ma­jor­ity win.

In a nail-biter in which the Lib­er­als and the NDP ran neck-and­neck as bal­lots were counted late into the night, pre­lim­i­nary re­sults show Clark won 43 seats — with 41 per cent of the pop­u­lar vote — short of the 49-seat ma­jor­ity she se­cured in the 2013 elec­tion.

B.C. NDP Leader John Hor­gan ended with 41 seats, up from 35 seats in the last elec­tion and 39.9 per cent of the pop­u­lar vote. The B.C. Greens scooped three seats and 16.65 per cent of the pop­u­lar vote, putting Green leader and cli­mate sci­en­tist An­drew Weaver, who held onto his rid­ing in Vic­to­ria’s up­scale Oak Bay, in the po­si­tion of power bro­ker.

But the re­sults are so tight the fi­nal out­come could still change by May 22 to 24, af­ter Elec­tions BC adds up ab­sen­tee bal­lots. In one rid­ing, Courte­nay-Cox, the Lib­er­als lost by just nine votes. If they win that rid­ing, they would get the 44 seats they need to form a ma­jor­ity.

Weaver was keep­ing his op­tions open Wed­nes­day. Dur­ing the cam­paign, he in­di­cated he was pre­pared to work with Clark, while there were some rough ex­changes with the NDP, which he ac­cused of us­ing nasty tac­tics and of be­ing a late­comer to the cli­mate change move­ment.

“My ini­tial re­ac­tion is that the Greens won’t be in a rush to top­ple a Lib­eral mi­nor­ity,” said Dan Tsub­ouchi, chief mar­ket strate­gist at Stream As­set Fi­nan­cial Man­age­ment in Cal­gary. “I know they won all three seats by big mar­gins, but I just think they re­al­ize they got as good as they can get it.”

Marie Ra­jic, se­nior vice-pres­i­dent at Hill+Knowl­ton Strate­gies, wasn’t as op­ti­mistic. “The mar­kets don’t like un­cer­tainty and a mi­nor­ity gov­ern­ment with the B.C. Green Party hold­ing the bal­ance of power will mean un­pre­dictabil­ity,” she said. “LNG projects await­ing fi­nal in­vest­ment de­ci­sion will keep wait­ing. In the mean­time, the United States will con­tinue to re­al­ize their LNG am­bi­tions as we in Canada watch and won­der why we al­lowed this eco­nomic op­por­tu­nity to pass us by.”

If the Lib­er­als part­ner with the Greens, the ques­tion is whether Weaver is pre­pared to tone down his agenda in ex­change for be­ing part of gov­ern­ment, or whether he’ll con­tinue to press for killing fos­sil fuel projects.

Weaver has said he would more than dou­ble the car­bon tax over the next five years and put the province on track for a 40 per cent re­duc­tion in green­house gas emis­sions by 2030, axe the hy­dro­elec­tric dam al­ready un­der con­struc­tion at Site C on the Peace River, kill the pro­posed Pa­cific North­west LNG de­vel­op­ment and likely other LNG projects as well, and stop con­struc­tion of the Kin­der Mor­gan’s Trans Moun­tain pipe­line.

Kin­der Mor­gan didn’t seem too dis­turbed Wed­nes­day by the elec­tion out­come. The com­pany filed an amend­ment to a pre­lim­i­nary prospec­tus for an ini­tial pub­lic of­fer­ing to raise $1.75 bil­lion to help fund the $7.4-bil­lion Trans Moun­tain pipe­line ex­pan­sion. The project has re­ceived all ap­provals — in­clud­ing from Clark’s gov­ern­ment in Jan­uary — and plan­ning is at an ad­vanced stage. If the NDP had won a ma­jor­ity it would have im­me­di­ately blocked it.

“Trans Moun­tain con­tin­ues to move for­ward with all as­pects of plan­ning,” Ian An­der­son, pres­i­dent of Kin­der Mor­gan Canada, said in a state­ment where he con­grat­u­lated all the suc­cess­ful can­di­dates. “Next steps for the project in­clude ar­rang­ing ac­cept­able fi­nanc­ing and a fi­nal in­vest­ment de­ci­sion by Kin­der Mor­gan with con­struc­tion set to be­gin September 2017 and an in­ser­vice date of late 2019.”

Ac­cord­ing to the prospec­tus, ship­pers that would ben­e­fit from the project in­clude many of Al­berta’s oil­sands pro­duc­ers: Athabasca Oil Corp., BP PLC, Brion En­ergy Corp., Cana­dian Nat­u­ral Re­sources Ltd., Cen­ovus En­ergy Inc., Devon En­ergy Corp., Husky En­ergy Inc., Im­pe­rial Oil Ltd., MEG En­ergy Corp., Sun­cor En­ergy Inc., To­tal SA.

The un­cer­tain po­lit­i­cal scenario could be more prob­lem­atic for LNG pro­po­nents, whose plans are not as ad­vanced. Clark has been a big LNG booster and the elec­tion in Skeena of star Lib­eral can­di­date El­lis Ross, the for­mer chief coun­cil­lor for the Haisla Nation, shows aboriginal com­mu­ni­ties are mo­ti­vated to see the in­dus­try move for­ward.

But with her Lib­eral mi­nor­ity in dan­ger of falling any time, and anti-fos­sil fuel par­ties be­com­ing more prom­i­nent in B.C. — even as the en­vi­ron­ment ranked low among voter pri­or­i­ties dur­ing the elec­tion cam­paign — pro­po­nents may throw in the towel on B.C. in favour of places where their in­vest­ments are wel­come.

"Per­son­ally I think the hur­dles are so large and the gov­ern­ment hasn’t re­ally got­ten its act to­gether yet, so I don’t hold out a lot of hope for West Coast LNG com­ing into the fold any­time soon,” said Dar­ren Gee, pres­i­dent and CEO of nat­u­ral gas pro­ducer Peyto Ex­plo­ration & De­vel­op­ment Corp.

Christy Clark

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