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.
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.