More fuel for Clark’s unlikely optimism

VANCOUVER • Hailed as “the largest capital investment in B.C. history,” the proposed US$36 billion Pacific NorthWest LNG (PNW) project looks very rich indeed. If it does finally proceed, if it does create 4,500 construction jobs and 330 full-time positions, if it does put $7.7 billion into provincial coffers over an initial 23 years — a “conservative” estimate, according to B.C. government bureaucrats — then we can start to believe in the province’s overall liquefied natural gas strategy, introduced three years ago and getting fine-tuned.

A ballyhooed “brand-new LNG sector” is now to include one, two, perhaps three additional projects by the end of the decade. The whole scheme was once valued at $1 trillion; the figure changes, like most everything else LNG-in-B.C. related.

That’s the thing with longrange economic forecasts, energy pricing and politicians: None are terribly reliable. As things stand, there are plenty of “ifs” in this one leading LNG proposal alone.

But the dream seemed a little more real Wednesday, with B.C. premier Christy Clark signing a memorandum of understanding with PNW president Michael Culbert, thereby formalizing terms of an LNG royalty scheme and project development agreement between the province and the project consortium, which is led by a Canadian subsidiary of Malaysian oil and gas company Petronas.

The terms are meant to provide a road map for both the province and PNW, allowing both to anticipate financial rewards and requirements related to the proposed plant, which would run natural gas from northeastern B.C. to a liquefaction plant on a small island near Prince Rupert, on the Pacific Coast. The product would be loaded onto freighters and shipped to hungry markets in Asia.

“It’s a good day for stability, clarity and predictability,” said Culbert, acknowledging the consortium has yet to make its “final investment decision” on the project, which also remains subject to provincial legislation and regulatory review.

The premier beamed. The signing on Wednesday means her government is one step closer to keeping its promise to expand LNG production, thereby juicing the province’s economy and delivering “cleaner air and a better climate all over the world,” Clark said.

She emphasized the benefits ordinary families would receive, if projects such as PNW are built. Think of the pipefitter, she said, “making high wages” and buying “hockey equipment and dinner for her family.” Good times are coming to the B.C. hinterland.

Clark did not reiterate a pledge, from her successful 2013 provincial election campaign, to eliminate the province’s mounting debt — now approaching $70 billion — using royalties and taxes raised from an expanded LNG industry. The “debt-free B.C.” mantra isn’t often heard inside government offices these days. It is sometimes hurled from the opposition bench, in a mocking tone.

British Columbians don’t hear much about the Clark government’s proposed “Prosperity Fund” either. A sort of rainy-day account “for the benefit of current and future generations,” it was to receive “more than $100 billion” over time, according to Clark, based on estimates from reports commissioned by her government and assuming at least five new LNG plants would enter production in the province.

The first plant was to have started production this year. Three more were to have entered production by 2020. Skeptics claimed the province’s LNG projections were much too optimistic when first unveiled in 2012. The skeptics were proven correct. Three years of lower-thananticipated oil and gas prices and increased competition from other gas-producing places have been blamed, and the promises have been dialed back.

But the prospect of an LNG future remains: There are now 19 proposed LNG facilities in B.C. Of those, PNW is furthest along, and probably has the best chance of getting built before the end of the current decade.

A final investment decision is coming. “Hopefully in the near future,” says PNW president Culbert. Federal regulatory approvals will arrive “hopefully in the next few months.”

Clark was asked if her government can convince holdout First Nations to sign on, and reap the benefits LNG development offers them. “We’re hopeful,” she replied.

Hopeful on LNG: It’s the new bottom line. More realistic than “debt-free B.C.”