B. C.’ s LNG exports a good news story

One gauge of the importance the Liberal government ascribes to development of British Columbia’s natural gas resources is the number of cabinet ministers who show up at your door to promote it.

Last week, a front- bench triumvirate of Energy and Mines Minister Rich Coleman, Transportation and Infrastructure Minister Blair Lekstrom and Jobs, Tourism and Innovation Minister Pat Bell met with The Vancouver Sun editorial board to make their case. It is a compelling one.

B. C. is blessed with vast reserves of natural gas. Conservative estimates put the amount of recoverable gas in B. C. at 100 trillion cubic feet. To put that in perspective, B. C. has produced a total of about 22.5 trillion cubic feet over the last six decades.

In an energy- hungry world, this is a resource we should and can share with others. However, the accessibility of shale gas in North America has made Canada’s traditional customer for energy, the United States, increasingly self- sufficient in natural gas. Where our gas is needed is in Asia and to get it there we have to liquefy it and ship it by tanker.

There are several proposals to establish liquefied natural gas plants in B. C. which, if all are built, would represent investment of more than $ 20 billion, create up to 9,000 construction jobs and 800 long- term operational jobs, and generate $ 1 billion a year or more in revenue for the government, assuming the econometric models are accurate.

First up is Kitimat LNG, a joint venture of Apache Resources, Encana Corp. and EOG Resources, which plans to build a $ 4.7- billion liquefied natural gas terminal at Kitimat to produce five million tonnes of LNG a year, with sufficient capacity to eventually double production. Depending on a final investment decision, expected before the end of the year, it could be operating by late 2015.

Royal Dutch Shell PLC and partners Korea Gas, Mitsubishi and PetroChina have proposed a $ 12- billion, 12- million- tonne- per- year LNG plant and export terminal on the west coast, with first exports expected in 2020. And, finally, BC LNG, a joint venture between the Haisla First Nation of Kitimat and LNG Partners LLC of Houston, Texas, plans to build an LNG plant with a capacity of 700,000 tonnes a year, capable of expanding to 1.8 million tonnes. It could be operating by 2018, or earlier.

Meanwhile, British Gas is working with the Prince Rupert Port Authority to determine the feasibility of an LNG terminal at Prince Rupert.

A recent Ernst & Young report estimated that infrastructure investment to facilitate all of this export development could be in the order of $ 50 billion.

For a government faring poorly in the political arena, natural gas is a good news story, a demonstration that it can get some things right, and the economic future is bright.

Unlike oilsands, oil tankers and pipelines, opposition to natural gas development and LNG plants has been subdued. Concerns over fracking — the injection of fluids to force out tight gas locked in rock — which have delayed development elsewhere are not a major issue in B. C., where there has not been a single incident of groundwater contamination. Moreover, most of the water used at well sites is recycled waste water, conserving precious fresh water resources.

Even the climate change contingent seems satisfied that B. C. LNG is a step forward, since natural gas shipped to Asia usually replaces coal and one tonne of LNG eliminates the equivalent of 0.9 tonnes of coal- fired carbon dioxide emissions.

Still, success is not assured. B. C. is late in the game. In 2009, 87 per cent of Canada’s natural gas exports were destined for the U. S., leaving other countries to dominate the global market. Qatar rose to become the world’s largest LNG exporter; Australia, the largest supplier of LNG to China. B. C. will have to carve out its niche.

That Korean, Chinese and Japanese companies have invested heavily in B. C.’ s fledgling LNG industry is a vote of confidence that the province will be able to supply Asia with the natural gas it needs to replace coal ( and nuclear power in Japan) to generate the electricity they need to grow their economies.

The coincidental side benefit is that LNG will help B. C. grow its economy, as well.