B.C. PEN­SION GI­ANT PUMPS MIL­LIONS INTO U.S. LNG FIRM

Some of us buy into the re­source with do­mes­tic de­vel­op­ment at a stand­still

Vancouver Sun - - OPINION - VAUGHN PALMER vpalmer@post­media.com

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.

DAR­RYL DYCK/THE CANA­DIAN PRESS/FILES

De­spite the slow pace of LNG de­vel­op­ment, En­ergy Min­is­ter Michelle Mun­gall says LNG Canada, backed by Shell Canada and its part­ners, “is still very much com­mit­ted to work­ing in B.C. … still very much ac­tively pur­su­ing.”

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