Alberta, CAPP enthusiastic about new LNG framework in BC, critics worried about rising emissions, economic benefits

LNG Canada
LNG Canada facility

LNG Canada plant, artist’s rendering

Alberta energy minister points out BC’s “hypocrisy” supporting its energy industry, but opposing Alberta pipeline

Premier John Horgan announced changes Thursday that are designed to accelerate the development of the British Columbia liquefied natural gas industry, including eliminating the previous Liberal government’s LNG income tax that was viewed as an impediment to investment. The new approach was greeted with mixed reviews, even in Alberta, where West Coast LNG is a key part of  the Notley government’s recently announced plans to significantly increase the size of the provincial petrochemical sector.

Marg McCuaig-Boyd, Alberta energy minister.

Energy Minister Marg McCuaig-Boyd is peeved that the BC NDP government continues to vociferously oppose the Trans Mountain Expansion pipeline, which will carry 525,000 b/d of diluted bitumen from Alberta to Burnaby, but is happy to built out its own fossil fuel industry.

“Let me be clear, we support LNG and support BC’s efforts to develop their energy sector,” she tweeted. “What we don’t support is the BC government’s blatant hypocrisy.”

No Canadian should take British Columbia’s opposition to the Kinder Morgan project seriously, she told the Canadian Press:  “BC cannot have it both ways. You can’t build your own energy industry yet block your neighbours — us, here in Alberta. It’s not fair, it’s not Canadian, and it needs to stop.”

The Canadian Association of Petroleum Producers also supports the pipeline, but decided to leave the sniping to the politicians and focus on the positive news.

“The global window to build LNG is closing – but these changes will help get Canada into the game. These changes will help ensure a level playing field for LNG proponents competing against other jurisdictions around the world,” said CAPP President Tim McMillan, who noted that the new framework will be the basis for the BC government’s discussions with the $40 billion LNG Canada project, which is scheduled for a final investment decision later this year, and if approved would be the largest private sector investment in the province’s history.

“Canada’s natural gas can help meet world demand – in China, India and Europe – for clean, reliable, affordable energy.”

bc wines
BC Premier John Horgan.

The Pembina focused on the difficulty an eight megatonne increase in CO2 emissions caused by LNG Canada would pose for Horgan’s promise to still meet BC’s climate promises.

“The government is now promising LNG development can proceed and we can meet our 2030 and 2050 climate targets. Questions remain regarding how the carbon pollution associated with proposed LNG projects will fit within the province’s carbon budget,” Karen Tam Wu, acting B.C. director at the Pembina Institute, said in a press release.

“Major LNG development would require significant emissions reductions in the gas supply chain, and an increase in the scale of emissions reductions needed in other sectors of the economy.”

Wu noted that opportunities to reduce emissions across the BC gas supply chain do exist, but Horgan failed to address them. And while he did mention GHG emission reductions in transportation and other parts of the economy, he didn’t address, he didn’t address specific measures there, either.

Economist Marvin Shaffer isn’t convinced that LNG will generate the economic benefits claimed by supporters.

“You sort of get enamored with the magnitude of investments and the number of jobs a project might develop, but from an economic point of view, the question is, are there net benefits from all of this or are we just enticing an influx of workers for a certain period of time in a certain location?” the Simon Fraser University professor asked in an interview.

Shaffer called on the Horgan government to release its economic study of the new LNG framework.

“Power consumption, even the secondary aside from liquefaction, can be very large and the industrial tariff doesn’t reflect the cost of new supply. It’s getting closer, but it doesn’t reflect that and when you deal with these large amounts of power use,”he said.

“What you’re saying is customers generally are going to be paying higher rates to support the supply of electricity to this particular user.”

While Prof. Shaffer may not include the contribution of a West Coast LNG industry to the expansion of the Alberta petrochemical sector, perhaps he should.

The recently released report of the Alberta Energy Diversification Advisory Committee noted that only about eight per cent of natural gas (e.g. ethane, propane, butane, etc.) is required for petrochemical manufacturing. The remainder, in the form of methane, needs to find a home in order to make downstream diversification really work (investment potential drops in half without a buyer for the methane).

And the best market for Alberta methane would be LNG plants in British Columbia.

A billion dollars in new Alberta incentives and many more billions in petrochemical plant and infrastructure investment are riding on the prospect of BC’s new LNG regime being enough to entice LNG Canada and other projects to venture into the rapidly growing but increasingly competitive global LNG business.

No wonder McCuaig-Boyd says the Notley government supports LNG.

With any luck, the BC NDP under Horgan will be able to meet the objections of Pembina and Shaffer, moving projects from the drawing board to production in a timely manner.

The NDP government next door has a lot riding on a positive outcome.


Facebook Comments

Be the first to comment

Leave a Reply

Your email address will not be published.