B.C.’s LNG Dream 2.0 is at the far end of the street today, but the provincial government should be preparing now to ensure it has a better chance of becoming reality than LNG Dream 1.0.
As reported in “The B.C. advantage in Alaska” (Business in Vancouver issue 1464; November 21-27), an ambitious proposal for a US$43 billion liquefied natural gas (LNG) project that would partner Alaska’s state-owned Alaska Gasline Development Corp. with China’s China Petrochemical Corp. and the Bank of China is now a leading North American candidate to service what will be China’s massive natural gas demand.
LNG Dream 1.0 once had B.C. in that role. But this province continues to demonstrate that ambitious projects are beyond its abilities. In addition to more agile competition elsewhere, B.C. is penalized by carbon taxes and a layer of LNG taxation absent in other regions.
The multibillion-dollar Alaska-China LNG export plan remains speculative, but it would create an LNG export terminal closer to China than any along the U.S. Gulf Coast.
B.C. has a similar geographical advantage. But unless groundwork on key project pillars is done prior to what is anticipated to be a second major wave of global LNG demand set to roll this way by 2023, LNG Dream 2.0 will suffer the same fate as its predecessor.
Those pillars include determining pipeline routes and infrastructure now and mapping out a fiscal framework so that potential bidders know the economic landscape upon which such massively expensive greenfield energy projects will be based. Aboriginal agreements in principle should also be secured in advance.
There are huge risks in any project of the magnitude required to kick-start an LNG export industry.
The provincial government can play a pivotal role in reducing that risk and removing the jurisdictional unknowns for investors and bidders before they commit resources.
But at this point there’s no evidence that B.C.’s NDP government will provide that essential leadership.