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The LNG industry: What's next for B.C.’s long-term bet?

Ten inch and 4 inch pipes used too draw gas from the pipeline into Coquitlam, B.C.

chad hipolito The Globe and Mail

The British Columbia government has great hopes for liquefied natural gas, anticipating that exports of the fuel will give the economy a long-term boost – and send billions into the provincial treasury. Global energy players have been flocking to the province to test the waters; they've also been creating alliances to try to get their projects built.

Here's a review of key events in the province's fledgling LNG industry in 2013, and what's in store for 2014.

BILLIONS IN PLANNED INVESTMENT

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In February, B.C. Finance Minister Michael de Jong delivered a budget speech that touted the potential for billions of dollars in investments by an array of companies planning LNG projects. The industry, however, worried that the province would tax LNG too heavily and take the shine off plans to send tankers of the fuel to Asia.

SWEET ELECTION VICTORY

The B.C. Liberal party, led by Premier Christy Clark, scored a surprise provincial election victory in May over the B.C. New Democratic Party. During the campaign, Ms. Clark consistently beat the drum for LNG proposals and raised the tantalizing possibility of huge tax revenue from the industry, though critics cautioned the province faces stiff global competition to lure LNG entrants.

MALAYSIA'S PETRONAS GEARS UP

Malaysia's state-owned energy company, Petronas, is behind one of at least a dozen LNG proposals in British Columbia. But Petronas managed to stand out from the crowd in October, when Malaysian Prime Minister Najib Razak touted tens of billions of dollars earmarked for the Petronas-led Pacific NorthWest LNG Ltd. project in the province. Petronas spent an estimated $2-billion in 2013 to develop natural gas properties in northeastern British Columbia and forecasts another $2-billion in capital spending in 2014.

LNG RACE HEATS UP

CNOOC Ltd. of China and two Japanese partners cleared a key hurdle in November in their bid to pursue their Aurora LNG project at Grassy Point, near Prince Rupert, B.C., after reaching a deal with the B.C. government.

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B.C. TRADE MISSION TO ASIA

Also in November, Ms. Clark kicked off a 13-day trade mission to Asia, noting that the three countries on her itinerary – China, South Korea and Japan – are all major importers of LNG. Japan is the planet's largest importer of LNG, while demand in China is surging.

NEB APPROVALS FOR EXPORTS

The National Energy Board has approved seven out of 11 LNG export licence applications so far. In December, the NEB approved filings from three major LNG projects seeking to build terminals in northwestern British Columbia: BG Group's Prince Rupert LNG Exports Ltd., the Petronas-led group and Exxon Mobil Corp.'s West Coast Canada LNG Ltd. A smaller venture called Woodfibre LNG Export, planned for the Squamish area north of Vancouver, also received NEB approval. The NEB previously gave the go-ahead on export licences to the Shell Canada Ltd.-led LNG Canada project, the Kitimat LNG proposal by the Canadian units of Apache Corp. and Chevron Corp., as well as a smaller plan touted by B.C. LNG Export Co-operative LLC.

FINAL INVESTMENT DECISIONS

In February, the B.C. government is slated to release details of its plans to tax the LNG sector. Major players, including the Petronas joint venture and the Shell-led LNG Canada project, are aiming to make their final investment decisions in the fall of 2014 on whether to forge ahead. LNG proponents are reviewing a broad range of issues such as taxation and the challenges in constructing natural gas pipelines from northeastern British Columbia to the northwestern B.C. communities of Prince Rupert and Kitimat.

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About the Author

Brent Jang is a business reporter in The Globe and Mail’s Vancouver bureau. He joined the Globe in 1995. His former positions include transportation reporter in Toronto, energy correspondent in Calgary and Western columnist for Report on Business. He holds a Bachelor of Commerce degree from the University of Alberta, where he served as Editor-in-Chief of The Gateway student newspaper. Mr. More

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