Liquefied natural gas, the big, shiny bauble Premier Christy Clark dangled before voters in the 2013 election, doesn’t appear to be so big and so shiny now. In fact, that bauble is looking more like a bubble, with Malaysian energy company Petronas holding a sharp pin.
B.C. really needs a Plan B.
Clark has consistently pursued the LNG dream, promising that B.C.’s natural gas will bring prosperity to the province. The industry represents a trillion-dollar economic opportunity, she has said, that will create 100,000 new jobs and the B.C. Prosperity Fund, allowing B.C. to erase its debt. She gives much of the credit for her come-from-behind election win to the B.C. Liberals’ LNG dream.
In Monday’s throne speech, the trumpeting of LNG was noticeably muted, with no mention of job numbers and dollar figures. Nevertheless, the speech made it clear that LNG is the hook on which hangs B.C.’s economic future.
Much of the throne speech’s thunder was stolen before the speech was even delivered, when Petronas issued a statement saying the province needed to resolve regulatory and tax issues by the end of the month, or Petronas would be forced to reconsider its participation in the multibillion-dollar LNG terminal in Prince Rupert, which could mean delaying the project 10 to 15 years.
In other words, give us a favourable deal or we’ll walk.
Clark shrugged off the Petronas statement as a negotiating tactic, which is likely correct. She says Petronas is just one of 15 potential investors the province is courting, and other projects are nearing final investment decisions.
It is also likely that Petronas’s timing is no coincidence, that it is a move designed to gain as much advantage as possible. And Clark’s singleminded eagerness to follow the shining path of LNG-fuelled prosperity puts the province at a disadvantage. A party negotiating from a position approaching desperation puts the other party in the driver’s seat. The premier has backed the province into a corner because she has over-promised, seeing far more potential in LNG than most experts estimate.
A report issued in April by the Canadian Centre for Policy Alternatives says the B.C. government’s expectations for LNG are unrealistic. The estimated returns of $100 billion are “a little more than wishful thinking,” says economist Mark Lee. The report says it would take a best-case scenario to realize the projected revenues.
Clark should stand her ground and not give the gas away. The idea is that LNG development should bring revenue for the province and jobs for British Columbians. If it can’t provide those, why bother? Leave the gas in the ground for another time.
That would be easier to do if the premier hadn’t pinned everything on LNG, if she had a backup plan.
B.C.’s natural gas deposits hold much promise, but many hurdles lie in the way of harvesting LNG riches. Natural-gas extraction is proceeding in many regions; the competition is stiff, which will drive down prices. Pipelines and processing facilities are needed, which entail environmental assessments and negotiations with First Nations.
That’s why a Plan B is needed, one laid out on the premise that LNG development won’t materialize, at least on the scale envisioned. It should look for ways to improve economic and social development in other areas, such as education and training. It should examine a spectrum of possibilities, recognizing the danger inherent in putting all eggs in one economic basket.
It’s a plan that should be in place even if that great LNG come-and-get-it day were right around the corner.
