LNG projects could generate $200 billion in investment in B.C., EY estimates – by Nelson Bennett (Business in Vancouver – May 20, 2014)

http://www.biv.com/

U.S. and Australia have a head-start in the global race to dominate market, LNG conference speakers warn

By 2020, the British Columbia government hopes to see three major liquefied natural gas plants on the West coast of B.C. – something professional services firm EY estimates would generate more than $200 billion in investment. That’s when many 20-year LNG contracts with large customers in Asia – primarily electrical utilities – are up for renewal.

But it will take four or five years to build the pipelines and LNG plants, and to date, none of the pipelines that will be needed to supply the LNG plants are under construction.

No offtake agreements with Asian customers have been signed yet, no final investment decisions have been made, and the industry is still waiting for details on the implementation of a new two-tiered LNG tax.

Meanwhile, Australia has three LNG plants already in operation, seven under construction, and a new Exxon Mobil LNG plant in Papua New Guinea loaded its first tanker – destined for Japan – just last week.

The U.S. is also now a potential competitor and has a head start on B.C., which is starting from scratch.

“The U.S. projects are starting on second base,” said Edward Kelly, vice-president of natural gas for the energy consulting firm IHS CERA. Kelly is among the speakers on a panel focusing on global competitiveness at this week’s annual LNG Conference sponsored by the B.C. government.

“They’ve got the harbour, they’ve got the tanks there, they have natural gas infrastructure in place, [and] they’re offering a clear model for North American gas price exposure.”

B.C. Finance Minister Mike de Jong acknowledges the urgency. “There’s a race and the stadium for this race is the world,” he said.

Despite the time pressure, de Jong is not rushing to implement B.C.’s new LNG tax. The two-tiered tax was announced in February, but it won’t be finalized until the fall. It would start at 1.5% on net profits and rise to a maximum of 7%, after the initial capital investments are paid for.

Jack Mintz, Palmer chair of the University of Calgary’s School of Public Policy, has criticized the tax.

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