As part of what it says is a “new approach” to liquified natural gas development (LNG), the BC government declared it is overhauling the policy framework for future projects, Premier John Horgan announced today.
However, he emphasized that this doesn’t mean an LNG project is automatically going ahead at this point in time.
Instead, the government said that today’s announcement “has clarified the fiscal framework” that LNG proponents will face should they decide to proceed.
“I want to make it abundantly clear to British Columbians that this is a different approach from the previous government,”said Horgan. “I believe it’s important that British Columbians understand that these are very challenging issues.”
The potential opportunity is “extraordinary,” but potential risks are “significant,” he added.
“This new approach is one that I believe British Columbians want to see from their government.”
Horgan said that following the 2017 election, he asked the Ministries of Energy, Environment, and Finance to develop a realistic approach to LNG that could work with BC’s climate action plan, fit with BC’s commitment to reconciliation with Indigenous Peoples, establish cost competitive conditions for the industry, and “maximize” financial benefits to BC. through investment, job creation, and government revenues.
“Our new approach welcomes investment that puts our province’s people and future first, and rejects the old ways of resource development at any cost,” Horgan said. “Our obligation is to the people who call British Columbia home, and our job is to get the best deal for them and the generations that follow.”
The government laid out four conditions for LNG development, saying that any proposals must:
- Guarantee a fair return for B.C.’s natural resources.
- Guarantee jobs and training opportunities for British Columbians.
- Respect and make partners of First Nations.
- Protect B.C.’s air, land, and water, including living up to the Province’s climate commitments.
These four conditions form the basis for government’s discussions with LNG Canada( a joint venture of Shell Canada, PetroChina, KOGAS, and Mitsubishi), which is moving toward a final investment decision on a project that, if approved, would be the largest private-sector investment in BC history, according to Horgan.
The LNG Canada investment would see the construction of a natural gas pipeline from northeast BC to Kitimat, where a new terminal would process and ship LNG to Asian markets. It’s also expected to create up to 10,000 construction jobs and 950 full-time jobs in northern BC.
“No premier or government can dismiss this kind of critical economic opportunity for the people of British Columbia,” said Horgan. “But neither will we turn our back on our commitment to climate targets, or our path to reconciliation with Indigenous peoples.”
The new framework, to which LNG Canada will be subject, provides:
- Relief from provincial sales tax (PST), in line with the policy for manufacturing sectors, subject to repayment in the form of an equivalent operational payment.
- New GHG emission standards under the Clean Growth Incentive Program, announced in Budget 2018.
- General industrial electricity rates consistent with other industrial users in B.C.
It’s estimated that the project would generate $22 billion in direct government revenue over the next 40 years.
The government said LNG Canada is preparing to move towards its final investment decision as it meets with partners next week. A final investment decision on the project is expected this year.
More to come….