The flagship project in BC's fledgling liquified natural gas industry is no more.
In July, the state-owned Malaysian energy giant Petronas pulled the plug on its $36-billion Pacific NorthWest LNG development - sending the industry into even deeper uncertainty after years of stagnation.
Former BC Premier Christy Clark once proclaimed LNG revenues would eventually wipe out the province's debt. Calling it the "economic opportunity of a lifetime," Clark said LNG would create 100,000 new jobs and establish a $100 billion prosperity fund.
Some have concluded the project's cancellation means Canada's LNG dream is dead - that what was once billed as the next great chapter in the Canadian energy story is now little more than an unfulfilled promise.
Suffice to say, Clark's prognostications have thus far come up short. Out of the two dozen LNG projects that are or were slated for development, only one appears poised to materialize - the relatively small Woodfibre LNG plant near Squamish.
And while the Woodfibre LNG project is small, it is good news. The project is slated to bring in $83.7 Million in tax revenue during construction and 86.5 Million in public dollars during every year of operations. It's expected to begin operations in 2020.
The others projects though have either been cancelled or are stuck in economic limbo. In the meantime that means less jobs for Canada and less tax dollars we can spend on priorities like infrastructure, health and education.
Still, it would be a grave mistake to assume Petronas' decision is the harbinger of doom for Canada's entire LNG industry. Rather, we should take this opportunity to evaluate the broader economic picture to see if this is a problem we can fix with smarter policy.
It's worth noting that while Canada has experienced a number of LNG setbacks, the LNG industry in the United States is booming.
In only the last 18 months, American LNG cargoes have been delivered to 20 countries, including lucrative markets in China, Japan, Korea, India and the Middle East. A total of seven LNG terminals approved by the Federal Energy Regulatory Commission are currently under construction and another four are on the books.
Analysts say the LNG boom will establish the United States as the world's largest LNG exporter and a net exporter of natural gas as early as next year. Good timing, as the International Energy Agency recently announced global demand for natural gas will go bump 50% by 2040.
So why hasn't Canada also been able to capitalize? Low natural gas prices afflict the entire market - not just Canada - so let's dispense with the myth that cratering prices are to blame for Canada's lagging. Capital is still finding its way into LNG - just not here.
The fact is Canada has driven investment away with lengthy regulatory approvals, costly royalties and taxes. This is apparent in Alberta, where a recent Canadian Association of Petroleum Producers (CAPP) report stated that the provincial government and the energy industry could create more than 24,000 new jobs and grow the province’s economy by nearly $5 billion over the next three years if the industry could work together with the government to make Canada more competitive.
We shouldn't be surprised that investment has landed in markets that greet energy development with open arms instead of turned backs. But we should do something about it, lest we risk squandering a significant economic opportunity.
It's not too late for LNG. The fundamentals for LNG are still there for Canada to leverage. BC and Alberta still have a 150-year supply of a clean-burning resource that has the potential to help displace coal-fired power in markets like China and India, as well as a Pacific coastline to ship it from and a labour market standing at the ready.
LNG has a bright future in Canada.
We just have to make sure Canada is competitive.
By Brad Tennant
Canada's Energy Citizens