The BC Liberal government’s answers to major power questions in the province are coming up short.
Revenue certainty for the province’s residents and government was Premier Christy Clark’s answer to questions over why her government is offering natural gas price volatility protection and a long-term royalty rate to the odds-on favourite to build a major liquefied natural gas export terminal in B.C.
But an economic reality check yields another answer.
The agreement, which would take effect if Petronas makes a final decision on its estimated $36 billion investment in the province’s north, is further evidence of how steeply the odds are stacked against B.C.’s global LNG industry aspirations.
In the global LNG trade, meanwhile, there’s optimism for continued buoyancy. For example, BW LPG, the world’s biggest very large gas carrier (VLGC) owner and operator, posted operating profit of US$80.4 million in 2015’s first quarter, compared with US$51.5 million in the same quarter last year.
According to the company’s most recent financial report, “the expectation for 2016 is continued positive development in demand.”
But for B.C., it’s getting the gas out of the ground and onto gas carriers that will be the challenge. Obstacles include lower gas prices in Asia, the spectre of rising domestic gas prices that will erase already thin export market margins, and a lengthy catalogue of infrastructure construction and aboriginal rights complications. Concerns over long-term domestic supply for the needs of Canadians were also raised last week.
Meanwhile critics of the province’s $9 billion Site C dam project continue to question the long-term economics of what will be a major cost outlay to build a hydro megaproject that will generate expensive power in a North American marketplace awash in cheap natural gas energy.
A better answer for B.C. would be to add incremental renewable power to the grid from independent power producers, provide more incentives for off-peak industrial and residential power use and increase investment in high-capacity energy storage technology.
