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Seventeen B.C. LNG project proposals have been announced so far, including a plant and marine terminal in Kitimat, B.C. (model shown). (Robin Rowland/THE CANADIAN PRESS)
Seventeen B.C. LNG project proposals have been announced so far, including a plant and marine terminal in Kitimat, B.C. (model shown). (Robin Rowland/THE CANADIAN PRESS)

B.C. to release LNG tax laws next month Add to ...

British Columbia will unveil tax rules for the province’s fledgling liquefied natural gas industry next month, during a pivotal point in the race to export LNG.

The timing is crucial because B.C. LNG proponents are edging closer to making their final investment decisions on whether to forge ahead with their massive projects.

Rivals such as Australia, Qatar, Nigeria and the United States are among the jurisdictions ahead of Canada in the global LNG competition. B.C. could miss out on a window of opportunity because foreign suppliers are eager to export LNG to meet growing global demand, especially in Asia.

B.C. Deputy Premier Rich Coleman said the province is optimistic that the proposed income tax on LNG, to be introduced in legislation in the fall session, will be competitive with other jurisdictions.

The goal is to provide fiscal certainty when it comes to B.C. LNG tax and regulatory policies for projects that would export natural gas in liquid form aboard Asian-bound tankers.

“We’re okay with our fiscal and regulatory regime,” Mr. Coleman said in an interview. “I’m pretty comfortable with where we’re at.”

Amid consultations with First Nations, the pieces are coming together to pave the way for B.C. LNG projects, including export terminals and pipelines, said Mr. Coleman, who serves as B.C. Minister of Natural Gas Development.

The broad strokes of the new tax scheme were released in February’s B.C. budget, but some LNG proponents criticized a proposal to slap a tax rate of up to 7 per cent on net income once the terminals recover the capital costs of building what are expected to be multibillion-dollar plants.

Mr. Coleman said the government is working hard to iron out the tax details. B.C. Finance Minister Mike de Jong is expected to table a bill for debate possibly within two weeks of the fall session’s start on Oct. 6 and have the tax regime in place by Nov. 30.

“Our intention is to have it completed no later than the end of November,” Mr. Coleman said.

In late October, the B.C. government will kick off the first of seven community meetings to promote the province’s nascent LNG sector. The energy seminars will include information for local contractors and also emphasize LNG projects’ need for thousands of workers with skilled trades.

The province estimates that if five plants get built, there could be up to 58,700 direct and indirect construction jobs created, and another 23,800 positions related to LNG plant operations.

So far, no LNG proponent has given the go-ahead to construct any export terminal, though some players have already spent hundreds of millions of dollars on preparation work.

Industry experts caution that government officials have yet to win over First Nations while most LNG ventures are still seeking environmental approvals. There have been 17 B.C. LNG proposals announced so far, but experts say only three or four have a realistic chance of getting built.

Pacific NorthWest LNG president Greg Kist said his project’s leaders intend to make a final investment decision by the end of 2014, though concerns linger about whether environmental approvals will come through in time.

Mr. Coleman offered his support for lobbying efforts to gain federal tax relief by the B.C. LNG Developers Alliance, which represents four major projects.

“Canada’s GDP will benefit dramatically from LNG if we’re successful – the jobs and all the taxation and the opportunities,” said Mr. Coleman.

He wrote a letter in June to federal Finance Minister Joe Oliver in a bid to win Ottawa’s backing for reclassifying LNG export terminals so that they qualify for better federal tax treatment.

“Canada needs to out-compete other countries to ensure it maximizes its share of this market opportunity,” Mr. Coleman said in his letter.

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