British Columbia's fledgling liquefied natural gas industry will overcome the slump in energy markets while addressing aboriginal concerns, the province's Finance Minister says.
LNG prices are weak in Asia, but the backers of major projects on Canada's West Coast are taking a long-term view, said Mike de Jong, who will be delivering a speech on Wednesday at the start of an international LNG conference in Vancouver.
"There is an LNG market out there and there will be cycles to that market. Proponents themselves are telling us that the sooner they can be up and running, the sooner they, British Columbians and Canadians will enjoy the benefits of this industry," Mr. de Jong said in an interview on Tuesday.
The B.C. government began its push to encourage an LNG industry in early 2012. Since then, there has been "great progress," including fruitful consultations with many First Nations, he said.
"We have come a long way in a very short period of time, and we are poised to see the final steps taken," Mr. de Jong said. "Every step of the way, there have been detractors and naysayers and people who have dismissed the opportunities within British Columbia."
The three-day LNG convention will attract about 3,000 participants and more than 300 exhibitors. "The Vancouver event has become one of the most prominent LNG conferences worldwide for size, scope and attendees," said Rich Coleman, B.C.'s Natural Gas Development Minister.
Environmentalists and native protesters, including representatives from the Luutkudziiwus, a house group of the Gitxsan First Nation, are gearing up. Luutkudziiwus members have been raising money to file a challenge in the B.C. Supreme Court against TransCanada Corp.'s proposed Prince Rupert Gas Transmission pipeline. That pipeline would transport natural gas from northeast B.C. to an LNG export terminal near Prince Rupert being planned by Pacific NorthWest LNG, a consortium led by Malaysia's state-owned Petronas.
Despite an internal rift over who is the hereditary chief, Luutkudziiwus spokesman Richard Wright said the house group will seek a judicial review of provincial permits issued for the pipeline that would cross 34 kilometres of traditional territory known as Madii Lii. There has been a Madii Lii protest camp for 14 months to draw attention to the pipeline's environmental risks. Some Luutkudziiwus members disagree with mounting the court challenge and instead want to negotiate with TransCanada.
Besides facing concerns from some aboriginal leaders, LNG proponents also have to scrutinize the economics of their proposals during a period of slumping oil prices.
Three key factors are weighing on the LNG industry, said Mary Hemmingsen, a partner at consulting firm KPMG Canada.
First, there is a looming glut of LNG supplies globally amid dampened demand in Asia. Second, with LNG contracts linked to oil prices, that has reduced the economic attractiveness of projects. And third, with low oil prices, there is less money to pour into capital-intensive ventures such as LNG export terminals.
"It certainly is a different mood than it was at this same time last year," Ms. Hemmingsen said.
LNG Canada chief executive officer Andy Calitz said his joint venture in Kitimat, led by Royal Dutch Shell PLC, has strong partners in South Korea, Japan and China. "From the nature of the joint venture, what is most important is really what Seoul, Tokyo and Beijing think, because these are the primary markets," Mr. Calitz said.
B.C. has 20 LNG proposals, although fierce global competition means only a few stand a chance of launching, industry experts say.
This week's international event marks the third such gathering organized by the B.C. government and co-sponsored by the energy industry. The first two B.C. LNG conferences in Vancouver were in February, 2013, and May, 2014.