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The Globe and Mail

B.C. Premier stakes province's energy future on liquefied natural gas

Premier Christy Clark in Kamloops, B.C. on Tuesday September 20, 2011.

Jeff Bassett for the Globe and Mail/jeff bassett The Globe and Mail

As the contentious Northern Gateway project – a key part of Prime Minister Stephen Harper's goal to take Canadian resources to Asian markets – remains under review, British Columbia Premier Christy Clark is trumpeting a plan to do the same thing.

Her plan, however, involves liquefied natural gas, not oil, and so far has not faced the opposition that surrounds Northern Gateway, a twin-pipeline project that would ship oil from Alberta to Kitimat and condensate back to Alberta along the same route.

Ms. Clark's plan calls for the world's first LNG export facility that would run on "clean" energy and is designed to put B.C. on the forefront of global efforts to meet anticipated demand for LNG – natural gas that's been cooled to a liquid form.

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"It is an opportunity to establish an entirely new industry in British Columbia," Ms. Clark said Friday at a news conference. "This isn't something that happens every day and it's not something that even happens every decade."

Energy companies are rushing to build export facilities on the West Coast because natural gas prices are higher in Asia than in North America, where new natural gas finds have pushed prices down. In announcing a jobs plan in September, Ms. Clark said she hoped to have one such terminal online by 2015 and three by 2020.

The National Energy Board granted its second LNG export licence – to BC LNG Export Co-operative, a joint venture between B.C.'s Haisla Nation and LNG Partners of Texas – on Thursday. The first went to Kitimat LNG in October.

Ms. Clark faces one major hurdle – finding the energy to turn natural gas into LNG.

Last fall, BC Hydro warned it is facing unprecedented load growth in northern B.C. and will need "major investment" in transmission facilities.

To meet the demand of shale gas, new mines and LNG plants, forecast to increase by between 2,600 and 3,250 megawatts, BC Hydro said it would require at least a 20-per-cent increase over its current capacity. That scenario did not include a third LNG plant.

Ms. Clark said new LNG operators will have to pay a higher rate than other industrial power users in B.C. to offset the cost of generating new power.

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And the province gave itself some slack by backing away from a vow to be energy self-sufficient by 2016.

For nine of the past 10 years, the province has been a net importer of electricity due to low water supplies. But the target – to ensure that B.C. could meet its domestic needs even in a drought – is being scrapped. Instead, BC Hydro is only required to provide enough power during a "normal" water year.

Independent power producers are expected to be part of the energy supply for new LNG players.

"When you look at LNG and the amount of power that's going to be required – everybody can play in this game," B.C. Energy Minister Rich Coleman said at the news conference, which was held at the British Columbia Institute of Technology to highlight the job-creating potential of the sector.

The Pembina Institute applauded the plan to rely on clean electricity for the first two of three proposed LNG plants.

NDP energy critic John Horgan said any changes should be vetted by the provincial regulator to ensure that residential ratepayers don't end up carrying the cost of a significant expansion of the province's energy needs.

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Fuelling the LNG sector won't come at the expense of higher bills for consumers, Ms. Clark said.

"We want to make sure, in the process of building this industry – because it's going to require a lot of energy – that we don't end up adding a burden to ratepayers," Ms. Clark said, adding that the province is working with the proponents to "minimize or negate" that impact on ratepayers.

Much of the consultation around the proposed LNG facilities is completed, Ms. Clark said, and natural gas is a relatively low-risk commodity to transport.

While dozens of B.C. native bands have vowed to fight the Northern Gateway project, the Haisla support the BC LNG project as a "game changer" for the Haisla people.

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