The B.C. government must hammer out a tax and regulatory regime this month to give the province's fledgling liquefied natural gas sector a fighting chance to compete against global energy powerhouses, says the head of a new industry association.
David Keane, president of the B.C. LNG Alliance, said the government can't afford to squeeze industry players because high taxes will scare off energy investment on the West Coast.
"A company sizing up a final investment decision does so in the context of what is happening in British Columbia, but also what is happening globally," Mr. Keane said in his keynote speech Wednesday to the Vancouver Board of Trade's energy forum. "When you prepare to invest billions of dollars on an LNG project, you do so based on sound due diligence, foresight and strong understanding of the economics."
Premier Christy Clark's Liberal government is preparing to unveil details of LNG tax and regulatory rules within two weeks. While Ms. Clark and B.C. Natural Gas Development Minister Rich Coleman have painted a rosy picture for LNG in the province, Mr. Keane cautioned that prosperity is far from guaranteed.
"A new LNG industry in British Columbia is not a foregone conclusion," he warned, noting that B.C. lags in the global LNG race against rivals such as Australia, Qatar, Nigeria and the United States. "The B.C. LNG Alliance is concerned about our global competitiveness and the overall fiscal framework in British Columbia and Canada."
Two more proponents, Woodfibre LNG and Triton LNG, joined the alliance this week to boost its membership to six. The alliance's other four members are Pacific NorthWest LNG, LNG Canada, Kitimat LNG and Prince Rupert LNG.
Mr. Coleman said earlier this week that he is confident the final tax framework will strike a proper balance between reaching a good deal for B.C. taxpayers and spurring companies to forge ahead with massive LNG projects. "It is a complicated package that's got to mesh together. It's an extreme amount of work to do," he said in an interview.
Pacific NorthWest LNG, led by Malaysia's state-owned Petronas, is considered a bellwether for the fortunes of the province's nascent LNG industry. Executives at Petronas and Pacific NorthWest LNG have been warning in recent weeks about how B.C. will miss a lucrative window of opportunity unless tax and environmental issues are quickly resolved.
In an interview after his Wednesday speech, Mr. Keane said he recognizes the importance of co-operating with environmental regulators.
"All of our members are working very hard to make sure that they get the environmental part of their projects right," he said. "They're working closely with First Nations, with local communities and with environmental regulators in the province and the federal government to ensure that they operate at a very high standard."
Pacific NorthWest LNG filed its environmental impact statement in February for its export terminal planned for Lelu Island in northwestern British Columbia. This week, project officials disclosed that they revised designs so that a 1.6-kilometre-long suspension bridge would be built to avoid disturbing environmentally sensitive habitat for fish and marine mammals.
Last month, Pacific NorthWest LNG requested and received an extra 45 days to submit additional information to regulators. The environmental review is slated to be completed by Nov. 5. Legal experts calculate that after two B.C. cabinet ministers receive the assessment report, they will have another 45 days to render a joint verdict on whether to issue an environmental assessment certificate to Pacific NorthWest LNG, extending the timeline to Dec. 20.