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Kitimat is one of about a dozen proposed LNG projects along the B.C. coast.Darryl Dyck/The Canadian Press

Companies seeking to export B.C. liquefied natural gas are motivated to overcome obstacles because energy-thirsty Asia is looking to Canada for security of supply, says the province's cabinet minister in charge of the LNG file.

British Columbia trails other jurisdictions, such as Australia and Louisiana, in constructing LNG export terminals, but the province will play an important role in the competitive energy industry, said Natural Gas Development Minister Rich Coleman.

"LNG proponents are not putting all their eggs in one basket. They want a diversity of supply. They want to have some competitive tension in the marketplace," Mr. Coleman said in an interview. "I see companies spending well over $1-billion of their own money to pursue an opportunity to get to a final investment decision. If they had no interest at all, they wouldn't be spending that first $1-billion."

There are a dozen B.C. LNG projects so far in the race to super-cool natural gas into liquid form for export. Industry analysts caution that uncertainty lingers over the province's proposed tax regime and there is nervousness about the volatile pricing gap between Canadian natural gas and Asian buyers paying premium prices for LNG.

The gap peaked at $15.70 (U.S.) per million British thermal units in July, 2012, but has narrowed since then to $11.50. The slimmer differential poses a threat to the economics of LNG export projects, which depend on a wide pricing spread to be viable, said Peter Tertzakian, chief energy economist at ARC Financial Corp.

Despite the hurdles ahead, Mr. Coleman said he is confident that the positives of exporting B.C. LNG will outweigh the negatives.

Malaysia's state-owned Petronas leads the Pacific NorthWest LNG project, which is on track to make its final investment decision by the end of this year.

"There are so many projects moving along at different paces and they have strategic times when they want to do things. Petronas without question is aggressively moving toward a final investment decision," Mr. Coleman said.

The Canadian units of Apache Corp. and Chevron Corp. are the co-owners of the Kitimat LNG project, although Apache said last week that it is seeking partners for the massive development.

Kitimat LNG is already preparing an industrial site in northwestern British Columbia, including work on a road – another sign that it is a matter of when and not if British Columbia will have an LNG industry, Mr. Coleman said.

Under the tax plan announced in the Feb. 18 B.C. budget, LNG export plants on the West Coast would be subject to an initial tax rate of 1.5 per cent on net income. The rate will rise to as high as 7 per cent once the plants recover the capital costs of building what are expected to be multibillion-dollar terminals that will supply ships carrying LNG to Asia.

The B.C. government has had extensive talks with Shell Canada Ltd., and the Calgary-based company remains bullish on B.C. LNG, Mr. Coleman said.

The Shell-led LNG Canada project cautions that the proposed rate at and near 7 per cent would be too high. But Mr. Coleman said the B.C. government has built flexibility into its two-tier tax regime for LNG, giving project proponents the comfort to plan ahead.

"We knew there would have to be flex in there for our conversations," he said. "We're not just imposing, but actually having a dialogue, and the companies think that's important. We're not finished our discussions. They wanted more time to work through the numbers with our folks. We think it's important we're not going to drop the ball on competitiveness. We're going to be globally competitive."

He said he is heartened by the upbeat tone from an array of LNG proponents, including British-based BG Group PLC's Prince Rupert LNG project and a rival plan led by Beijing-based CNOOC Ltd.'s Nexen unit. "I've talked to all the senior people that I need to talk to in the industry and they're fine. And actually, they're really keen to continue to work with us and get this stuff done."