British Columbia Premier Christy Clark is not wavering from her projection that three liquefied natural gas projects will be operating on the West Coast by 2020, even as economic stumbling blocks pile up against the developments.
Ms. Clark has staked much of her province's economic future on natural gas production and LNG exports, and in the lead-up to the last provincial election in 2013 she set the three-terminal target.
"We're still a long way from 2020. I think we're still on target for three operating plants," Ms. Clark told The Globe and Mail editorial board on Monday.
The world's oil and gas industry faces dwindling cash flow and sinking equity value as a result of the dramatic fall in oil prices, raising questions about investments in major energy projects as companies shift attention to protecting their balance sheets.
Last Wednesday, Malaysia's Petronas said it will delay its final investment decision for an LNG terminal near Prince Rupert, B.C. Its proposal is viewed as a front-runner among 18 now planned by numerous players.
Some analysts have said Ms. Clark's target is unlikely to be achieved, given the time it takes to get a project approved and built, especially in a region where there is no LNG industry yet. In addition, long-term supply contracts between potential developers and buyers have been elusive.
Petronas pushed back its decision on proceeding after intense talks on fiscal terms with the provincial government. The state-controlled company lauded B.C.'s new LNG-friendly tax regime and new rules for buying carbon offsets, but said construction costs were too high.
To reduce the estimated price tag, it plans to push contractors to shift more work to other countries. Ms. Clark said it is positive for B.C. that the delay is not due to disputes over the taxation and regulatory terms.
"In the context of a 20-year agreement, to me, waiting a week or a month or a couple of months isn't that material," she said.
The province is negotiating separate development agreements with each proponent, based on how the plants will be powered and other factors.
She pointed out Petronas still plans its first LNG shipments by the first quarter of 2019. A smaller-scale proposal, Woodfibre LNG, has a proposed in-service date of the first quarter of 2017.
"And Shell is very much in the process of working on our project development agreement. They have a little different way of going about these negotiations than a state-owned enterprise does," she said.
"They're on track, but they're a little bit bigger so they'll probably do their first shipment after 2020."
However, it is "reasonable" to expect one more project out of the gate in sufficient time, she said.