Mark Milke is an independent policy analyst, columnist and author. Andrew Pickford is a consultant to natural-gas companies and is researching the history of LNG in Western Australia.
Academics are often accused of being ensconced in an "ivory tower" – turrets of isolation and imagination where reality rarely intrudes. Fair or not, sometimes the indictment is accurate: Witness former University of Victoria academic and BC Green Party Leader Andrew Weaver and his frequent skepticism about the benefits of resource development.
With the fall of the BC Liberals and the ascension of the NDP to power in British Columbia, and the Green Party in a supporting role (the swearing-in will occur in a few weeks), the potential is real for Mr. Weaver's fact-challenged pontificating about "imaginary" resource-based jobs and benefits to become self-fulfilling government policy.
To be specific, Mr. Weaver has variously described several thousand construction jobs at the Site C dam site in northern British Columbia as "artificial." His position, a flip-flop from several years ago when he argued hydro power was green, is connected to Mr. Weaver's opposition to liquefied natural gas (LNG). Mr. Weaver now wants the dam, already under construction, cancelled; he argues its electricity would be provided to a "non-existent LNG industry."
Mr. Weaver has long asserted that any notion of British Columbia benefiting from exports of liquefied natural gas is akin to believing in "unicorns." It's an image he used during B.C.'s election campaign. On June 20, Mr. Weaver reminded a reporter of his statement from four years ago: "LNG isn't going to happen; I said it cannot happen, because there's no market for it."
This rather skips over years of attempts to get LNG export plants built on B.C.'s coast. That includes Pacific NorthWest LNG with lead partner, Malaysia-based Petronas. That consortium has already spent $7.4-billion since 2013 in its attempts to build an LNG export terminal. Meanwhile, Woodfibre LNG's processing and export facility, worth $1.6-billion, is already approved and moving ahead. Companies do not spend billions of dollars on unicorn-like fantasies.
Another fact check: With a look back at 2016 and an estimate to 2020, the provincial budget forecasts $926-million in total natural-gas royalties alone, never mind additional corporate tax revenue. Then there is the $1.4-billion in provincial revenue in the sale and leasing of Crown land and drilling rights, a figure that includes proceeds from B.C.'s oil and gas sector. Development of an export-oriented LNG sector would only add to such totals.
Mr. Weaver has justified his position in part because of a current glut in natural-gas supplies and weak prices. But supply gluts come and go and LNG exploration, extraction and investments in export facilities are not determined on short-term price fluctuations but long-term receptivity to investment.
Thus, the key task is to ensure a jurisdiction is ready for such investment. As an example of how investment and jobs are anything but imaginary, consider Australia, where nearly $200-billion has been invested in LNG plants over the past few decades.
There, when the gas market was tight and investors were looking for new LNG export ventures, Australia was an attractive jurisdiction. One report from Deloitte calculates that to 2009 alone, 103,000 jobs were created in Australia during the construction phase of the LNG investment boom.
In addition, there is the continuing employment provided by Australia's natural-gas exploration, extraction and export sector. One estimate is for 55,000 to 65,000 Australians to be employed, annually, in the wider LNG industry and associated supply chain once all the plants (some are still under construction) are complete. These are highly skilled jobs that earn well above the average Australian wage.
Thus, LNG investments will transform and improve the Australian economy. During the next decade, the LNG industry is estimated to add 2 per cent to Australia's GDP, or about $30-billion annually.
The background to Australia's success is how the groundwork was laid over decades. Australia's national and state governments welcomed and championed new projects. To its credit, that is something the outgoing B.C. government tried to do on LNG in British Columbia. The question now is whether an NDP-Green alliance will continue to position British Columbia as open for business. That includes LNG investment flows already committed to and those possible in the future as natural-gas prices recover.
Mr. Weaver's academic, imaginary construct – "unicorns" – best describe his own claims about natural gas and the LNG sector. He is a prisoner of his anti-natural-gas ideology concocted while in his ivory tower.