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Douglas Channel, the proposed termination point for an oil pipeline in the Enbridge Northern Gateway Project, is pictured in an aerial view in Kitimat, B.C., on Jan. 10, 2012.

DARRYL DYCK/THE CANADIAN PRESS

It will be years before the first liquefied natural gas export terminal is built on British Columbia's shores.

But the B.C. government is confident enough that LNG sales will happen – and that they will provide a windfall – that it's already working out how to grab some of the profit.

The province has begun studying how to capture some of the arbitrage between North American Henry Hub prices and international LNG prices, which currently value gas at more than four times domestic rates.

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"We've been looking and examining what are other jurisdictions doing in that regard," a B.C. government official told Streetwise, speaking on condition of anonymity.

The province is not looking to alter its royalty system. Instead, it's looking to create some sort of new one that "would share the risks – so if there was a significant profit, then the citizens of B.C. would be wanting to take a piece of that. If it gets thin, we would back out of it," the official said.

But "that's the definition of a royalty," said Steven Paget, an analyst with FirstEnergy Capital.

He was shocked to hear that B.C. might try to boost its take from an industry that has not yet taken wing. Not a single company has yet committed to begin construction, and the past few months have shown that the road ahead is tough, with Asian buyers seeking contracts based on North American gas prices that are far less lucrative than the oil-linked contracts traditionally used to sell LNG.

Wrongly written, a policy designed to boost provincial revenues could hurt the economics of gas exports, Mr. Paget said.

"It's just putting another wrench in it," he said. "I would remind everyone involved that no LNG off-take contract has been signed yet."

He drew a comparison to B.C.'s fight with oil producers on the Northern Gateway pipeline.

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"After poking the oil industry and the Alberta government with a stick, this is poking their own gas industry with another stick."

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