VANCOUVER – British Columbia Premier Christy Clark insisted Wednesday it’s still possible her much-hyped vision for liquefied natural gas could start bringing in cash in three years’ time, a day after her own finance minister appeared to temper those expectations.
Clark won last year’s provincial election in large part on a promise to foster a trillion-dollar LNG industry that she said could create more than 100,000 jobs and wipe out B.C.’s debt. The province would start collecting LNG revenues, Clark told voters, by 2017.
But there have been doubts about whether that goal is realistic, and even B.C. Finance Minister Mike de Jong said this week that he doesn’t expect LNG revenues for at least three to five years.
Clark said she remains optimistic.
“I’m still hopeful that we can get there,” the premier said after a speech in Vancouver.
“It depends on when the private-sector companies, the proponents, get to their final investment decision.”
Some details about how the province will tax and regulate the industry, originally expected last year, were released in Tuesday’s provincial budget, though they have yet to be finalized.
Clark has said there are 10 potential projects under consideration but none of the prospective operators has made a final decision.
Even so, Clark brushed aside the suggestion her LNG plans are lagging behind. She said some proponents could make their final decisions by 2016.
“In that case, there could be revenue that starts flowing by (2017),” said Clark.
“There’s a range of different proposals out there, and not all of them are starting from scratch.”
Clark has staked her political legacy on the success of the LNG industry, which she has cast as a once-in-a-generation opportunity on the same level of the moon landing. She even included a nod to U.S. president John F. Kennedy, who launched America headlong into the 1960s space race, in her government’s most recent throne speech.
Zoher Meratla, a B.C.-based expert in the LNG industry, warned that the province isn’t moving nearly fast enough to capitalize on global demand for the resource.
“It is way behind schedule,” Meratla said in an interview. “I don’t see why it has taken so long.”
Meratla, who was briefly quoted in the B.C. Liberals’ campaign platform last year, said there is no chance the province will see any LNG revenues three years from now.
“It’s not possible, because none of the LNG plants has any financial investment,” he said. “It takes at least four years to build an LNG plant, and none of the plants is at a financial investment decision.”
The Liberal government’s publicly stated goal is to have at least three LNG terminals up and running by 2020.
On budget day, de Jong admitted that goal was “lofty” but insisted it was still within reach. Meratla disagrees.
“I think those were optimistic numbers,” he said.
“I’m not criticizing the government, because there was a lot of interest in British Columbia by proponents to set anchor. But now the dust has settled. … I see probably by 2020, maybe two — possibly — but we’ll have to move soon.”
The LGN tax plan released Tuesday contemplates a two-tier tax structure that would begin at 1.5 per cent at the start of production. That would be followed by second-tier tax, which could increase to seven per cent once a plant is running and capital costs have been deducted.
However, even those details could change before legislation is released this fall.
Greg Kist, president of Pacific Northwest LNG, said his company’s proposal to build a multibillion-dollar LNG facility near Prince Rupert remains on track, though he’ll be watching what B.C. does and how quickly it does it.
“It still fits within our timelines,” Kist said Wednesday.
“We’re targeting our final investment decision by the end of 2014. We would certainly hope that we would have very good clarity by the summertime in terms of the construct of that tax and how it’s to be calculated.”
Pacific Northwest LNG includes Malaysia’s Petronas, Japex and PetroleumBrunei.
A spokesman for LNG Canada, a proposed export facility near Kitimat that includes Shell Canada, Korea Gas, Mitsubishi and PetroChina, said the company doesn’t plan to make a decision until 2015 or later.
“Nothing changes on the project,” said Shell Canada spokesman David Williams. “The project description is in the regulatory process. The investment decision would be sometime around the middle of the decade. That would mean the first LNG by the end of the decade.”
— With files from Dirk Meissner in Victoria
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