CALGARY – The head of the B.C. LNG Alliance says it’s not a matter of if, but when, the province becomes a major global LNG player and he wouldn’t be surprised to see at least one project get the green light this year.
David Keane took on the industry’s naysayers at a Calgary energy conference on Tuesday.
“To paraphrase Mark Twain, reports of B.C. LNG’s death have been greatly exaggerated,” he said. “To the contrary, we are not alarmed by the present volatility in the energy market.”
High construction costs and plunging crude have been weighing on the nascent sector, with some companies, such as Malaysia’s Petronas, putting off final investment decisions until they can make the economics of their multibillion-dollar projects work.
The B.C. LNG Alliance includes seven of the 19 LNG projects that are currently proposed for Canada’s West Coast, including ones led by Petronas and other heavyweights such as Royal Dutch Shell and Chevron.
No West Coast LNG project has been given the official go-ahead by its backers, stoking concern that Canada may lose competitive ground to projects in the U.S. and elsewhere that are further along in development. Cost estimates for some B.C. projects have run into the tens of billions of dollars.
Keane said he’s more focused on the long-term outlook, with global demand expected to outpace supply by between 100 and 120 million tonnes a year over the next decade or so.
And he notes B.C. has an edge over some of its competitors globally. For instance, its colder climate means it’s more efficient to operate the plants where natural gas, piped in from the province’s northeast, would be chilled into a liquid state.
While Keane commends the B.C. government’s recent moves to bolster the industry, he says more work needs to be done when it comes to its greenhouse gas regulations.
Specifically, Keane says industry players should have more options when it comes to purchasing carbon offsets.
“Right now, the requirement is that they be in British Columbia, which I think skews the market and I would like to see us have an opportunity to look throughout North America for carbon offsets,” he told reporters.
Keane also lauded federal tax breaks for the industry announced last month by Prime Minister Stephen Harper, saying the move eliminates one major hurdle.
High labour costs have been one big concern for LNG developers, but tumbling crude prices may help in that regard, Keane said. With activity in Alberta’s oilpatch slowing down and layoffs being announced, more construction workers have been freed up to work on the West Coast.
“There’s an awful lot of trained workers that will be, because of the downturn in the oil price… looking for work, and I think there may be an opportunity for the LNG facilities in British Columbia to be able to capture some of that labour,” said Keane.
“Clearly, the premier in British Columbia has been saying she’s going to put up advertising in the Fort McMurray airport to get people back to B.C.”
Follow @LaurenKrugel on Twitter