More LNG development debate hot air
The B.C. legislature’s summer debate over the Pacific NorthWest LNG project development agreement is but one factor in B.C.’s complex liquefied natural gas equation.
More pressing issues include First Nations’ buy-in, the project’s environmental footprint and global LNG marketplace volatility.
For Pacific NorthWest LNG’s proposed US$36 billion project, the latter is the lesser concern of the three. After all, the consortium, which is led by the Malaysian government’s Petronas, owns the upstream gas resource and is its own customer.
On the other hand, First Nations challenges, which are now critical in virtually any major resource undertaking in the province and are often rooted in environmental issues, could bind the project in legal knots for years. The province maintains that nearly 90% of the 32 First Nations with pipelines proposed to run through their territories approve of the projects. But the Petronas plan for Port Edward’s Lelu Island appears to be a non-starter for area First Nations. The Lax Kw’alaams Band’s rejection in May of Petronas’ offer of $1.15 billion in exchange for approval of its project was based on band concerns over the export terminal’s long-term impact on salmon habitat. So there is far more than money and jobs at stake for First Nations here.
Meanwhile, the project development agreement’s cost certainty for proponents and investors gambles much potential taxpayer revenue on a notoriously volatile energy sector. That certainty comes in the form of LNG tax rates frozen for 25 years, which other industries would relish.
But uncertainty in the deal abounds, especially when it comes to local employment promises, provincial revenue estimates and the interpretation of such opaque clauses as “Discriminatory Greenhouse Gas Industrial and Reporting and Control Act events” and their impact on the province’s carbon emissions commitments.
The reality here, however, is that, regardless of the legislature’s project development agreement debate, the final decision on the Petronas project’s future will not be made by politicians.