LNG

Media Statement: February 25th, 2014
Evidence 100 000 LNG Jobs Vastly Overstated
For Immediate Release

Victoria BC – In an article published by David Broadland in Focus Magazine (www.focusonline.ca) the government’s justification for 100 000 LNG jobs is seriously called into question. Using Freedom of Information access, he analysed the communications noting: “The report contained many warnings to the reader that it was based entirely on assumptions provided by ‘the Province and its advisors’ “

The points raised by Focus Magazine on potential LNG sector employment forecasts coincide with analysis within Andrew Weaver’s office. While the government continues to tout 100 000 jobs, a $100 billion prosperity fund, retirement of provincial debt and end of the PST, the numbers simply do not add up.

“Focus Magazine should be noted for their investigative report on LNG in BC. During and since the election campaign I’ve been consistent in saying LNG is a ‘Hail Mary Pass’ . It is now more evident the jobs numbers and revenue expectations  should be questioned and it is time the government comes clean on what British Columbians can realistically expect. This is especially true for northern communities relying on government projections for economic and infrastructure planning around LNG. If the numbers are wrong, the policy failures are quick to follow.” Andrew Weaver MLA

Accurate employment projections are vital for economic policy. Even a small percentage difference from estimates to reality can have a ripple effect throughout the entire provincial economy. They inform policy and investment decisions as wide reaching as education, health care, social services, transportation and infrastructure.

Media Contact
Mat Wright – Press Secretary, Andrew Weaver MLA
mat.wright@leg.bc.ca
1 250 216 3382

With today’s Throne Speech, the BC Liberal Government once again positioned LNG development as its moon-shot saving-grace for the economy, the climate and B.C.’s future. Yet, according to Andrew Weaver, MLA for Oak Bay-Gordon Head and Deputy Leader of the BC Green Party, while the government’s throne speech offers lofty goals, it falls far short of positioning B.C. as a leader in the 21st century economy.

“The BC Government is talking about making an economic plan and sticking to it and yet they still have no plan for what to do once LNG runs out or if it never takes off,” says Dr. Andrew Weaver. “We are still not using LNG to transition ourselves to a low carbon economy. And we still have no back-up plan for our economy if LNG fails to deliver. ”

The USA, China, and EU are all heading into renewable energy and knowledge based economies. Instead, B.C. is doubling down on its hope to become a super highway for non-renewable exports.

British Columbia has the potential to be a clean tech powerhouse but for this to happen we need a specific and actionable economic and skills training plan to position B.C. as a leader in the new global clean tech economy.

As the 2014 legislative session begins, Andrew Weaver will be looking for MLAs who are serious about building an economic future based on access to clean renewable energy, the innovative potential of British Columbians, and our desire to ensure fiscal, environmental and social sustainability for future generations.

In making this challenge, Weaver says: “To those politicians who claim to be so concerned about greenhouse gas emissions, where are your voices in opposition to the proposed expansion of thermal coal exports? To those politicians who are concerned about a strong economy, where are your backup and transition plans? ”

This week Andrew Weaver is in Fort St. John for the BC Energy Conference. The conference brings together industry leaders, government representatives, and academics to generate awareness and general literacy relating to the energy sector in Canada, and particularly relating to the natural gas sector which is prominent in this region.

Andrew Weaver has raised serious concerns about the government’s plan to develop a liquefied natural gas sector in British Columbia. This conference serves as another helpful step in ensuring that he can continue to offer an informed and constructive voice to the debate.

The first day of the conference was spent touring some of the nearby natural gas facilities. Below are a few of the highlights.

LNG: Facts and Comments

Fact 1: According to the Honorable Richard Coleman, Minister of Natural Gas Development, revenue projections from LNG are based on B.C. supplying 84 million tonnes of natural gas to the Asia-Pacific market. According to Minister Coleman, this is the projected amount that could be supplied by B.C., but it does not take into consideration competitive supply from other countries, which he describes as “staggering”.

Fact 2: British Columbia is not the only jurisdiction vying to sell its natural gas to Asian markets. Here are some basic facts:

• Canada has less than 1% of the world’s proven natural gas reserves.
• Russia has 20 times as much natural gas as all of Canada combined and recently signed agreements to trade natural gas with China. Russia can transport its gas to China via pipeline and does not need to undergo the costly process of liquefying the gas for tanker transport.
• Australia has similar-sized shale gas reserves as Canada and is much further ahead in the development of its LNG industry.
• The United States has more than twice the shale gas reserves as Canada and the US government recently decided to allow natural gas export. The US already has some of the necessary infrastructure in place on their coastline to facilitate a relatively quick development of an LNG export industry.
• China could soon be well positioned to take advantage of its own natural gas reserves, which are 3 times the size of Canada’s.

First Comment: There are many other countries with much larger natural gas reserves than Canada–let alone BC–that will be vying to sell to the Asia-Pacific markets. Many of these countries are well-positioned to do so. If Minister Coleman’s statement is in fact true—that the supply projections for B.C. do not take into consideration competition from other suppliers—then we are headed for a rude awakening. Russia, Australia, Qatar, the US, to name a few—none of these countries will simply stand by and allow BC to sell as much LNG to Asia as it needs—they will fight as hard as they can to beat out LNG from B.C. and control the market. To base promises of wealth on airy-fairy scenarios is disrespectful to taxpayers.

In either case, what we know from economics is that as supply increases, price usually decreases. In the context of a drastic increase in the global supply of natural gas, the Liberal government has yet to provide adequate evidence to show that the demand for, and therefore price of, LNG will remain high enough, for long enough, to justify spending hundreds of millions of taxpayer dollars to develop this industry.

Fact 3: The Liberal government has claimed that LNG export could add up to $1 trillion to the provincial GDP over 3 decades and could finance a $100 billion prosperity fund that, in addition to benefiting local communities and First Nations groups, could be used to eliminate the provincial sales tax and pay off the provincial debt (currently approximated at more than $55 billion and predicted to rise to $69 billion by 2015).

Second Comment: When I asked the Minister for Natural Gas Development how he arrived at the $100 billion estimate for the prosperity fund, he was unable to provide a clear answer.

Obviously, the prosperity fund statements are based on an assumed average global pricing for LNG. However, like all fossil fuels, natural gas tends towards boom and bust cycles. In the past 6 years, natural gas prices have fluctuated from a high of $9.34 in June 2008 and to a low of $0.76 in April 2012. That’s a factor of 12.3. Even assuming that B.C. can achieve its supply goals (First Comment) there is no guarantee the assumed price of gas will stay constant enough to realize these revenue projections, in the context of intense price competition.

That said, even if B.C. is able to raise $100 billion prosperity fund, it is unclear how that fund alone could do everything the Liberal government has suggested.

Fact 4: Since 2008 British Columbia has led the continent with its visionary climate policy. Part of this policy requires the government to keep provincial carbon emissions below a certain level. The fact is we will not be able to meet our carbon targets if we develop the liquefied natural gas industry as the Liberal government has currently proposed.

Third Comment: Here’s why: Liquefying natural gas requires enormous amounts of energy. This energy cannot come from renewable energy alone—even with the development of the Site-C dam there simply is not enough. Most likely, the power will come from burning natural gas to then liquefy natural gas. Even though natural gas is a relatively clean energy, so much of it will have to be burned that we will exceed our carbon targets. Knowing this, the Liberal government made changes to the Clean Energy Act last year to allow the use of natural gas to power LNG facilities. These changes were contrary to the very purpose of the Clean Energy Act.

The fact is Clean Energy Act was not created based on politics and convenience. It was created based on science. And the science is clear: Natural gas is not a clean energy. It is a cleaner energy, but not a clean energy. The effects of climate change will cost our province billions if we do not make smart investments today to shift to a low-carbon economy.

That said, I do believe there is a role for LNG to play in transitioning to a low carbon economy. For instance, I have proposed transitioning the BC Ferries fleet to LNG. Such a transition could make BC Ferries significantly less expensive to operate while also decreasing their carbon footprint.

LNG: My Assessment

The Liberal government is selling British Columbians on a pipe dream. They are making promises based on risky projections while doubling down on an industry that, as it stands, would add to the climate crisis instead of helping to mitigate or adapt to it.

When I asked the Minister of Natural Gas Development if the government ever compared returns on investment from similar levels of government support for other industries with what they are proposing for LNG, his answer ranged between a ‘non-response’ and a ‘no’. I consider this fiscally irresponsible.

Rather than looking backward to fossil fuels, I believe BC needs to look forward to clean technology. Clean tech jobs are growing 4 times faster than the national average in the United States. BC is well positioned to be a leader in the clean tech sector, but we need government leadership and support to make it happen. Together, let’s get there.

LNG: Background

For many years now, companies have extracted natural gas from deposits in Northeastern BC for use domestically and for export to the United States. Recently, due to innovation in horizontal fracking technology and growth in the U.S. natural gas sector (you need to be more clear that it is actually the combination of horizontal drilling AND fracking), North America has experienced a significant increase in natural gas supply, leading to a decline in gas prices in North American markets. Meanwhile, demand for natural gas has increased substantially in Asian markets–particularly in Japan, China and Korea–leading to a rise in gas prices in those markets.

The Liberal Government campaigned on a plan to further develop BC’s natural gas industry with a view towards breaking into these Asian markets. The hope is that if BC can sell natural gas to Asian countries, we can take advantage of the relatively higher prices to make a significant profit.

The challenge with selling natural gas to Asian markets is that it cannot be transported across the ocean in a gaseous state. It must first be liquefied by decreasing its temperature to -160 degrees Celsius, so that it can be shipped by tanker. This is where the term, liquefied natural gas–or LNG–comes from. Liquefying and transporting natural gas requires enormous capital investments to create the necessary infrastructure (E.g. liquefaction facilities on the coast, pipelines to transport gas from Northeastern BC to the coast, fuelling terminals at the harbours). It also requires enormous ongoing energy investments to liquefy the natural gas.

According to the Liberal government, as much as $1 trillion could be added to our provincial Gross Domestic Product (GDP) between now and the year 2046 if we act decisively and develop the industry. However, many serious questions and assumptions have yet to be addressed, leaving me deeply concerned that the Liberal government’s LNG plan is little more than a pipedream.