By GRAHAM HICKS
Congrats to British Columbia.
But is that the sound of one-hand clapping?
It looks like the $40 billion – that’s BILLIONs, not MILLIONs – LNG Canada project/port is going ahead. At least all the permits and processes and environmental this ‘n’ thats have been approved.
LNG Canada will build a mega-specialized transfer port at Kitimat – in the same general region as Prince Rupert on the northern B.C. coast – to receive natural gas through as yet-unbuilt-but-approved pipelines from the Montney natural gas fields of northeastern B.C.
The gas shipped to the Kitimat plant will be super-cooled to the point of liquification, pumped into specialty LNG tankers and transported across the Pacific Ocean to countries where natural gas prices are five times higher than in North America.
Thanks to new drilling and extraction technologies, Canada and the United States are drowning in readily available, and hence super-cheap, natural gas.
Forty billion dollars!
Put this into perspective.
The entire Fort Hills oil sands project, now coming on stream, cost $10 billion.
The new Sturgeon Refinery outside Fort Saskatchewan had the same construction cost.
Inter Pipeline’s Heartland Petrochemical Complex, now under construction in the same vicinity, is a $3.5 billion project.
So the LNG Canada project will pump as much money into the Canadian economy as five to 10 oil-sands/petro-chemical/refinery projects being built at the same time.
So why aren’t Albertans cheering and whooping it up?
Because LNG Canada is ALL about B.C.!!!!
All the B.C. government/LNG Canada negotiations, says Explorers and Producers Association President Gary Leach, were predicated on a keep-it-in-B.C. policy.
First dibs on designing, planning and construction will go to B.C. companies. All the gas will come from the B.C. side of the Montney gas field – which straddles the B.C./Alberta border.
All the royalties, corporate and municipal taxes will stay within B.C. As much of the construction spending as possible will happen within B.C.
“Some engineering could happen in Calgary, given the expertise in the city,” says Leach. “Specialized fabrication could go to Edmonton firms if B.C. companies can’t do it. LNG modules will be built in Asia – where that expertise lies.”
Everything else – and it’s hardly unexpected – will be B.C.’s bounty.
Indirectly, some benefits may pass our way.
Alberta-based skilled tradespeople will likely be called upon to build the Kitimat plant. Tough to imagine B.C. having enough certified specialty welders to handle the volume of work.
As demand for natural gas and its by-products grow, the overall price for natural gas in North America may edge upwards to the benefit of Alberta gas producers.
“It will likely take a second LNG plant (on the west coast),” says Leach, “to spin serious activity into Alberta.”
With LNG Canada taking the initial plunge, a second, or even a third LNG plant could be built. But that’s off in the future, says Leach. LNG Canada won’t be operational before 2023. Any other plant would be at least three to five years later.
The weirdness remains: Why are super-natural, super-environmental British Columbians okay with all the industrial activity associated with natural gas, but so opposed to the pipelines and oil tankers so urgently needed to open Asian markets to Alberta’s heavy oil?
Why is it okay to ban big oil tankers from the west coast, but allow the big-bubble LNG ships? Aren’t they equally noisy? Aren’t the propellers the same size?
Natural gas is grudgingly accepted by environmentalists as a much cleaner-burning fuel than oil or coal.
Reasonable environmentalists like the notion of replacing coal in Chinese electricity plants with cleaner Canadian natural gas.
Natural gas leaks are seen as a less vexatious environmental problem than spilled oil, even though natural gas pipelines do, from time to time, blow up – as happened weeks ago in northern B.C. (Apparently LNG ships don’t explode, unless torn apart by something like a missile: Something to do with the super-cold temperature of the LNG.)
The biggest reason, of course: Natural gas is all about B.C., and heavy oil is all about Alberta.
And B.C. doesn’t have to cross Alberta to get its natural resources to foreign markets.