For years, I’ve favoured making British Columbia a global leader in the production and exportation of liquefied natural gas (LNG).
I still believe that Canadian LNG—the cleanest of all fossil fuels— can significantly reduce greenhouse gas emissions in other jurisdictions, namely in Asian countries that rely heavily on coal for electricity generation.
Last month, when the $36-billion, Petronas-led Pacific North West LNG project was shelved, I was seriously disappointed. I live in northeastern British Columbia—home of the Montney play where there is an estimated 449 trillion cubic feet of marketable natural gas—and I know the vital role the industry plays in the area.
Those living outside my region may not grasp the consequences the cancellation had for many businesses and families who anxiously waited for it to move forward.
Not long ago, British Columbia was poised to become a world LNG leader. When I was the provincial energy minister between 2001 and 2009, Canada, along with Australia and the United States, were eager to kick-start their respective LNG industries.
Today, Australia’s young LNG industry is thriving, ranking second behind Qatar in terms of exports, and the United States is expected to quickly move up in the rankings as its industry is picking up pace.
What went wrong? Why has B.C.’s multibillion dollar LNG potential stalled?
Many factors may explain why Petronas backed out of the project. The chairman of the PNW board said “that the extremely challenging environment brought about by the prolonged depressed prices and shifts in the energy industry have led us to this decision.”
I’ve been around long enough to know this is diplomatic talk.
It took over six years to come to this final decision after receiving all the necessary permits and approvals from the provincial and federal governments, and signing a number of agreements with many First Nations. Petronas had already spent $11-billion in Canada for the acquisition of Progress Energy, holder of significant land in the Montney, and for planning and developing the project—a sure sign it was serious about coming to Canada.
Now, Petronas isn’t the first multinational to say “thanks but no thanks” to Canada’s natural resources in recent months. Others like Shell and Chevron have divested themselves from their Canadian oilsands portfolios. Some may argue that fossil fuels are no longer a wise investment within the context of the green shift. Still, we know global natural gas demand continues to increase.
Others—like myself—maintain that Canada is becoming increasingly hostile to foreign investment in large part because of the tax burden and regulatory policies in place. As economist Jack Mintz recently wrote, “new carbon levies and implicit costs associated with regulations are raising the energy and investment costs in Canada in ways investors in the U.S. and Australia need not worry about.”
Canada’s foreign investment appeal is suffering. It’s taking too long for these major projects to get the green light, whether it’s an LNG plant or a solar farm. Our competitiveness level is quickly shrinking. Meanwhile, investments in LNG projects continue abroad. Canada has been sidelined and is probably viewed as an uncertain, unpredictable place to invest.
I would suggest that the new NDP, Green Party-backed provincial government was the cherry on top for Petronas to take its $36-billion of private funds off the table. For years, the B.C. NDP has been openly critical of LNG’s potential. I had a nice chuckle when I read the new energy minister’s statement after Petronas’ announcement. She reminded us that B.C. remains a player in the LNG sector and reassured all of the LNG stakeholders that the new NDP government is going to be working with them.
To make matters worse, just last week, the B.C. government announced another obstructive tactic to delay the construction of the Kinder Morgan Trans Mountain pipeline. I can’t help but feel like our rich resources are being held hostage. This latest ploy by the NDP may just be Kinder Morgan’s last straw.
I think it’s a real shame that Canada is not truly committed to developing its rich gas reserves and getting it to markets. Not only would we be creating good-paying, family-supporting jobs and mass revenues for all levels of government, but we could also help displace coal in foreign markets and reduce worldwide greenhouse gas emissions. The fact of the matter remains that Canada’s attractiveness is slowly deteriorating.
Richard Neufeld is a senator representing British Columbia. He is chair of the Senate Committee on Energy, the Environment and Natural Resources.
This article appeared in the August 21, 2017 edition of the Hill Times.