Premier Christy Clark is a supremely confident and ebullient promoter of the liquefied natural gas opportunity in B.C.
So it’s hard to picture her paying a lot of attention to the Canada West Foundation when it comes to that topic.
Because the think-tank’s advice is this: Cool it with the jackpot talk. Chill out a bit on the predictions.
The foundation is releasing a study of the LNG potential today called “Managing Expectations.”
It calls LNG an unprecedented opportunity, but it raises a number of caution flags and appears to downgrade some of the more exuberant B.C. Liberal projections.
“Expectations of just a year ago may be tough to deliver,” it says, because of intense competition and price uncertainty.
“The B.C. government should be prepared for a more modest natural-gas boom in the event that projected production and revenues build more slowly.”
That’s not the kind of thing B.C. Liberals are interested in hearing, given how heavily invested they’ve been in LNG.
They are projecting at least five plants up and running over the next several years and have held out the possibility of mammoth revenues from the project being used to eliminate B.C.’s debt.
The throne speech just three months before the May election talked about $100 billion in new revenue and the government collecting up to $8 billion more a year in revenue.
The Canada West Foundation doesn’t sound nearly as confident. “Notwithstanding the economic boost expected from natural gas production, efforts to grow the industry should not crowd out other natural resource opportunities.
“Natural gas remains a growth industry with great potential, but realistic expectations regarding the pace of development and fiscal impacts are required.”
Among the considerations:
• “B.C. is coming late to the party.” If the expansion plans of all the traditional suppliers to Asian markets proceed — and they are well on their way — it would more than meet the expected increase in demand.
• Most of that growth is in China, but that country has its own new potential supplies.
• B.C. has vast supplies of natural gas, but the cost of piping it to the coast, liquefying it and shipping it must be carefully managed to remain competitive, says the report.
• Asian purchasers want the LNG price based on low North American prices, plus the transportation premium. “Should existing suppliers choose to aggressively defend market share, this could lead to destructive competition.
“Such competition would disadvantage B.C. natural gas producers, whose supply costs are high relative to many competitors.”
Overall, the foundation said the LNG idea “is solid, but not guaranteed.”
All the local and international competition puts downward pressure on revenues and the number projects that will move forward.
Just So You Know: Sometimes it pays to let your boss push you around. Ben Stewart, renowned Okanagan vintner, was happily re-elected as a Liberal MLA in Kelowna-Westside last May. But he felt obliged — or was made to feel obliged — to offer his seat to Clark after she lost her race.
It was one of those gracious gestures people sometimes make while keenly hoping they aren’t accepted. But Clark took him up on the offer, bounced him out of his seat and took his place.
His just reward for that sacrifice came Monday. He’s B.C.’s new trade commissioner to Asia, based in Beijing.
He’ll cover China, Japan and Korea and focus on LNG opportunities. Clark said B.C. needs someone known for “access to power and government here in B.C.”
She said he’s close to every cabinet minister “including myself,” and that Asian officials can have absolute confidence that when Stewart calls the government, the call will be returned.
The backgrounder on the appointment listed no less than six approving blurbs from people, including Vancouver Mayor Gregor Robertson, and author John Ralston Saul, an oenophile of the highest order.
During his wife Adrienne Clarkson’s term as governor general, he stocked Rideau Hall with Canadian wine and kept a keen eye on the Okanagan wineries, including Stewart’s Quail’s Gate operation.
