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Les Leyne: Energy minister shrugs off LNG loss

Energy Minister Michelle Mungall had a fairly neutral reaction to the Petronas decision to walk away from its multibillion-dollar liquefied natural gas project near Prince Rupert.
Energy Michelle Mungall: Neutral reaction to cancellation of LNG project; potential problems if it's revived.

Les Leyne mugshot genericEnergy Minister Michelle Mungall had a fairly neutral reaction to the Petronas decision to walk away from its multibillion-dollar liquefied natural gas project near Prince Rupert.

Most of the emphasis in her brief appearance after the Malaysian energy giant announced it was giving up was on one point — this is not the NDP’s fault.

“This is about global market pricing. This isn’t about anything else other than Petronas looking at … what’s happening on the international market. … That’s what this is about.”

Petronas officials later rejected any notion that B.C.’s change of government had anything to do with the cancellation. It’s still heavily invested in the upstream B.C. gas fields, so it could hardly say anything else.

Still, Mungall tried to walk a fine line in re-positioning the NDP government on the LNG issue, now that the leading proponent that was furthest along the development path has collapsed well short of the finish line. On the one hand, it’s undeniably bad economic news for northern B.C., since the decision kills the prospect of thousands of construction jobs in a sector in which First Nations were significantly invested. On the other, it’s exactly what the NDP has been predicting and not-so-secretly hoping for over the past few years.

Politically speaking, the corporation’s Pacific Northwest LNG plant was written, produced and directed by the B.C. Liberals. Now that the play is closed, the NDP can rescript it, recast it and mount a whole new production, should they choose. But there are a few problems to resolve before LNG — The Revival — can open.

One is that the Greens, the crucial junior partners in the NDP government, have nothing but disdain for LNG and are delighted that Petronas has given up.

“B.C.’s future does not lie in chasing yesterday’s fossil-fuel economy,” said Green Leader Andrew Weaver. “It lies in taking advantage of opportunities in the emerging economy in order to create economic prosperity in B.C. These opportunities must be available to people in all regions of our province.”

He said the Liberals went all-in on a single industry and let the other opportunities slide.

Whatever the NDP comes up with in its new approach to LNG, and their vague platform doesn’t give many clues, the Greens are already against it.

Another issue is that the Petronas retreat sends a signal to the 19 or so other contenders who are at varying stages of multibillion-dollar plans to create an industry.

They’ve all been jockeying for position in the crowded field for several years. They’ve all been keeping a close eye on world markets, and each other. Now Petronas has signalled its view that the gas-price recovery they’ve all been counting on is a mirage.

However the NDP reshapes the potential industry, it still needs investors to step up. There’s nothing in the Petronas decision that generates any enthusiasm that will happen. In B.C.’s big LNG experiment, the rat that got furthest through the approval maze has just keeled over.

Mungall, who got a heads-up from the company a few hours before the public announcement, said the government respects the decision “and will now move on to support the prospects of the natural gas sector to create good-paying jobs right here in B.C.” (The natural-gas sector isn’t necessarily the same thing as the LNG sector.)

She planned to spend the day talking to other stakeholders in the field to reassure them B.C. will remain a player and the government wants to lay out a new road map to build the industry.

That comes after the NDP’s frequent criticism of the projects and it’s voting record against the Liberal framework for the industry.

The NDP election campaign said the Liberals were “steamrolled” by the industry and signed sweetheart deals that left B.C. without any real benefits. The NDP said it is still a significant opportunity, but has to meet their conditions of fair return, First Nations’ involvement and job and environmental guarantees. Salvaging any of that from Tuesday’s wreckage is going to be a challenge — particularly when it looks like they don’t have the votes to pass any legislative changes they might want to make.

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