The dance moves are getting more intense, as the music swells to the finale.
A new alliance of prospective liquefied-natural-gas producers showed the government a few new steps on Wednesday, as the suggested Oct. 31 deadline nears on one proponent's go or no-go decision. They're presenting themselves as a skittish, anxious bunch, ready to reconsider the enthusiasm if governments don't address concerns.
LNG Alliance head David Keane told a Vancouver business luncheon B.C.'s overall cost structure is "potentially too high" to make starting the new industry worthwhile. It's an echo of the move Petronas made two days earlier, with its announcement the economics look marginal at this point, without some tax cutting. Little wonder the alliance repeated the worry, given Petronas is one of the lead hands in the alliance.
Despite the government's extravagant sales job on the amounts of money to be made by shipping B.C. natural gas to Asia, Keane said: "A new LNG industry in British Columbia is not a foregone conclusion."
He outlined four major challenges and the paramount one is the fiscal framework, which will be made clearer when the exact tax rate for the new industry is revealed in legislation expected later this month.
Said Keane: "If we are going to have a viable LNG industry in B.C., our industry and all levels of government will have to make some difficult decisions. We must assess and adjust our sails to the competitive winds."
The six proponents in the alliance want "certainty, clarity and a fiscal environment that recognizes the huge technical and financial challenges of very large and complex projects with significant risks."
Keane said B.C. deserves fair value for the natural resource, "but in light of the global market we operate in, B.C.'s overall cost structure holds the potential to reduce our members' competitiveness and their ability to succeed in the global market."
The other challenges he cited are public misunderstanding of the industry, developing the workforce and recognition of the role LNG could play in lowering global greenhouse gas emissions. That's a disputed contention, given it will raise B.C.'s emissions.
Premier Christy Clark said later the speech was all part of the negotiations now underway. "Sometimes when parties are negotiating, they negotiate a little bit in public, and that's what's happening here."
Thirty minutes after Keane issued the warning, the topic cropped up in the legislature, with the Opposition portraying LNG as an opportunity that has been bumbled.
Opposition Leader John Horgan demanded of Clark: "What can she say to British Columbians when she can't deliver a tax bill to this house because Petronas hasn't written it yet?"
NDP MLA Bruce Ralston recalled her "far-fetched" promises to eliminate debt and even cancel the sales tax based on billions in new LNG revenue. Now two outfits have walked away and Petronas is threatening to do the same. If the company does win a tax concession "it will surely mean the premier's revenue promises are shattered forever."
Clark said the NDP have been wrong on every single pronouncement and "will be wrong on this one, too."
"It's a little rich to stand here and listen to the NDP, who oppose every single proposal for economic development, and hear them say they're worried about slow economic growth."
Keane also referred briefly to one aspect of LNG that doesn't get much attention. The new industry wouldn't all be an add-on to the economy. Some of the benefits would replace those lost due to declining demand for B.C. natural gas in the U.S., which is bursting with new reserves.
Natural Gas Minister Rich Coleman has also noted that, saying northern communities are at risk, because B.C. has a 200-year supply of a product, just when the main market in the U.S. is awash in the same product.
Just So You Know: Keane described the LNG industry and governments as being on two parallel tracks that "need to come together."
If they mesh, it will be a huge economic boost. If they don't, there's the potential for a political train wreck.
