New approach to LNG

Premier John Horgan has introduced new Liquid Natural Gas rules as part of a new approach to natural gas development.

The British Columbia government is overhauling the LNG policy framework for future projects while ensuring those projects adhere to B.C.'s climate targets.

Under the new fiscal agreement, LNG projects will see relief from provincial sales taxes, subject to repayment in the form of an equivalent operational payment.

"Our new approach welcomes investment that puts our province's people and future first, and rejects the old ways of resource development at any cost," Premier Horgan said. "Our obligation is to the people who call British Columbia home, and our job is to get the best deal for them and the generations that follow."

Some of the new guidelines include:

  • Guarantee a fair return for B.C.'s natural resources.
  • Guarantee jobs and training opportunities for British Columbians.
  • Respect and make partners of First Nations.
  • Protect B.C.'s air, land, and water, including living up to the Province's climate commitments.

Horgan says the government is moving toward a final investment decision on a project that, if approved, would be the largest private-sector investment in B.C. history.

The LNG project would see the construction of a natural gas pipeline from northeast B.C. to Kitimat, where a new terminal will process and ship LNG to Asian markets. The project, if approved, is expected to create up to 10,000 construction and up to 950 full-time jobs in northern B.C.

"No premier or government can dismiss this kind of critical economic opportunity for the people of British Columbia," Premier Horgan said. "But neither will we turn our back on our commitment to climate targets, or our path to reconciliation with Indigenous peoples."

In the past year, companies have pulled the plug on three LNG projects proposed in B.C., including the $36-billion Pacific Northwest LNG pipeline project.

LNG Canada, which includes partners Shell, PetroChina, Korea Gas and Mitsubishi, said in 2016 that its final investment decision for the Kitimat facility would be delayed because of poor global markets.

Those markets are turning around, says Shell's 2018 LNG outlook. It found the market has defied expectations, growing by 29 million tonnes in 2017.

"Based on current demand projections, Shell sees potential for a supply shortage developing in the mid-2020s, unless new LNG production project commitments are made soon.

LNG development was a centrepiece of the B.C. Liberal party's 2017 election campaign.

-with files from Canadian Press

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