December 8 – BC Chamber Public Affairs Update

The state-owned Malaysian oil and gas company says the project’s construction costs are too high and oil prices are too low. FID was originally anticipated for mid-December 2014.

Shamsul Azhar Abbas, Petronas president and CEO of Pacific NorthWest LNG, said the company will continue to review the economic viability of the project and work on regulatory approvals. No new target date for a FID has been specified.

Abbas said it’s still possible the project will proceed. He said he “hopes that all outstanding factors can be resolved as soon as possible to enable the FID to be made within the identified LNG supply and demand window. This is vital in light of the current intense market environment and for Pacific NorthWest LNG not to lose out on long-term contracts to competitive United States LNG projects.”

The deferral is a potential blow to Premier Christy Clark’s economic vision for B.C., which hinges on the creation of an LNG industry in the province. However, Natural Gas Development Minister Rich Coleman remains optimistic, saying the Province has done everything it possibly can to secure an investment by Petronas in LNG, including clarity about environmental rules and taxation. He says the company’s focus is now on other areas, including supplier costs and federal issues.

BC NDP critic for natural gas development Bruce Ralson said Petronas’ decision is “a setback,” and noted other proponents have also delayed FID, including the BG Group.

“Like any family that’s been through tough times, the first thing you need to do when you get back to finding a job and making an income again, is to pay off your credit card,” Premier Clark said.

Total provincial debt is now $64.7 billion.

NDP children and family critic Carole James says the surplus is the result of increases to medical premiums, ferry fares, BC Hydro rates and other charges. She says the money would be better spent providing improved social programs to British Columbians.

Employment in the sector – which includes hydro power, wind, solar and biomass – has increased 37 per cent to 23,700 employees over the last five years, outpacing employment in the oilsands which stands at 22,340.

Clean Energy Canada further said that the federal government is missing out on opportunities to invest in renewable energy and recommends: favourable tax treatment for development of power storage and solar technologies; help to build clean energy infrastructure; less emphasis on oil exports and more on renewable exports in trade talks; rebates for electric vehicles; and carbon pricing to discourage the use of high-carbon alternatives.

Submissions can be made by visiting the consultation website.

This weekly report produced for the BC Chamber of Commerce by Fleishman-Hillard.  While every effort has been made to ensure the accuracy of the information included in this publication as of the date of issue, events and government policies are subject to frequent change.  Therefore, the BC Chamber of Commerce and Fleishman-Hillard cannot assume any responsibility for actions taken solely or principally on the basis on the information contained herein.