Thursday, May 21, 2015

Province lays the LNG foundation, now waits for Petronas to finance and build

Wednesday's LNG statement from Premier Clark was long on planning, a little short on timeline, as Ms. Clark outlined the moves now in place to push forward with the BC Liberal Government's hoped for delivery of its LNG program over the next number of years.

With Petronas represented by Pacific NorthWest LNG's Michael Culbert at the morning conference and Federal Industry Minister James Moor on hand, the Premier outlined a few notes on tax plans and royalty expectations that the province will receive should Petronas make a final investment decision on the proposed development currently planned for Lelu Island.

That elusive goal has been deferred a few times and isn't expected to take place until the fall at the earliest, once word has come back from the Canadian Environmental Assessment Agency regarding the environmental review process currently underway.

For the Premier, the announcement was used to make note of the many partners involved to this point, reviewing some of the developments towards moving to the point of a hopeful final investment decision  on the Pacific NorthWest project.

“Today reflects the beginning of the company’s final decision path toward an investment decision, ... Today’s agreement is the product of tremendous effort right across government and among many partners to recognize a generational opportunity and ensure that we are ready to seize it, for the benefit of British Columbians today and those who are to come.” -- Premier Christy Clark 

Some news was delivered however as part of the briefing, with natural gas royalty rates for the Petronas led project revealed as part of the overview.

The returns will be based on a twenty three year scale, with the process to kick in starting on January 1st of 2016 with a royalty rate  of 6.06 per cent in the first year, climbing to 13.36 per cent in the final year of 2039.  It's expected that close to 8 billion dollars in royalties could be provided over the length of the term.

As part of that twenty three year program, the group led by Pacific NorthWest will continue to invest in increased natural gas production in the province during that period as well.

The Province also made note of a new Project Development Agreement for the Pacific NorthWest project, but little in the way of details was actually provided in the way of background regarding that initiative at Wednesday's event, other that to explain it as a way of providing certainty for those who plan to invest in the Northwest.

As part of that aspect of the province's LNG plans, the  Premier did explain the steps that would take place (with financial compensation plans set) should a different government find the LNG plans of today, not what they would wish to work with in the future.

Details related to the Project Development Agreement will be released sometime in the summer, or early fall and then submitted to the Legislature for discussion and debate, allowing for MLA's to offer up their opinion on the Government's plan. 

That opportunity for debate will be one that offers North Coast MLA Jennifer Rice a chance to put forward more of her thoughts on the the impact that LNG will have on the North Coast, in particular the nature of the Pacific NorthWest proposal for the region.

Not examined in any great detail was how the Province planned to address the recent rejection by members of the Lax Kw'alaams First Nation of a proposed benefits package, the results of the vote against the proposal were announced earlier this month, leaving many to wonder what impact it would have on the project and any momentum to move it forward.

Instead, the Premier noted the engagement that the Province has found with a number of other First Nations across Northern British Columbia, highlighting fourteen agreements reached to this point.  Highlighting what she calls the game changing nature of the opportunities for those communities.

As part of the statement of Wednesday, the government advised that the province continues to consult with Tsimshian Nations  including the Lax Kw'alaams First Nation to overcome the hurdles currently in place.

Those looking for a sense of when, or if Petronas will be making a Final announcement related to their development, didn't find it from the words of the Premier, or LNG Minister Rich Coleman.

For the most part the announcement, such as it was, provided mostly for technical details on what could happen providing that a range of other issues come to pass, as well as to continue to provide support for the plans of Pacific NorthWest and their industrial project.

“We are starting a new chapter in British Columbia’s long history as a resource economy, ... Today’s agreement provides Pacific NorthWest LNG with certainty and the potential to become the first export facility in our province.” -- LNG Minister Rich Coleman

Wednesday provided no actual blue print as to what the Project Development Agreement consists of, the review of the process ahead more of a thumbnail sketch, as opposed to a firm timeline.

With an environmental assessment process and a Final Investment Decision still be delivered, the Government's notes from Wednesday for the most part seemed to provide mostly for a review of the province's LNG blue print.

You can review the full statement from the Government here,

Included in the information from the BC Government website is an audio file of Wednesday's announcement and follow up observations from  the Premier, Pacific NorthWest LNG's Michael Culbert and Federal Industry Minister James Moore.

Their commentary can be reviewed from the audio file below.

Further observations related to Wednesday's developments can be found below.

Vancouver Sun -- B. C., Petronas sign deal toward proposed LNG project in province's northwest
Vancouver Sun -- B. C. Liberals lock in taxes, royalties for Pacific NorthWest LNG
Vancouver Province -- Will NDP walk into liquefied natural-gas trap set by Clark government?
Financial Post -- B.C.’s LNG deal with Petronas more fuel for Christy Clark’s improbable fiscal optimism
Financial Post -- B . C. and Petronas reach LNG agreement paving way for energy giant's proposed $36 billion investment
Financial Post -- B.C. offers cost guarantees to Petronas, but doubts remain
CFTK TV -- BC signs LNG Deal for Petronas-led Project
Global BC -- What hurdles remain in Petronas LNG agreement? (video)
Global BC -- Premier announces LNG project development deal with Petronas (video)
Global BC -- B. C. signs deal toward proposed LNG project
Business in Vancouver -- B. C, commits future governments to terms for LNG
News 1130 -- LNG project led by Petronas takes a step forward
Globe and Mail -- B. C. pushing ahead with LNG proposal despite objections from First Nations
The Tyee -- Province forges ahead with LNG Development
The Tyee -- Who is BC's Big LNG Partner? A Petronas primer
CBC -- Christy Clark announces LNG agreement with Petronas

For further background on the Pacific NorthWest LNG project see our archive page here.

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