Canadian Manufacturing

Much work still to be done after major firms sign on with LNG Canada

by Camille Bains, The Canadian Press   

Cleantech Canada
Operations Oil & Gas

Shell Canada, PetroChina, Korea Gas Corp. and Mitsubishi teaming up on Kitimat, B.C.-based project

VANCOUVER—Premier Christy Clark says a proposed liquefied natural gas (LNG) development in British Columbia has reached an important milestone now that four major energy companies have signed on.

Shell Canada Ltd., PetroChina Co. Ltd., Korea Gas Corp. and Mitsubishi Corp. have agreed to be part of LNG Canada, which would oversee the project based in Kitimat, B.C.

LNG Canada chief executive Andy Calitz told a news conference that while the project has gained momentum, the agreement does not mean a final decision to build has been made.

“Projects of this magnitude are challenged by significant financial investment and risks,” Calitz said. “We have a number of uncertainties to overcome and work to do.”


He said an environmental assessment would need to be done and that consultations with First Nations and communities including Kitimat, where a plant would be constructed, need to continue.

Calitz said his major concerns include the future price of natural gas in Asia, whether the required labour pool exists and how pipelines would get through the mountains in B.C.

LNG Canada plans to work closely with the federal and B.C. governments to ensure the project is economically viable, Calitz added.

Clark, who has promoted LNG as the saviour of B.C.’s economy, said the government is taking steps to provide skills training as early as high school for future workers in the industry.

Existing education money is to be reallocated to expand programs and give students an opportunity to take advantage of jobs in the natural gas industry, she said.

“The world is changing, the economy is changing, and we need to do more. We have a bigger responsibility to meet the needs of kids than we are now,” Clark said.

Clark said the province would use the Temporary Foreign Worker Program (TFWP) to supplement labour needs after people from the province and the rest of Canada filled various apprenticeship and journeymen positions.

“There are going to be, in the process of building these huge, huge, facilities and pipelines, peaks in construction that we just will not be able to meet within British Columbia and the rest of Canada,” she said.

Clark also announced that she plans to travel to Asia for her fifth trade mission to promote the LNG industry in Malaysia, Singapore and Hong Kong.

A report issued this week by the Centre for Canadian Policy Alternatives suggested the B.C. government must lower its LNG expectations.

Economist Mark Lee said the government’s touted returns of $100-billion are “a little more than wishful thinking.”

The report analyzed forecasts for Asian energy markets, the time and cost associated with developing the LNG industry, plans to earn royalties from gas extraction, and LNG income tax.

A tax and regulatory framework is still being worked out by the B.C. government.

“Looking at these factors, it becomes clear that it would take every best-case scenario to materialize to earn the revenues promised by the government,” said a statement from the centre.

It said India, Japan, Korea, China and Taiwan, which account for 70 per cent of LNG imports, are forming a “buyer’s club” on price, making it far less likely that they will continue to pay top dollar for imported LNG.


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