Clean Energy Canada | Vancouver Sun: "LNG Sector Receives Government Push, Environmental Pull"
September 24, 2013
The Vancouver Sun covers our new report, The Cleanest LNG in the World. Here’s a copy of the original article by reporter Derrick Penner:
B.C.’s nascent liquefied natural gas sector received a government push Monday with the approval of $116 million in tax breaks to support continued drilling in the province’s northeast, as well as an environmental pull from an environmental group looking to pin government down on a definition of “clean” LNG.
The tax breaks are royalty credits to companies proposing to build 12 road and pipeline projects designed to interconnect wells with the province’s collection and distribution system. The province justifies the credits as a way to encourage companies to spend on infrastructure that jump-starts drilling activity that wouldn’t have happened otherwise.
Minister of Natural Gas Development Rich Coleman said the government brings in less money because of these royalties, but it is the industry that builds roads and bridges within production regions.
“What it has done for us is it’s built the infrastructure we’ve needed to have for movement of goods and services into well sites,” Coleman said.
Coleman said the construction projects will inject $320 million into the region to build the dozen projects.
And while low gas prices have driven down royalty payments – down to just under $200 million last year compared with $2 billion at their peak, Coleman said the credits still expand activity and “the back-end (of production) is higher than it would be today.”
The province’s estimate is that it will see $445 million in royalties over the next 25 to 30 years through increased drilling.
Also Monday, Tides Canada released a report chiding the government for its use of the term “clean LNG.”
Merran Smith, director of Tides’ Clean Energy Canada program, said the report was sparked by the province’s vows to produce “the cleanest LNG in the world,” without defining what that means.
“When we did a scan from the carbon perspective, we’re on track to producing LNG that’s going to be three-times dirtier than the ‘cleanest LNG’ in the world,” Smith said.
Tides takes its clean standards from two plants, a Statoil LNG facility in Norway and the Gorgon facility in Australia, both of which employ carbon-capture and storage of excess C02 from gas wells at the drill head, and electric-drive equipment in gas processing and at the liquefaction plants rather than directdrive systems that burn natural gas to operate equipment.
“Frankly, I think we cannot afford not to make this investment, if we want to be world class and cleanest,” Smith said, but will require strong policy decisions by government.
Coleman said he is “comfortable with where we are” on the environmental front, and that Tides is making some of its comments without knowing what technology proponents in B.C. plan to employ.
Environment Minister Mary Polak added that the Tides report will “certainly be helpful as we wrestle with the challenges we’re facing,” but government policy will be a balance. “We need to ensure we’re protecting the environment and living up to our commitments, and at the same time, not create a situation where the work we’re asking them to do that makes their bottom line not viable for British Columbia,” Polak said.
And Coleman, speaking to The Sun outside an industry summit event in Vancouver, said the province is close to finalizing the terms for royalties and fees on the LNG industry under the B.C. Prosperity Fund, which he expects will be released by mid-November.