- Status
walleyes
Crew Member
Yup,, and our governments too, scary thought isn't it. Like I said about the BC, NDP at one time they were the voice of the working man, they were the working mans party even if it was the unions at least they wanted jobs. What about now, they are fighting against job creating initiatives, unreal and they got in bed with the Green Party wow lol.
GLG
Well-Known Member
Yea it's scary that folks don't know......
Basic supply-demand theory says the pending flood of new supply from around the globe will push prices down over time.
Now look at the spot price for LNG and remember that when these projects were dreamed up it was around $16 and today it's around $8.
https://ycharts.com/indicators/japan_liquefied_natural_gas_import_price
Now look at the futures market for deliver for the next 2 years. It's between $5 and $6. You think that petronas can read charts too?
http://www.cmegroup.com/trading/energy/natural-gas/lng-japan-korea-marker-platts-swap.html
Basic supply-demand theory says the pending flood of new supply from around the globe will push prices down over time.
Now look at the spot price for LNG and remember that when these projects were dreamed up it was around $16 and today it's around $8.
https://ycharts.com/indicators/japan_liquefied_natural_gas_import_price
Now look at the futures market for deliver for the next 2 years. It's between $5 and $6. You think that petronas can read charts too?
http://www.cmegroup.com/trading/energy/natural-gas/lng-japan-korea-marker-platts-swap.html
GLG
Well-Known Member
Canada is doing fine... we have the best growth in the G7. Hope you have a good fishing trip and I mean that sincerely.
I know this has been dragging on for quite a while and is getting a little tedious. GLG, all I can say is that IF and that's a big if, the Pres down south there can organize that **** show to pass some/all of his economic reforms, that growth you talked about may dry up. That's not a doom and gloom scenario, it is just the reality of the world we live in. He has put forth an agenda that will attract massive amounts of capital to the core of the world economy. When Obama was in power, it was a totally different picture and due to the relative nature of investment capital, there was safety in the west, and no country really stood out as all that much better than the rest. Canada actually has very low corporate tax rates and I like that fact. Similar to Norway, you must attract investment capital to provide jobs, so you can tax the crap out of the middle class to pay for social programs.
This post could go on for a long long time, but I won't do that to you unless you ask. This is my business and I'm giving you an insider tip, take it or leave it.
Pray that the machine that works against Mr Trump achieves its goal, because if they don't, the USA will be the only pro business country in the West that has the ability to handle the massive amounts of capital searching for a home.
This post could go on for a long long time, but I won't do that to you unless you ask. This is my business and I'm giving you an insider tip, take it or leave it.
Pray that the machine that works against Mr Trump achieves its goal, because if they don't, the USA will be the only pro business country in the West that has the ability to handle the massive amounts of capital searching for a home.
GLG
Well-Known Member
Seems like I'm not the only one in Canada that has the same analysis of this project and why they decided not to go forward and not even factoring in what Qatar is about to do.
http://www.macleans.ca/economy/econ...-its-plans-for-an-lng-project-on-b-c-s-coast/
Why Petronas cancelled its plans for an LNG project on B.C.’s coast
Market forces played a far bigger role in the decision to scrap the LNG project than many seem willing to acknowledge
This week, Petronas finally announced that it would not proceed with its Pacific Northwest LNG project—part of a proposed $36 billion investment in B.C. natural gas production, processing and shipping. While the project had significant potential when first announced, and Petronas signalled continued commitment to it as recently as last year—after the Trudeau government finally approved the project—the market has been weakening since and it wasn’t a huge surprise that they announced a cancellation. In addition to market headwinds, the project faced significant opposition, it was seen as a potentially large source of GHG emissions, and the previous B.C. Liberal government had over-promised beyond what the project and others like it would have ever been able to deliver. After five years of regulatory process, with global gas prices having collapsed, Petronas decided it could better spend about $18 billion it had previously proposed to spend on the combined pipeline and LNG project. The fate of some of the remaining $18 billion—spending plans to further develop gas resources in B.C.—remains to be seen.
Before we get into the details of this project, a quick step back: what is LNG and why was it felt to be so important for Canada? LNG is liquefied natural gas (the same gas that you’d use in your home heating system) chilled to -161°C, which reduces its volume to 1/600th of the volume of gas, making it economically feasible to transport over long distances by ship. The LNG, which has lower energy density than oil-derived fuels, but much higher energy density than gas, is shipped across the ocean in its chilled state, and then delivered to re-gasification facilities via which the gas is introduced into the receiving country’s pipeline network for delivery to homes and businesses.
Processing and shipping natural gas via liquefaction is expensive. Analysis from the Canadian Association of Petroleum Producers put the combined costs of pipelining B.C. gas from the Montney and Horn River formations to the coast, liquefaction, and shipping to Asia at between $8 and $10 per GJ of gas shipped, and that’s before you’ve paid anything for the gas. For comparison, shipping costs for a barrel of oil by pipeline and tanker from Edmonton to China were estimated at less than $8/barrel in the TransMountain Pipeline Expansion application —equivalent to $1.36/GJ. LNG involves, literally, spending more to process and ship the gas then the gas is worth here at home.
So, why was this ever attractive? Because gas is not evenly distributed around the world, and when regions such as China and Korea look to import gas to heat their homes, these high transportation costs mean that large regional price differences can occur. And that’s just what we saw occur over the past decade. If you look at the graph below, you can see why, for a period of time, the prospect of spending $8-10/GJ to ship gas to Asian markets looked attractive.
At some points during 2012 and 2013, the spread between the value of a gigajoule of gas in Alberta and Japan was over $15—more than enough to pay for liquefaction and shipping. In fact, it was this differential that led governments and industry to push hard for LNG terminals—when prices in Asia were that high, the demand induced by new LNG facilities would allow high prices to flow all the way back to the well-head value of gas in Western Canada, which would increase Canadian resource wealth.
http://www.macleans.ca/economy/econ...-its-plans-for-an-lng-project-on-b-c-s-coast/
Why Petronas cancelled its plans for an LNG project on B.C.’s coast
Market forces played a far bigger role in the decision to scrap the LNG project than many seem willing to acknowledge
This week, Petronas finally announced that it would not proceed with its Pacific Northwest LNG project—part of a proposed $36 billion investment in B.C. natural gas production, processing and shipping. While the project had significant potential when first announced, and Petronas signalled continued commitment to it as recently as last year—after the Trudeau government finally approved the project—the market has been weakening since and it wasn’t a huge surprise that they announced a cancellation. In addition to market headwinds, the project faced significant opposition, it was seen as a potentially large source of GHG emissions, and the previous B.C. Liberal government had over-promised beyond what the project and others like it would have ever been able to deliver. After five years of regulatory process, with global gas prices having collapsed, Petronas decided it could better spend about $18 billion it had previously proposed to spend on the combined pipeline and LNG project. The fate of some of the remaining $18 billion—spending plans to further develop gas resources in B.C.—remains to be seen.
Before we get into the details of this project, a quick step back: what is LNG and why was it felt to be so important for Canada? LNG is liquefied natural gas (the same gas that you’d use in your home heating system) chilled to -161°C, which reduces its volume to 1/600th of the volume of gas, making it economically feasible to transport over long distances by ship. The LNG, which has lower energy density than oil-derived fuels, but much higher energy density than gas, is shipped across the ocean in its chilled state, and then delivered to re-gasification facilities via which the gas is introduced into the receiving country’s pipeline network for delivery to homes and businesses.
Processing and shipping natural gas via liquefaction is expensive. Analysis from the Canadian Association of Petroleum Producers put the combined costs of pipelining B.C. gas from the Montney and Horn River formations to the coast, liquefaction, and shipping to Asia at between $8 and $10 per GJ of gas shipped, and that’s before you’ve paid anything for the gas. For comparison, shipping costs for a barrel of oil by pipeline and tanker from Edmonton to China were estimated at less than $8/barrel in the TransMountain Pipeline Expansion application —equivalent to $1.36/GJ. LNG involves, literally, spending more to process and ship the gas then the gas is worth here at home.
So, why was this ever attractive? Because gas is not evenly distributed around the world, and when regions such as China and Korea look to import gas to heat their homes, these high transportation costs mean that large regional price differences can occur. And that’s just what we saw occur over the past decade. If you look at the graph below, you can see why, for a period of time, the prospect of spending $8-10/GJ to ship gas to Asian markets looked attractive.
At some points during 2012 and 2013, the spread between the value of a gigajoule of gas in Alberta and Japan was over $15—more than enough to pay for liquefaction and shipping. In fact, it was this differential that led governments and industry to push hard for LNG terminals—when prices in Asia were that high, the demand induced by new LNG facilities would allow high prices to flow all the way back to the well-head value of gas in Western Canada, which would increase Canadian resource wealth.
GLG
Well-Known Member
cont....
However, all did not stay as it was in 2011-2015, nor had it always been that way. If we shift the graph to look at a wider time period, we see two important elements often omitted from the stories of this past week.
First, look to the left end of the graph. Unbeknownst to many, for a long time, both Canada and the U.S. were looking at becoming LNG importers. Yes, importers. The U.S. built and operated significant numbers of re-gasification plants (more on that later), and as late as 2007, Canada was permitting import facilities on the B.C. coast to bring gas in! During that time, gas prices in Alberta where actually higher than prevailing LNG prices, and so developers thought they could earn a return re-gasifying LNG on the B.C. coast to ship inland to supply our homes and businesses.
Next, look to the right of the graph, and what’s happened since 2015—global prices have come into much closer balance, with Japanese import prices recovering a bit recently but still sitting about $7/GJ above Alberta and B.C. gas prices, which are at near-historic lows. Now you see what people are talking about when they say that the LNG window has closed, at least for now. At today’s prices, you would certainly not make a reasonable rate of return on an LNG asset in BC. Simply put, if the interest in LNG is to drive higher values for Alberta and B.C. gas than we are currently seeing, the market isn’t there globally to allow that to happen today. The difference in price between B.C. gas and global LNG wouldn’t be high enough to pay for the operating and capital costs of pipeline and liquefaction assets.
It’s worth taking a step back, with costs in hand, to consider the three most frequently-raised issues we’ve seen in the past week—the role of government policies (including GHG policies and regulatory timelines), the reasons the U.S. and Australia seemed to get ahead of us in this market, and then get back to the future for the industry in B.C.
Regulatory hurdles
Beginning with the regulatory timelines, Petronas has not had an easy time in Canada. Their initial purchase of Progress Energy in 2012 was initially rejected by the federal government, then eventually approved at the eleventh hour. The B.C. government of then-Premier Christy Clark introduced special royalty and tax provisions for LNG, as well as specific greenhouse gas policies. Furthermore, the Christy Clark government reviewed GHG policies in 2015, during which potential LNG emissions were a primary focus. Finally, the recent election of the NDP government, while not a signal that the project would be derailed, was certainly a source of further regulatory uncertainty and likely increases in production cost. The most direct question, to which we may never have an answer, is whether Petronas would have committed to build the project and begun construction had they received immediate approval in 2012. Even then the project was huge and risky—an $11 billion terminal and a $7 billion pipeline to a still-developing gas play banking on the hope that the extraction, shipping, and liquefaction costs would combine to be less than global LNG prices and allow a return on investment.
The LNG projects impact on emissions
What about GHGs? How much would the project have emitted? Through the various environmental assessments the project was required to pass, many estimates of the emissions from the project are available. The most comprehensive, from the federal government’s environmental assessment, puts the emissions from the facility itself, and associate operations, at 5.2 million tonnes per year. Further analysis found that the emissions associated with the natural gas production to feed the project would add a further five to nine million tonnes per year to Canada’s emissions inventory.
Whatever your preferred final number is, the emissions impact of a facility this size will not be small and GHG policies could be material to the overall costs of the project, but that’s not likely the case for current policies. At the high end of the range above, with total GHG intensities in Canada of a little over 0.21 tonnes of carbon dioxide equivalent per tonne of LNG shipped, carbon costs would not materially alter processing costs. A $30 per tonne carbon price, as is currently in place in B.C., applied on emissions, would increase processing costs by about 12 cents per gigajoule. B.C.’s previous government had enacted provisions to shelter the average costs of production from GHG costs, but there was no guarantee this would continue and the new government has indicated that GHG policies will become more stringent. While I don’t believe the project was cancelled because of risks from proposed changes to GHG policies in B.C., it’s certainly possible that any change in GHG policy would have a material impact on the expected costs of liquefaction. It’s out of the money now, so it’s not likely driving the decision, but that’s not to say it wouldn’t ever matter. LNG is all about margins, and costs here will decrease potential margins.
The American experience
Next, the question I’ve most often heard this week is: if this is purely a market story, why is it not happening in the U.S.? The U.S. has built and is still building LNG export facilities and, these facilities are challenged by current market conditions. So, why did the U.S. build while we didn’t? In effect, the U.S. had an advantage from being far behind—in the mid-2000s, the U.S. was very short natural gas, and built a lot of import capacity, as shown in the graph below. Many of those import sites, with pipeline infrastructure, docks, storage, and such were converted to export facilities as the U.S. gas market swung from short to long after 2013.
These facilities are facing the same cost pressures I described above. Recent analysis from Jason Bordoff and Akos Losz (2016) discusses just how tight US LNG margins have become and, as you can see from their graphic below, facilities faces challenges to even meet their variable costs, let alone recover the costs of sunk capital.
However, all did not stay as it was in 2011-2015, nor had it always been that way. If we shift the graph to look at a wider time period, we see two important elements often omitted from the stories of this past week.
First, look to the left end of the graph. Unbeknownst to many, for a long time, both Canada and the U.S. were looking at becoming LNG importers. Yes, importers. The U.S. built and operated significant numbers of re-gasification plants (more on that later), and as late as 2007, Canada was permitting import facilities on the B.C. coast to bring gas in! During that time, gas prices in Alberta where actually higher than prevailing LNG prices, and so developers thought they could earn a return re-gasifying LNG on the B.C. coast to ship inland to supply our homes and businesses.
Next, look to the right of the graph, and what’s happened since 2015—global prices have come into much closer balance, with Japanese import prices recovering a bit recently but still sitting about $7/GJ above Alberta and B.C. gas prices, which are at near-historic lows. Now you see what people are talking about when they say that the LNG window has closed, at least for now. At today’s prices, you would certainly not make a reasonable rate of return on an LNG asset in BC. Simply put, if the interest in LNG is to drive higher values for Alberta and B.C. gas than we are currently seeing, the market isn’t there globally to allow that to happen today. The difference in price between B.C. gas and global LNG wouldn’t be high enough to pay for the operating and capital costs of pipeline and liquefaction assets.
It’s worth taking a step back, with costs in hand, to consider the three most frequently-raised issues we’ve seen in the past week—the role of government policies (including GHG policies and regulatory timelines), the reasons the U.S. and Australia seemed to get ahead of us in this market, and then get back to the future for the industry in B.C.
Regulatory hurdles
Beginning with the regulatory timelines, Petronas has not had an easy time in Canada. Their initial purchase of Progress Energy in 2012 was initially rejected by the federal government, then eventually approved at the eleventh hour. The B.C. government of then-Premier Christy Clark introduced special royalty and tax provisions for LNG, as well as specific greenhouse gas policies. Furthermore, the Christy Clark government reviewed GHG policies in 2015, during which potential LNG emissions were a primary focus. Finally, the recent election of the NDP government, while not a signal that the project would be derailed, was certainly a source of further regulatory uncertainty and likely increases in production cost. The most direct question, to which we may never have an answer, is whether Petronas would have committed to build the project and begun construction had they received immediate approval in 2012. Even then the project was huge and risky—an $11 billion terminal and a $7 billion pipeline to a still-developing gas play banking on the hope that the extraction, shipping, and liquefaction costs would combine to be less than global LNG prices and allow a return on investment.
The LNG projects impact on emissions
What about GHGs? How much would the project have emitted? Through the various environmental assessments the project was required to pass, many estimates of the emissions from the project are available. The most comprehensive, from the federal government’s environmental assessment, puts the emissions from the facility itself, and associate operations, at 5.2 million tonnes per year. Further analysis found that the emissions associated with the natural gas production to feed the project would add a further five to nine million tonnes per year to Canada’s emissions inventory.
Whatever your preferred final number is, the emissions impact of a facility this size will not be small and GHG policies could be material to the overall costs of the project, but that’s not likely the case for current policies. At the high end of the range above, with total GHG intensities in Canada of a little over 0.21 tonnes of carbon dioxide equivalent per tonne of LNG shipped, carbon costs would not materially alter processing costs. A $30 per tonne carbon price, as is currently in place in B.C., applied on emissions, would increase processing costs by about 12 cents per gigajoule. B.C.’s previous government had enacted provisions to shelter the average costs of production from GHG costs, but there was no guarantee this would continue and the new government has indicated that GHG policies will become more stringent. While I don’t believe the project was cancelled because of risks from proposed changes to GHG policies in B.C., it’s certainly possible that any change in GHG policy would have a material impact on the expected costs of liquefaction. It’s out of the money now, so it’s not likely driving the decision, but that’s not to say it wouldn’t ever matter. LNG is all about margins, and costs here will decrease potential margins.
The American experience
Next, the question I’ve most often heard this week is: if this is purely a market story, why is it not happening in the U.S.? The U.S. has built and is still building LNG export facilities and, these facilities are challenged by current market conditions. So, why did the U.S. build while we didn’t? In effect, the U.S. had an advantage from being far behind—in the mid-2000s, the U.S. was very short natural gas, and built a lot of import capacity, as shown in the graph below. Many of those import sites, with pipeline infrastructure, docks, storage, and such were converted to export facilities as the U.S. gas market swung from short to long after 2013.
These facilities are facing the same cost pressures I described above. Recent analysis from Jason Bordoff and Akos Losz (2016) discusses just how tight US LNG margins have become and, as you can see from their graphic below, facilities faces challenges to even meet their variable costs, let alone recover the costs of sunk capital.
GLG
Well-Known Member
cont....
Bordoff and Losz also look ahead, asking whether there will be significant future upside to existing U.S. facilities, and they find very weak support. As you can see in the graphic below, they find that prototypical U.S. facilities are marginal at best (in terms covering their variable costs) let alone recovering capital costs.
If we perform a similar analysis to see the gap between current Canadian forward market pricing and global hub pricing from Europe (I am using Dutch forwards, but German, French or U.K. forwards give the same results), you’ll see the results are similar. On the graph below, the average spread between the next five years’ forward curves for gas delivered to Europe versus gas delivered to Station 2 in B.C. is about $5 CAD/GJ—perhaps enough to cover the operating expenses for a pipeline to the B.C. coast and a liquefaction plant, but nowhere near large enough to recover the costs of capital for the liquefaction plant or to provide any uplift to BC and Alberta gas prices. Asian gas prices likely provide another dollar or two of lift, getting projects closer to economic viability at current low gas prices. Of course, insofar as you believe that LNG would raise prices in Alberta and B.C. (wasn’t that the point?), the margins get even thinner and the projects even less economic!
Bordoff and Losz also look ahead, asking whether there will be significant future upside to existing U.S. facilities, and they find very weak support. As you can see in the graphic below, they find that prototypical U.S. facilities are marginal at best (in terms covering their variable costs) let alone recovering capital costs.
If we perform a similar analysis to see the gap between current Canadian forward market pricing and global hub pricing from Europe (I am using Dutch forwards, but German, French or U.K. forwards give the same results), you’ll see the results are similar. On the graph below, the average spread between the next five years’ forward curves for gas delivered to Europe versus gas delivered to Station 2 in B.C. is about $5 CAD/GJ—perhaps enough to cover the operating expenses for a pipeline to the B.C. coast and a liquefaction plant, but nowhere near large enough to recover the costs of capital for the liquefaction plant or to provide any uplift to BC and Alberta gas prices. Asian gas prices likely provide another dollar or two of lift, getting projects closer to economic viability at current low gas prices. Of course, insofar as you believe that LNG would raise prices in Alberta and B.C. (wasn’t that the point?), the margins get even thinner and the projects even less economic!
GLG
Well-Known Member
cont....
That’s a lot of words on LNG. What’s the bottom line? Without a doubt, government policies (Conservative, Liberal, B.C. Liberal, and B.C. NDP) have impacted the timelines, risks and potential future returns from LNG facilities on the B.C. coast. However, to be viable, these plants would have required market conditions which have only existed for four or five years in the relatively short history of global gas trade to prevail for most of the next 30 years. Furthermore, don’t believe the comparisons which suggest that LNG growth in the U.S. shows that Canadian project delays are all about government. Building LNG in B.C. is expensive—more expensive than on the U.S. Gulf Coast—because of a lack of existing facilities to retrofit, a need to construct infrastructure across the mountains to the coast, and due to building in smaller communities with smaller labour markets than we see on the U.S. Gulf Coast. Yes, gas is cheaper in Alberta and B.C. than it is on the Gulf, and we’re closer to Asia, but once you factor in the hurdles of greenfield construction and the need to add pipelines, that advantage disappears.
Will the remaining projects on the B.C. Coast get built? It’s hard to say. If global oil prices recover, and pull gas prices up with them, the LNG window may open again. But, in a world awash in gas, and with other competing sources of energy getting cheaper by the month, the window may remain closed for good.
That’s a lot of words on LNG. What’s the bottom line? Without a doubt, government policies (Conservative, Liberal, B.C. Liberal, and B.C. NDP) have impacted the timelines, risks and potential future returns from LNG facilities on the B.C. coast. However, to be viable, these plants would have required market conditions which have only existed for four or five years in the relatively short history of global gas trade to prevail for most of the next 30 years. Furthermore, don’t believe the comparisons which suggest that LNG growth in the U.S. shows that Canadian project delays are all about government. Building LNG in B.C. is expensive—more expensive than on the U.S. Gulf Coast—because of a lack of existing facilities to retrofit, a need to construct infrastructure across the mountains to the coast, and due to building in smaller communities with smaller labour markets than we see on the U.S. Gulf Coast. Yes, gas is cheaper in Alberta and B.C. than it is on the Gulf, and we’re closer to Asia, but once you factor in the hurdles of greenfield construction and the need to add pipelines, that advantage disappears.
Will the remaining projects on the B.C. Coast get built? It’s hard to say. If global oil prices recover, and pull gas prices up with them, the LNG window may open again. But, in a world awash in gas, and with other competing sources of energy getting cheaper by the month, the window may remain closed for good.
Your reading/posting what you want to believe. NatGas prices may/may not recover, no one knows and anyone who gives you a market prediction on the price of X is full of ****.
The point is, Asia is open for business albeit with the problems that have historically been there, uncertainty of Government.
The west has been relatively closed for business fora couple decades now, and that was all good while it was across the board. That may not be the case in a year or so. We will just have to wait and see what the States do. Canada/BC needs to adapt if the US admin succeeds, with a government and a population that welcomes the benefits of these large investments.
If a venture succeeds or fails, so be it, but money being spent here is rarely a bad thing.
The point is, Asia is open for business albeit with the problems that have historically been there, uncertainty of Government.
The west has been relatively closed for business fora couple decades now, and that was all good while it was across the board. That may not be the case in a year or so. We will just have to wait and see what the States do. Canada/BC needs to adapt if the US admin succeeds, with a government and a population that welcomes the benefits of these large investments.
If a venture succeeds or fails, so be it, but money being spent here is rarely a bad thing.
GLG
Well-Known Member
What the author of the Maclean's article missed was the deal that BC worked out with this project.
http://www.cbc.ca/news/canada/british-columbia/political-lines-drawn-on-historic-lng-bill-1.3149750
Under the terms of the 140-page deal, the province would compensate the LNG consortium if future governments:
Toweny ..... I'm not talking about market predictions .... I'm using futures contracts at $5 to $6 for the next 2 years....... from above...
"Analysis from the Canadian Association of Petroleum Producers put the combined costs of pipelining B.C. gas from the Montney and Horn River formations to the coast, liquefaction, and shipping to Asia at between $8 and $10 per GJ of gas shipped, and that’s before you’ve paid anything for the gas."
Would you risk billions when you know that the market is flooded with LNG and the price trend is going down?
FYI... The Maclean's article was written by
Andrew Leach
Andrew Leach is a professor of energy policy at the University of Alberta, where he teaches courses on energy markets, energy investments and environmental policy. Leach's primary research areas are climate change policy, oil sands regulation and clean energy innovation and policy.
http://www.cbc.ca/news/canada/british-columbia/political-lines-drawn-on-historic-lng-bill-1.3149750
Under the terms of the 140-page deal, the province would compensate the LNG consortium if future governments:
- Raise income rates for LNG operations.
- Add carbon taxes that specifically target the industry.
- Reduce natural gas tax credits.
- Make changes to rules on greenhouse emissions that financially harm the industry.
Toweny ..... I'm not talking about market predictions .... I'm using futures contracts at $5 to $6 for the next 2 years....... from above...
"Analysis from the Canadian Association of Petroleum Producers put the combined costs of pipelining B.C. gas from the Montney and Horn River formations to the coast, liquefaction, and shipping to Asia at between $8 and $10 per GJ of gas shipped, and that’s before you’ve paid anything for the gas."
Would you risk billions when you know that the market is flooded with LNG and the price trend is going down?
FYI... The Maclean's article was written by
Andrew Leach
Andrew Leach is a professor of energy policy at the University of Alberta, where he teaches courses on energy markets, energy investments and environmental policy. Leach's primary research areas are climate change policy, oil sands regulation and clean energy innovation and policy.
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Without numbers available that tell me what the potential risk is if they should lose those protections/benefits then I can't really comment, except to say it's high enough risk that this is common practice.
I know it says "Futures" price, but it still fluctuates whether it's the Forward Month contract, or a 2019 contract. There is always a spread but they move in sync. It really has no relevance here apart from being a spoke in the wheel that corporations use to gauge risk.
Once again, I'll say, it's about promoting an area that's business friendly, not this project especially. BC is not that attractive right now.
I know it says "Futures" price, but it still fluctuates whether it's the Forward Month contract, or a 2019 contract. There is always a spread but they move in sync. It really has no relevance here apart from being a spoke in the wheel that corporations use to gauge risk.
Once again, I'll say, it's about promoting an area that's business friendly, not this project especially. BC is not that attractive right now.
How BC’s LNG Fiasco Went So Wrong
Government, cheerleaders were blind to market forces that doomed the pipe dream. Will NDP make the same mistake?
By Andrew Nikiforuk Today | TheTyee.ca
https://thetyee.ca/Opinion/2017/07/31/BC-LNG-Fiasco/
Government, cheerleaders were blind to market forces that doomed the pipe dream. Will NDP make the same mistake?
https://thetyee.ca/Opinion/2017/07/31/BC-LNG-Fiasco/
SpringVelocity
Crew Member
SpringVelocity
Crew Member
You realize of course your speaking of just oil and gas industry. Tourism is strong, high tech industry and advanced manufacturing continues to grow and so on.
Many other things that contribute more than just that project The problem is people don't want to change. Engineering and technology jobs growing everyday. Software companies can't get enough people to do work so they look offshore.
Construction is though the roof in places in mainland on Vancouver Island.
Sorry I just don't see it being that unfriendly for business. Seems most industries are thriving.
Clint r
Well-Known Member
Hey SV my company is exploding with work too. But it's also outside the oil and gas industry so doesn't count. You know what I mean? We better rubber stamp alot of these projects because if we don't, the whole Canadian economy will collapse around us. Hahaha laughable really.
OldBlackDog
Well-Known Member
Diane Francis: B.C.’s war on resource development is a national tragedy
Diane Francis (Financial Post)
Published: July 30, 2017
Canada’s constitution and federal system is almost as dysfunctional as America’s, only different.
Last week, a national tragedy continued thanks to newly elected politicians and others in British Columbia who have about as much respect for the rule of law as does President Donald Trump.
On July 25, the province’s $36-billion liquefied natural gas (LNG) proposal was canceled by the Malaysian giant, Petronas. Others, now on blueprints in B.C., will do the same.
The official reason given was not the real reason why: the company diplomatically blamed poor global conditions for LNG.
But identical global conditions have not halted the booming LNG export industry in the United States or Norway or Qatar where mega-projects sprout like daisies.
The real reason is the new NDP-Green government declared war against the fully approved $7.4 billion Kinder Morgan pipeline. It also issued a raft of expensive demands on LNG developers that ranged from higher taxes and more money for First Nations to new environmental requirements.
These actions were abusive and illegal attempts to retroactively alter decisions, agreements and laws. And they are a red flag to anyone intending to invest billions.
The Kinder Morgan project has been approved by every regulatory and political body at every level of government, a process taking years. Even so, the new government declared war.
Its “Confidence and Supply Agreement between the B.C. New Democrats and the B.C. Greens” stated the alliance would “immediately employ every tool available to the new government to stop the expansion of the Kinder Morgan pipeline, the seven-fold increase in tanker traffic on our coast, and the transportation of raw bitumen through our province.”
This is simply illegal.
This is not protecting democracy or the will of the people. This is about a group of politicians who are threatening a legally-constituted project to transport legal products to export customers.
The two controversies loomed last week. On the one hand the B.C. government said it was upset about the Malaysian cancellation, but did not stand down on demands or on its attack against Kinder Morgan.
Premier John Horgan bluntly asked his attorney general, David Eby, to find ways to stop the pipeline.
Eby, a lawyer, should have simply said no. Instead, he obfuscated and took a swipe at courts which would award damages to Kinder Morgan.
“I’ve been tasked by the premier to identify our options. There is an important piece to that, which is that we must do so within the laws of British Columbia and Canada, because if we don’t, we’ll be sued,” Eby said in a radio interview.
“We’ll end up paying hundreds of millions of dollars that should be going to schools and hospitals to an oil company and that is not a goal that anybody’s looking for,” he said.
But Green party leader Andrew Weaver dismissed Eby’s remarks and said the government must use “every legally available tool to stop the pipeline from going ahead.”
But no such tools will ever be legal, and any government that stalls, delays, or damages the project will be guilty of deliberate sabotage and bad faith, say lawyers.
This catastrophe is simply the latest in what can be described as Canada’s existential plight. Resource development is the cornerstone of the economy and it’s been stunted for decades. Anti-development interests will turn the country into a park for polar bears and grizzlies.
They trample the rights of developers and the 150-year-old constitution enshrines a federal government too weak to challenge provinces. Constitutional amendments are virtually impossible. Open defiance is constant from First Nations blocking the Mackenzie Valley pipeline or Ring of Fire mega-projects to B.C. blocking Alberta oil shipments and Quebec blocking the development of hydro-electric projects in Newfoundland for export.
The country is balkanized and a de facto European Union, with competing interests that paralyze economic development.
Ottawa has powers to govern on behalf of all Canadians, but doesn’t. This time, the feds must forbid any interference in the building of that pipeline by the Province of British Columbia and provide security if needed.
As for the Malaysians, they are gone, having witnessed a government disobeying laws, breaking promises and retroactively changing contracts.
Canada’s reputation is tarnished. The Malaysians invested $10 billion in good faith in a country with the rule of law to build a 30- or 40-year project. Now they will dis-invest and ship as much Canadian gas as they can south of the border to the United States where dozens of high-tech plants will produce LNG for export across the U.S. and around the world.
And one of the world’s largest natural gas resources will be stranded forever, equivalent to Norway walking away from its energy bonanza.
This represents an abrogation, threatened or real, of the rule of law, civilization’s pre-eminent organizing principle.
This time it’s about reneging on promises to corporations. Next time, it could be about ignoring the rights of regions or individuals.
Meanwhile, democracy is subordinate to the rule of law. At best, it is a popularity contest and at worst it’s a mechanism to give power to contemptuous fanatics and demagogues.
It’s unacceptable.
Financial Post
Diane Francis (Financial Post)
Published: July 30, 2017
Canada’s constitution and federal system is almost as dysfunctional as America’s, only different.
Last week, a national tragedy continued thanks to newly elected politicians and others in British Columbia who have about as much respect for the rule of law as does President Donald Trump.
On July 25, the province’s $36-billion liquefied natural gas (LNG) proposal was canceled by the Malaysian giant, Petronas. Others, now on blueprints in B.C., will do the same.
The official reason given was not the real reason why: the company diplomatically blamed poor global conditions for LNG.
But identical global conditions have not halted the booming LNG export industry in the United States or Norway or Qatar where mega-projects sprout like daisies.
The real reason is the new NDP-Green government declared war against the fully approved $7.4 billion Kinder Morgan pipeline. It also issued a raft of expensive demands on LNG developers that ranged from higher taxes and more money for First Nations to new environmental requirements.
These actions were abusive and illegal attempts to retroactively alter decisions, agreements and laws. And they are a red flag to anyone intending to invest billions.
The Kinder Morgan project has been approved by every regulatory and political body at every level of government, a process taking years. Even so, the new government declared war.
Its “Confidence and Supply Agreement between the B.C. New Democrats and the B.C. Greens” stated the alliance would “immediately employ every tool available to the new government to stop the expansion of the Kinder Morgan pipeline, the seven-fold increase in tanker traffic on our coast, and the transportation of raw bitumen through our province.”
This is simply illegal.
This is not protecting democracy or the will of the people. This is about a group of politicians who are threatening a legally-constituted project to transport legal products to export customers.
The two controversies loomed last week. On the one hand the B.C. government said it was upset about the Malaysian cancellation, but did not stand down on demands or on its attack against Kinder Morgan.
Premier John Horgan bluntly asked his attorney general, David Eby, to find ways to stop the pipeline.
Eby, a lawyer, should have simply said no. Instead, he obfuscated and took a swipe at courts which would award damages to Kinder Morgan.
“I’ve been tasked by the premier to identify our options. There is an important piece to that, which is that we must do so within the laws of British Columbia and Canada, because if we don’t, we’ll be sued,” Eby said in a radio interview.
“We’ll end up paying hundreds of millions of dollars that should be going to schools and hospitals to an oil company and that is not a goal that anybody’s looking for,” he said.
But Green party leader Andrew Weaver dismissed Eby’s remarks and said the government must use “every legally available tool to stop the pipeline from going ahead.”
But no such tools will ever be legal, and any government that stalls, delays, or damages the project will be guilty of deliberate sabotage and bad faith, say lawyers.
This catastrophe is simply the latest in what can be described as Canada’s existential plight. Resource development is the cornerstone of the economy and it’s been stunted for decades. Anti-development interests will turn the country into a park for polar bears and grizzlies.
They trample the rights of developers and the 150-year-old constitution enshrines a federal government too weak to challenge provinces. Constitutional amendments are virtually impossible. Open defiance is constant from First Nations blocking the Mackenzie Valley pipeline or Ring of Fire mega-projects to B.C. blocking Alberta oil shipments and Quebec blocking the development of hydro-electric projects in Newfoundland for export.
The country is balkanized and a de facto European Union, with competing interests that paralyze economic development.
Ottawa has powers to govern on behalf of all Canadians, but doesn’t. This time, the feds must forbid any interference in the building of that pipeline by the Province of British Columbia and provide security if needed.
As for the Malaysians, they are gone, having witnessed a government disobeying laws, breaking promises and retroactively changing contracts.
Canada’s reputation is tarnished. The Malaysians invested $10 billion in good faith in a country with the rule of law to build a 30- or 40-year project. Now they will dis-invest and ship as much Canadian gas as they can south of the border to the United States where dozens of high-tech plants will produce LNG for export across the U.S. and around the world.
And one of the world’s largest natural gas resources will be stranded forever, equivalent to Norway walking away from its energy bonanza.
This represents an abrogation, threatened or real, of the rule of law, civilization’s pre-eminent organizing principle.
This time it’s about reneging on promises to corporations. Next time, it could be about ignoring the rights of regions or individuals.
Meanwhile, democracy is subordinate to the rule of law. At best, it is a popularity contest and at worst it’s a mechanism to give power to contemptuous fanatics and demagogues.
It’s unacceptable.
Financial Post
SpringVelocity
Crew Member
Francis became a Director of Aurizon Mines Ltd., listed on the Toronto and American Stock Exchanges September 2007.
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