Category Archives: LNG

BC LNG: Boon or Boondoggle? LNG (Liquified Natural Gas) is one of biggest energy stories to hit Western Canada. It is promoted as a clean bridge fuel that will create thousands of jobs and turn British Columbia into a trillion-dollar global energy leader. The idea is to cool natural gas into liquid, so it can be shipped to higher-price markets in Asia. But is it really all it’s cracked up to be? And what are the trade-offs and impacts associated with LNG and the fracked gas that would feed it?

The Common Sense Canadian is your go-to source for in-depth analysis of the potential benefits and risks of this “game-changing” industry.

LNG ‘Prosperity’ Will Always be Just Around the Corner for BC

February 27, 2013Economics, Energy and Resources, LNG, Oil&GasRafe Mair

In assessing Premier Christy Clark’s political sins, add one other: irresponsibility…big time.

In the Sun of February 26, on the business page, is an excellent article by Scott Simpson on natural gas prices and their uncertainty. In it you will see that exports of natural gas, in liquefied form (LNG), to Asian markets are scarcely a slam dunk proposition. Gas prices in most Asian markets are controlled by governments and the private sector in a number of cartels, with the idea of maintaining high prices. But, to say the least, the matter is in a state of flux.

Getting ordinary facts on this situation is a crap shoot. Christy Clark tells us that China will be our next big customer. On the other hand, we hear that China has discovered its own massive shale gas reserves – while yet other sources warn this gas will be a challenge to access. Russia sits on the world’s most plentiful conventional gas reserves and is developing a plan to venture into shale gas. The US is awash in the stuff.

Ms. Clark has based her economic position on gas revenues increasing 20 fold in the next 20 years, predicated on the assumption that LNG prices will be 2½ times higher than our domestic price in 20 years.

She has also promised a “Prosperity” fund, starting in two years, which will have us rolling in dough. To tie that all up, she has signed a long-term deal with a consortium of First Nations for gobs of cash to come when a gas pipeline is built through their territory.

This raises, of course, a critical question – if the market we want to serve is awash in natural gas, why in the years to come would it need the stuff from BC?

It rather reminds one of President Hoover, as the Great Depression started rolling, in the election year of 1932, promising a “chicken in every pot” and that “prosperity is just around the corner.”

In The Globe and Mail of February 26, an interview by Justine Hunter of Premier Clark has a little gem in it. The Premier, with her Prosperity Fund “just around the corner”, admits those LNG exports are “four or five years away”.

To top it all off, the International Energy Agency has recently stated, “it is questionable whether freely available LNG will be available from Canada as the main partners in developing other terminals — PetroChina, KOGAS (from Korea), and (Japan’s) Mitsubishi — have dedicated markets for sales in Asia.”

There is also the obvious point that in BC pipelines must cross two huge mountain ranges.

I am no expert in these matters, God knows. However, I have attained a pretty good tummy and an ability to spot horse buns when I see them.

The plain fact is that with the rapid discoveries of shale gas taking place around the world, but especially in the US, Australia, Poland, Russia and China, it doesn’t make sense to promise that any LNG will available from BC to Asia…ever.

Moreover – and please, dear readers pay attention to this – if Australia is any example, LNG plants will only be built with huge incentives (read money) from the public. That’s us folks.

If I am accused of not knowing what the hell I’m talking about, well, neither do Premier Clark and her government.

And I’m not running for a fourth term to lead this province.

BC’s Fiscal Mess: Hydro, LNG Numbers Don’t Add Up

February 20, 2013Energy and Resources, Hydropower, LNG, Politics, Western CanadaRafe Mair

BC's Fiscal Mess: Hydro, LNG Numbers Don't Add Up — Proposed LNG plant in Kitimat – artist’s rendering

The famous bordello keeper of the 20s, Texas Guinan, used to greet her “guests” with, “Hello suckers!”

Texas Guinan has her presence today in the form of BC’s Finance Minister Mike de Jong.

First we must understand some underlying facts about BC finances.

A balanced budget – your style and mine – has us forecasting revenues and expenses accurately, including everything, not something to be pushed at a banker after a three martini lunch. If you don’t include everything you’ll have to borrow money when the car breaks down.

You and I know that if we don’t include everything, we’re just fooling ourselves. Well, folks, there’s no gentle way to put it. We have been played for fools and I’m only going to deal with three headings and leave the deep analysis to economists.

Robbing Peter to Pay Paul

We are selling off some $800 million of Crown assets. This is like you and me selling our homes and using the revenue to balance our current budget. Using money from capital assets, you and I would say, doesn’t belong in our family’s budget because it simply isn’t proper revenue any more than selling off the family jewels is proper revenue.

Governments make up their own rules, of course, and some things that ought not to be are in the annual budget, while other things that ought to be there are missing.

Private Power Rip-off

Take BC Hydro – in fact, take it before General Electric takes it if the Liberal government is, God forbid, re-elected.

Under this government, BC Hydro, which used to pay us taxpayers hundreds of millions per year from its operating profits, is now essentially bankrupt, though not yet formalized. It will be sold with a Liberal victory in May.

No government would do such a thing?

Can you say BC Ferries? Can you say BC Rail?

Since the Liberals embarked on their deliberate plan to bankrupt BC Hydro, our crown jewel has seen its debt and contractual obligations rise to about $80 BILLION.

How has this happened?

Much of it comes from the sweetheart contracts BC Hydro is forced to give Independent Power Producers (IPPs). These contracts cost the public as high as five times the market rate for power and have pushed Hydro into an annual deficit position.

The trouble in dealing with this is it’s difficult if not impossible to believe.

Well believe it. Mair’s Axiom #1 prevails: “You make a serious mistake assuming that people in charge know what the hell they are doing.”

Now, if your family business started to lose big bucks and you decided to pump money from your family’s other sources of income into it, you would certainly show that in your budget. The Liberal government hasn’t told you about that.

LNG Pipe Dream

Finally, let’s take a look at projected income, particularly from Liquified Natural Gas (LNG), which is to be our fiscal saviour. Indeed, according to Premier Clark, we’ll be rolling in dough with this money!

Mr. de Jong perhaps hasn’t noticed that suddenly – and it has been sudden – the world is awash in natural gas. In the time I’ve been talking about it, our obvious major client, China, has discovered massive shale gas reserves of its own.

Believe it or not, it gets worse.

The Canadian Association of Petroleum Producers has made it clear that unless the BC government and the federal government agree to give 30% capital cost allowances – meaning they want a 30% subsidy on the money spent building facilities, like what happens in Australia – then thanks but no thanks to this LNG scheme.

A glance at the Australia experience shows that at the end of the day, the taxpayer ends up footing a big portion of the construction costs to serve a world that doesn’t want their product.

Here’s what one BC political blog had to say on the matter, comparing the LNG issue to our experience with private power:

…LNG exporters are just like our IPP run of river companies, who did nothing, built nothing, acted only on their own behalf, and laid out no money to build 1 kilowatt of power without 30 and 40 year guaranteed contracts, contracts that Gordon the thief Campbell was more than willing to sign. IPPs did not take one single risk, we, the taxpayers, the BC Hydro ratepayers were ripped off…

There are no LNG facilities built as yet, nor will there be unless government pays their capital costs and even then I predict we’ll never see a single plant, let alone the 5 or more proposed.

Christy Clark’s vaunted “Prosperity Fund” will never receive one penny.

The Speech from the Throne and the Prosperity Fund – and the Budget – are barnyard droppings and Premier Clark is trusting that a disreputable, ongoing lie will fool the public.

Hello suckers!

Does Malaysian LNG Mega-Project for BC Coast Need Environmenal Assessment?

February 19, 2013Energy and Resources, LNGDamien Gillis

The Canadian Environmental Assessment Agency is seeking public input on whether or not to hold a federal environmental assessment process for a proposed Liquified Natural Gas (LNG) mega-project on BC’s north coast. The plant, dubbed Pacific Northwest LNG, is designed to turn natural gas from northeast BC into super-cooled liquid so it can be shipped to new markets in Asia, currently paying a higher price for the commodity.

Citizens have until March 11 to let the government know whether the proposal for Prince Rupert – one of half a dozen slated for that community and nearby Kitimat – should undergo a thorough environmental assessment.

Project proponent Progress Energy became a wholly owned subsidiary of Malaysian state-owned energy giant Petronas in December, when Stephen Harper approved the controversial buyout. The decision followed lengthy deliberations, during which time Harper was pressured directly by the Malaysian Prime Minister.

Just prior to that, the two companies announced their intention to proceed with the $9-11 Billion project, regardless of the fate of the buyout, but indicated the project’s size would vary accordingly.

A Financial Post story at the time noted, “If the takeover bid is a go, the LNG plant, named Pacific Northwest LNG, will export two billion cubic feet a day of liquefied natural gas. If the bid is not approved, the two companies will continue as separate entities and work on a plant with the capacity to export 1.2 billion cubic feet a day. Either way, the project will proceed at an ‘aggressive’ pace.”

Petronas’ mega-project is far from the only LNG plant proposed for BC’s coast. There are at least five major projects proposed by a host of North American, Asian and European natural gas players – some of which have already received some level of approval. These include Kitimat LNG, of which Chevron just purchased a majority stake, and Kitimat-based, Shell-led LNG Canada, a consortium which includes Japanese, Chinese and Korean partners.

These plants are a key piece of a promised natural gas boom that is a central plank in the BC Liberals’ economic and election platform. They also bring with them considerable environmental and economic concerns – from the shaky financial foundation of the nascent industry to the water and air contamination caused by fracking – a controversial, new technique used for harnessing much of the gas that would feed these LNG plants.

The plants themselves would create local air pollution and carbon emissions, as they plan to burn some of their own product to to meet the enormous energy demands of processing gas into liquid.

Progress/Petronas’ project description is available to download here. Comments can be emailed to GNLPacificNorthwestLNG@ceaa-acee.gc.ca – or see mailing and fax info here.

Rafe on Liberals’ Delusional LNG Scheme

February 14, 2013Canada, LNG, Politics, Western CanadaRafe Mair

Don’t eat that, Elmer. Them’s horse buns!

The BC Liberal Government’s speech from the throne on February 12 – which hinged on promises of a $100 Billion windfall from BC’s heretofore nonexistent Liquified Natural Gas (LNG) industry – was an appalling attempt to divert attention away from reality with pie in a distant sky.

This government must be thrown out and one can say with certainty that any replacement would be an improvement.

Billions in a few years hence, perhaps trillions after that. We’ll become the LNG capital in the world! There are one or two dark spots on this sunny painting we should look at carefully.

The LNG will come largely from fracking, which is taking the world by storm. It involves drilling deep underground into shale beds where gas is trapped, then drilling horizontally through them, and ultimately pushing huge amounts of chemical-laced water through to crack open the shale and force the gas to the surface. Under Christy Clark’s grand LNG scheme, this gas would then be transported by pipeline to Kitimat or Prince Rupert, where it would be converted into LNG for export, mostly to Asia.

The first questions – the conditions precedent to this operation – are to do with the environment. In a radio interview with the CBC’s Rick Cluff Wednesday, Premier Christy Clark repeatedly referred to this gas as “clean”. Really?

Where does this water come from? The requirements are immense, so a large supply must be found.

Where does the chemically loaded water go? Into the water table, thence to the water supply of local residents?

What is the impact of the extraction of this gas on the stability of the area? Will there be earthquakes as a result of fracking, as a recent report from the Oil and Gas Commission suggests?

What is the impact of huge water extractions on the general ecology of the the supply area? Are there fish losses? What happens to the fauna and flora after the water is extracted? What impact is there on people, especially First Nations? What will be the impact of the water lost to this process on BC Hydro and its ratepayers – like the billions of litres coming from the Williston Reservoir?

There is this question Premier Clark won’t deal with because she doesn’t give a damn – what about the impact of pipelines (all four of them proposed to cut across BC), especially on wildlife?

The fact is that these concerns are being dealt with in several regions with a moratoriumon the enterprise until the answers to these and other questions are answered.

What we do know is that these sorts of concerns do not bother the Chinese in the least, which leads into the major economic concern. Asian prices are high now – 5 or 6 times higher than in North America, which is the basis for this whole scheme. This is a direct reflection of the current lack of cheap, local supply.

So here’s the rub – what if China develops its own supply of “fracked” gas? What happens to the overseas market price then?

One doesn’t have to be an economic genius or Nostradamus to predict that our proposed customer, China, will find plenty of shale and be awash with natural gas.

Even if China does not develop its own supply, who says BC can compete with other countries, such as Australia, which is into this big time?

Another nasty question: how does Premier Clark know how much tax room there will for BC in this development? Are we to suppose that the feds will see huge money without wanting to get into the taxing game themselves, big time?

It should be noted that at present there is no LNG plant in BC.

This is the bunch that wants to be re-elected on May 14. This is their blueprint. Not only have they done nothing to relieve our financial woes they have taken us for fools by feeding us a load of unattainable and inedible pie in the sky.

This government is unfit to govern.

Environment still an afterthought to BC media in election run-up

January 21, 2013Energy and Resources, Fracking, LNG, Media, Oceans, Oil&Gas, Pipelines and Supertankers, Politics, Salmon Farming and AquacultureRafe Mair

Mike Smyth gave us a full page story of his interview with Adrian Dix in the Sunday Province without a word on the environment!

What’s with these guys at Postmedia? Are the thousands upon thousands of hits that organizations like the Wilderness Committee, and yes, the Common Sense Canadian, garner meaningless? Can it be that a handful of NDP supporters visit our websites 1000’s of times a day?

For reasons that escape me, Dix is getting a free ride in the capitalist press.

At least Fazil Mihlar, when he was editor of the Sun’s editorial pages up until recently, kept the faith with the far right, as this Fellow of the Fraser Institute flooded the op-ed pages with articles by anyone who’d kiss the ass of the fish farmers, coal miners, pipeline companies, the tanker people and so on. And we’ve long given up on star Suncolumnist Vaughn Palmer’s ability to ask a tough question of anyone or say something that even barely qualifies as controversial – but Mike was beginning to draw some blood in both major political camps.

There is, evidently, a strong aversion in the mainstream media to talk about the environment and I can only guess why. Was the Kalamazoo spill by Enbridge too complicated to deal with? And the 800+ other spills by this wretched despoiler of the outdoors?

Is the question of the proposed Kinder Morgan pipeline too difficult to analyze, the issues being the same as the proposed Enbridge line?

Are we having trouble dealing with dilbit, the chemical-laced bitumen that it is proposed to be piped through our mountains and valleys into tankers to ply the waters of the Great Bear Rainforest? Is it too time consuming to let readers know of the disastrous difference between bitumen spills and the stuff with which the Exxon Valdez polluted our waters and killed our fish and birds?

What about LNG? (Liquified Natural Gas) Is it beyond the abilities of the Sun and the Province to deal with the environmental issues surrounding fracking, which, by drilling first vertically, then horizontally, pumps out gas from between layers of shale? Where do the enormous volumes of water required for this process come from? After it’s laced with poisonous chemicals and the result pumped underground to crack open the shale, where does it go? Into the water table? Are there potential consequences of stability to the earth’s crust – such as this recentreport from the BC Oil and Gas Commission suggests?

What about fish farms? The Province and Sun have avoided this issue like the plague, with the notable exception of Mihlar, who seems to have given a free pass to the fish farms when they wanted the op-ed page.

What of the desecration of farmland, especially in the Delta area?

Adrian Dix has taken stands on these issues – sort of. He’s against Enbridge but silent on Kinder Morgan. If Kinder Morgan proceeds there will be unbelievable risks from tankers in Vancouver Harbour right out until the open ocean is reached.

The NDP have approved of LNG plants for the northern coast. Does this mean that they are unconcerned about the threat pipelines pose to the fauna and flora they pass through? Does this mean they have satisfied themselves that fracking poses no environmental concerns?

And with the same concerns applying to Kinder Morgan as with Enbridge, how can Mr. Dix condemn the latter while being undecided about the former?

Mr. Dix seems to be concerned about fish farms, but what would he do about them?

And what about the private power catastrophe which has ruined or will soon ruin some 75 rivers while bankrupting BC Hydro? Mr. Dix seems to be against them but what would he do about them? Hydro is presently on the hook for $50 BILLION dollars from these thieves in three piece suits.

Meanwhile, another multi-billion-dollar Hydro boondoggle and environmental calamity awaits us with the proposed Site C Dam – which wouldflood over 12,000 acres of farmland and wilderness to provide subsidized electricity to new mines and gas operations. The NDP has been on the fence at best with this massive project.

Mr. Dix seems to believe that a clean fight is on its way. Is this because he doesn’t want the Liberals to deal with the little matter of outright forgery he committed to save Glen Clark’s scalp in the Pilarinos scandal?

Politics is a blood sport in BC and will be in spite of the hypocrisy of Mr Dix.

The Common Sense Canadian, being devoted to environmental issues. will likely support the NDP in the May election but this doesn’t mean we support handling Mr. Dix or anyone else with kid gloves.

All we really ask is for an informed public, something apparently anathema to the Postmedia and David Black papers.

Get with it you guys – the environment is a huge issue and you have a duty to get it in all aspects on the table.