BUILDING ECONOMY REQUIRES PLANNING

While many in B.C. are vocal about what they’re against, being in favour of something is even more vital

BY WAYNE COX, GAVIN DIROM AND TOM SIGURDSON AND JOHN WINTER, VANCOUVER SUN OCTOBER 29, 2012

From our rugged environment, generations of British Columbians built a province where prosperity is widely shared. And from our efforts – over many years and with governments of different political stripes – B.C. built a strong middle class and a vibrant entrepreneurial culture that to this day remains the backbone of our economy and our society.

B.C.’s economic and natural advantages have helped us weather many storms. Even as the global economy struggles through a period of turmoil and uncertainty, in B.C. we are still creating new jobs.

And while other jurisdictions have had to slash important public services to balance budgets, here at home health care and education remain strong even as the government tightens its belt.

But as resilient as B.C. is, we are not immune to global economic forces. As a small economy that is dependent on open trade, those forces will eventually overtake us unless steps are taken today to secure our prosperity for tomorrow. And that means we have to ask ourselves some tough questions and have an informed discussion about what that future looks like – a serious debate about what it takes to make sure we continue to grow and provide new opportunities for workers, families and young people.

But quite frankly, we are avoiding the debate. And in so doing, we believe we are putting at risk all those things that make B.C. strong and give us hope for a prosperous future.

Just open a newspaper or turn on the evening news and you can see the problem.

Yes, there is a tremendous amount to say about all those things we are against – be it a new dam, a pipeline, a mine, or even a highway upgrade. Without exception, the voices raised against economic development dominate the headlines.

But there is precious little conversation about just what exactly we are for. It’s as though the billions of dollars of investment, the countless new jobs, and the money flowing into communities across B.C. that new projects can provide just doesn’t matter. Opponents of new economic developments seem to believe we can maintain our standard of living without building anything new and without investing in the infrastructure that is the lifeblood of any sustainable and growing economy.

Well, we say it’s time to change the conversation. We say it’s time to have an honest and realistic debate about what it’s going to take to grow British Columbia’s economy, create new economic opportunities, and give our young people hope for the future.

Such a debate about our future starts with the recognition that we can’t distribute or share wealth we don’t create. It’s folly to think otherwise. After all, the hospitals, schools and public services we value don’t come free. They are built with the revenues produced by skilled workers and businesses in this province.

That’s the way B.C. was built over many generations and that’s how B.C. will grow for the next generation. It’s that simple. And those of us who believe B.C.’s future requires us to harness the potential of our people and resources have to have the courage to say so.

Of course, every new economic development project has to be judged on its merits. They have to be planned thoughtfully with a view to their overall strategic impact on the economy.

The era of top-down, one size fits all decision-making is over. The public needs be included in decisions, important environmental values must be adhered to and First Nations must be included in the decisions that affect their lives and their future. The world has changed and we have to change with it.

But that does not mean we give up on the idea that we derive our quality of life from our natural wealth. That would be to give up on the very potential we have as a province and on what makes us strong. If we do that, we will consign future generations to a rapidly declining standard of living in an economy that can’t support the services we depend on. And that’s a future no one wants.

So let’s not only talk about what we are against. That’s the easy part. Let’s get serious and start talking about what we are for.

Wayne Cox is executive secretary-treasurer of the British Columbia Regional Council of Carpenters; Gavin C. Dirom is president and CEO of the Association for Mineral Exploration BC; Tom Sigurdson is executive director of BC Building Trades; and John Winter is president and CEO of the BC Chamber of Commerce.

© Copyright (c) The Vancouver Sun

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KITIMAT LNG TERMINAL STILL AN OPTION: EXXON

The senior vice-president of Exxon Mobil is bullish about the future of the oil and gas industry, but is still keeping his cards close to his chest about building a liquefied natural gas facility on the West Coast.

“Exxon Mobil and Imperial are currently in the early stages of assessing potential LNG export options from British Columbia from our Horn River resource holdings,” said Andrew Swiger at the Global Business Forum in Banff, Alta., on Thursday. “Markets around the world will increasingly seek this cleaner source of energy to fuel progress and prosperity.”

Exxon Mobil, which is the major stakeholder in Imperial Oil, announced its interest back in May, but said at the time plans were in the very early stages and a site had not yet been chosen for a plant to cool natural gas into a liquid state, enabling it to be transported by tanker overseas.

The acreage Imperial has in northeastern British Columbia’s Horn River Basin contains dry gas. Several companies have been ditching dry-gas drilling in favour of areas that contain more lucrative liquids.

In Asia, the fuel would be worth about five times more than it currently is in North America, where burgeoning supplies from shale formations across the continent have far outpaced demand.

Swiger refused to talk to reporters after his presentation.

Other plans for an LNG facility on the West Coast are farther along.

In May, Royal Dutch Shell and three Asian partners announced plans to build a liquefied natural gas export terminal in Kitimat.

The Anglo-Dutch energy giant will have a 40 per cent stake in the project, called LNG Canada. PetroChina, Mitsubishi Corp. and Korea Gas Corp. will each hold a 20 per cent interest. No price tag has been disclosed.

Encana Corp. and U.S. partners Apache Corp. and EOG Resources plan to start up their Kitimat LNG plant in 2015, with an initial capacity of five million tonnes a year.

Another proposal called BC LNG, owned by the Haisla First Nation and Houston-based LNG Partners, expects its first shipment in 2014.

Swiger told the business conference that Exxon expects steady economic growth in the years ahead and the demand for oil and natural gas to boom.

“The reality is the world’s economy will double in size between now and 2040. With this will come a strong growth and a global demand for energy,” he said. “We project the demand for global energy will be more than 30 per cent higher in the year 2040 than it is today.”

He remains equally optimistic that TransCanada Corp.’s Keystone XL system between Alberta and the Texas coast will eventually be approved in its entirety despite the regulatory headaches that it has encountered.

“We’ve lived through a number of them as an industry as Imperial and Exxon Mobil and we could pick any specific example and talk about the frustrations and so forth,” added Swiger. “We see there are a number of scenarios that can unfold which cause us not to be overly concerned about it. We don’t like the frustration of some of the regulatory processes but I think given the prize at stake for Canada and our industry … there’s going to be solutions.”

Read More:  http://www.timescolonist.com/business/Kitimat+terminal+still+option+Exxon/7277955/story.html#ixzz27UQBy2GN

Source: The Victoria Times Colonist – By Bill Graveland, The Canadian Press September 21, 2012

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ENERGY REGULATOR APPROVES EXPORT LICENSE FOR BC LNG

Canada’s national energy regulator has granted its second liquefied natural gas export licence in less than four months – further opening the door to a future where Asia-bound tankers deliver new profits to struggling gas producers.

The National Energy Board approved an application by BC LNG Export Co-operative LLC, to ship LNG out of Kitimat, B.C., the regulator said in a statement Thursday.

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“We’re very pleased to get the licence,” said Tom Tatham, the driving force behind BC LNG. “It’s one key thing that we need to do that’s now out of the way. We’re very happy, as are the Haisla.”

B.C.’s Haisla Nation is a 50-per-cent partner with BC LNG, which has the support of some important corporate players, including Talisman Energy Inc. and Tenaska Marketing Canada, one of the largest exporters of natural gas from B.C. and Alberta.

The export approval gives Encana Corp. and its partners – who have also proposed an LNG export facility near Kitimat – a dose of competition and makes the Haisla an important player in the natural gas shipping business.

Energy companies want to build export facilities on the west coast because natural gas is worth far more in countries like China and South Korea. North America is swimming in natural gas, thanks to prolific shale plays, which has pushed prices to 10-year lows in 2012. Moving natural gas off the continent would also help boost domestic prices.

A Wood Mackenzie study done for BC LNG suggested Asian gas prices would range from $11 to $18 per million British thermal units over the next decade. In North America, gas is currently selling for $2.50. BC LNG plans to charge $3 to liquefy a million BTUs of gas; transportation through pipelines and tankers is expected to cost an additional $2.25 to $2.75 (for a total of $5.25 to $5.75) to get the gas to Asia. That leaves a potentially hefty profit margin.

“It does make sense right now with these numbers that we’re seeing in the market,” said Kristen Gould, a vice-president with Tenaska. “We’re hoping that it does add value to the producers’ netbacks.”

The National Energy Board, in giving its reasons for the decision, also noted “the benefits for the Haisla Nation, including an interest in BC LNG, and employment opportunities resulting from the development and operation of the liquefaction facility.”

While international energy companies have flooded into western Canada’s unconventional natural gas plays – China National Petroleum Corp., for example, purchased a 20-per-cent stake in one of Royal Dutch Shell PLC’s properties in B.C. Thursday – BC LNG makes room for outfits lacking the same clout.

“BC LNG’s export model permits smaller natural gas market participants in Canada to play a part in exporting LNG,” the NEB said. “Members of the co-operative will submit bids to provide natural gas to be liquefied or purchase LNG. A committee will review the bids and choose those that will yield the greatest margin to the co-operative.”

Net revenue from selling the gas in other markets would be split among co-op members. In addition to Talisman and Tenaska, five gas-producing companies have signed up: Enerplus Corp., Birchcliff Energy Ltd., Painted Pony Petroleum Ltd., Northpoint Energy Ltd. and UGR Blair Creek Ltd.

In total, 16 parties have signed up to be part of the BC LNG co-operative. Among them are companies representing “a broad cross-section of Asian countries,” Mr. Tatham said. Additional members may be added upon request.

BC LNG plans call for construction of liquefaction facilities, which use deep cold to convert natural gas into a liquid, aboard barges that can be built elsewhere and shipped to Kitimat for shore-side installation. Each barge could liquefy up to 125-million cubic feet a day; the NEB licence allows BC LNG to liquefy, in total 230-million cubic feet a day. It will be allowed to ship 26-million tonnes of LNG, 47.9-billion cubic metres of natural gas, over a 20-year period. At most, it is allowed to move 1.8-million tonnes of LNG annually, which translates to about 2.4-billion cubic metres of natural gas.

BC LNG expects to make a final investment decision by April 15 – at that point it would decide whether to build the first barge at an estimated cost of $400-million. An investment decision is also expected in the coming months from the companies backing Kitimat LNG, a much larger project that could move up to 1.4-billion cubic feet a day of LNG off the coast and cost about $5-billion.

The BC LNG plan is much more modest – but its backers say that by building its terminal far from Kitimat on barges, it has much greater control of cost since it can take advantage of lump-sum contracts and doesn’t have to fight weather. That should allow it to ship gas for a reasonable price, Mr. Tatham said.

The BC LNG terminal would be located along the same arm of land, just southwest of Kitimat, that could one day host both the Kitimat LNG facilities, and the oil ship-loading terminal proposed for Enbridge Inc.’s Northern Gateway oil sands pipeline project.

Kitimat LNG, owned by Apache Corp., EOG Resources Inc. and Encana, received a similar export licence in October. It was the first export licence the NEB approved since Canadian gas markets were deregulated in 1985.

A series of other companies have also proposed terminals. The most prominent is a Royal Dutch Shell plc proposal in partnership with Mitsubishi Corp., Korea Gas Corp. and China National Petroleum Corp. Malaysian LNG importer Petronas has also discussed plans to build an LNG terminal after buying a stake in B.C. gas reserves from Progress Energy Resources Corp. last June.

Those plans come amidst a broad push in recent months by the federal government to send Canadian energy products to Asia. In its reasons for its decision on the BC LNG project, the NEB said such exports make sense, when it comes to natural gas.

“The board recognizes that the forecast annual LNG demand growth in Asia provides a new opportunity for Canadian producers to diversify their natural gas export markets,” it wrote, pointing to the possibility of “attractive netbacks,” or profits, from shipping gas to Asia.

“Due to the size of Canada’s natural gas resource, proximity to Asian markets and stable political and regulatory environment, the board accepts BC LNG’s submission that Canada is viewed as a desirable source of supply for Asian LNG purchasers.”

Source: Carrie Tait and Nathan Vanderklippe – Calgary – The Globe and Mail

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BCRCC SPONSORS ADRIAN DIX AT VANCOUVER BOARD OF TRADE LUNCHEON

Adrian Dix was first elected as an MLA in Vancouver in 2005, and quickly earned a reputation as an effective opposition critic and a skilled and passionate advocate, particularly in areas including children and youth, and seniors’ care. Upon his election as leader of the B.C. New Democrats in April 2011, one of his primary focuses became leading the NDP’s successful fight against the Harmonized Sales Tax (HST).

Mr. Dix has built his career in the public policy arena, fulfilling roles including non-profit director, education community leader, government strategist and media commentator. A key highlight of his pre-election career was serving as Chief of Staff to Premier Glen Clark from 1996 to 1999.

On Sept. 18, 2012, Mr. Dix will deliver his first address to The Vancouver Board of Trade, providing a glimpse into his view of the future of B.C.’s economy and how businesses may be impacted. Presenting Sponsor: United Brotherhood of Carpenters: BC Regional Council of Carpenters Millwrights Local Union 2736 Piledrivers Local Union 2404 Floorlayers Local Union 1541.

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