By Joe Oliver <\/p>\n
Last week, Canada received more bad news in its prolonged failure to export energy resources abroad. Petronas decided not to proceed with its $36-billion Pacific NorthWest LNG project, dealing a body blow to B.C. employment, economic growth, funding for social programs and revenue to First Nations. Understandably, the federal and provincial governments sounded defensive, characterizing it as a business decision based entirely on the decline in liquified natural gas prices. <\/p>\n
However, Petronas had previously emphasized it considers the industrys long-term prospects, including costs, not just the current market. Furthermore, LNG projects are moving forward south of the border and in Australia. An initial project description was filed with the Canadian Environmental Assessment Agency (CEAA) in February 2013, raising the question why it could not have been approved sooner when prices were higher and costs potentially lower. For the sponsor, it must have felt like death by a thousand cuts, with frustrating delays and ceaseless demands for concessions from politicians and regulators, as well as lawsuits from environmental and aboriginal opponents. <\/p>\n
Norway green policies have not prevented it from exploiting its vast offshore resources <\/p>\n
When I was minister of natural resources, our Conservative government legislated one project, one review in a defined time period, a significant regulatory improvement. Later, we provided an accelerated capital allowance for the projects facilities and extended export licenses. In contrast, the Liberal government denigrated the National Energy Board (NEB), politicized, duplicated and lengthened the consultation and review processes and broadened their scope. It is now considering the addition of social and cultural impacts, which would exacerbate uncertainty and delay. <\/p>\n
Former premier Christy Clark imposed a provincial carbon tax and took her time in pressuring Petronas to commit up to $1 billion in investment over 20 years. For its part, the CEAAs numerous and onerous requests for information stopped the clock and added a one-and-a-half-year delay. Meanwhile, the B.C. NDP, later to form government, officially rejected the project. In September 2016, the federal cabinet finally gave its approval, subject to 190 conditions including a cap on carbon emissions. So, a lot of people contributed to killing the deal. <\/p>\n
Lets put the project in perspective. Canada has enormous natural gas reserves (1,100 trillion cubic feet), enough for 350 years of domestic use at current consumption. It is just common sense that we export as much as we responsibly can, as soon as we can. However, according to the NEB, Canada will be a late entrant in the highly competitive global LNG market and the next several years will be critical to the development of the Canadian LNG industry. Unfortunately, only the $1.6-billion Woodfibre LNG project has any chance of being built in the next five years. <\/p>\n
Canadas strategic challenge is that our sole customer, the U.S., has discovered vast domestic shale reserves. Its companies are buying our gas at the low Alberta border price and exporting gas at the higher Henry Hub price. A substantial oil price differential also exists between Western Canadian Select and international Brent. Our exporters only option is to pay U.S. pipeline tariffs and contract with Gulf Coast facilities. For Donald Trump, its a great deal. For Justin Trudeau, not so much. <\/p>\n
That leads to Kinder Morgans $6.8-billion Trans Mountain pipeline extension, which would transport 890,00 barrels of oil a day to Burnaby, east of Vancouver, for export to Asia. The new minority NDP government promised its Green Party supporters it will immediately employ every tool available to stop its construction. To avoid being sued for bad faith, the government is cautious about how it handles permit approvals and its role in lawsuits launched by opponents. Nevertheless, its historical opposition was fierce and Green votes are crucial to keep it in power. <\/p>\n
The$12-billionEnergy Eastpipelineis also encounteringNIMBYopposition. Itwould deliver 1.1 million barrels of crudefrom Western Canada toQuebecand New Brunswickfor refining, consumptionand export. <\/p>\n
These are nation-building projects. Trudeau should look to Norway, whose passionate commitment to green policies has not prevented it from enthusiastically exploiting its vast offshore resources and becoming the worlds third-wealthiest country per capita. Canada is 19th. <\/p>\n
In terms of safety, anewFraser Institutestudydemonstratesthat while global tanker shipmentsdoubledfrom 1970 to2015, spills plummetedby 98 per cent.Therefore, whena projects environmental impact hasbeenscientifically vetted,it is timefor the federal governmentto grab thenettleanduse all itsauthoritytoget itbuilt.Ambivalence doesnot cutit. <\/p>\n
We urgently need a national campaign strategy and a federal champion to explain to Canadians what is at stake. Otherwise, time will pass without progress, lengthening a distressing record of lost opportunities. It would be an inexcusable failure for Canada to be the only resource-rich country incapable of exporting its resources for the benefit of its people. <\/p>\n
Joe Oliver, chairman of investment dealer Echelon Wealth Partners, is the former minister of natural resources and minister of finance. <\/p>\n<\/p>\n<\/p>\n
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How to smother a resource economy to death, starting with LNG - Financial Post<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" By Joe Oliver Last week, Canada received more bad news in its prolonged failure to export energy resources abroad. Petronas decided not to proceed with its $36-billion Pacific NorthWest LNG project, dealing a body blow to B.C. employment, economic growth, funding for social programs and revenue to First Nations. Continue reading