Canada: British Columbia’s LNG Strategy

Copyright 2012, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Energy–Regulatory/Environmental, February 2012

BACKGROUND

On February 3, 2012, against the backdrop of the BC Jobs Plan released in September 2011, the province of British Columbia unveiled its Natural Gas Strategy. At the same time, the LNG Strategy, identified as the cornerstone of the province's Natural Gas Strategy, was released by the provincial government to support development of the new liquefied natural gas (LNG) industry in B.C.

The LNG Strategy details B.C.'s commitment to LNG exports and outlines the critical priorities that will guide the development of this new industry:

  • to remain competitive in a global LNG industry;
  • to maintain leadership on climate change and clean energy; and
  • to keep energy rates affordable.

What follows is a summary of each of these priorities (including how the province intends to honour them) and a brief overview of the implications of the LNG Strategy for B.C. citizens and industry.

PRIORITIES FOR DEVELOPMENT OF B.C.'S LNG INDUSTRY

1. Keep B.C. Competitive in the Global LNG Market

Natural gas has always been one of B.C.'s most abundant resources and modern drilling technology is now making this gas more readily accessible. Over the next 20 years, global demand for natural gas is expected to rise dramatically, fuelled by rapid economic growth in Asia where the cost of natural gas is approximately four times that in North America. (In late 2011, 1,000 cubic feet of natural gas cost under $4 in North America versus $16 in Asia.)

With the development of LNG – a shippable form of natural gas (compared to conventional natural gas, LNG takes up 600 times less space) – B.C. is ideally positioned to compete for a share of that lucrative market. However, B.C. faces stiff competition from jurisdictions such as Australia, the U.S., Qatar and Africa in securing long-term contracts to supply LNG to Asia. Recognizing that time is of the essence, the province has taken, and continues to take, an aggressive approach to developing the sector. To date:

  • an efficient regulatory system for LNG growth has been established in B.C.
  • overseas marketing (primarily to Asia) is ramping up, supported by the New West Partnership between B.C., Alberta and Saskatchewan (B.C., Alberta and Saskatchewan signed the New West Partnership in April 2010; one of the four main components of the New West Partnership is an international co-operation agreement that will see the three provinces co-operate on trade and investment missions to international markets, and share foreign market intelligence to advance joint interests and increase business competitiveness)
  • work is underway to streamline federal and provincial environmental assessments to create a single, more efficient process
  • approaches to collaborative solutions for natural gas pipeline development are being explored
  • collaboration with local communities, First Nations, industry and other levels of government is being strengthened to define more effective working relationships that benefit the entire province.

In line with its priority to keep B.C. competitive in the global LNG market, the province has committed to having the first LNG plant in B.C. (Kitimat LNG) up and running by 2015, with a total of three LNG facilities, including BC Douglas Channel, operating by 2020.

The next steps in keeping B.C. competitive in this new global market will include investments by the province (and likely, industry) in skills training.

2. Maintain B.C.'s Leadership on Climate Change and Clean Energy

Kitimat LNG and BC Douglas Channel are the first LNG plants in the world that are anticipated to use clean electricity to drive the liquefaction process. As a result, LNG development in B.C. will have lower life cycle greenhouse gas emissions than any of its competitors in the global LNG export market. Additionally, as new or proposed projects come on stream, the province and BC Hydro will continue to work with industry, First Nations, and with clean-energy producers to develop clean-reliable sustainable sources of supply.

The province is also examining ways to grow the market for natural gas as a transportation fuel, in both compressed natural gas (CNG) and LNG forms. These alternatives can replace diesel in heavy duty fleets and other vehicles, and thereby help to lower emissions.

3. Keep Energy Rates Affordable

LNG production requires a steady source of power and, therefore, may necessitate the construction of new transmission lines or other types of infrastructure which have the potential to affect BC Hydro rates. However, through two primary measures, the province has committed to ensuring that energy rates remain affordable.

First, the government will ensure that LNG developers contribute capital for infrastructure development and to the electricity supply required to serve each operation. Second, the government will be making changes to the implementation of its electricity self-sufficiency policy. In particular, moving forward, the new self-sufficiency definition will require BC Hydro to meet customer demand on an average water year, instead of historically low water levels. Further, BC Hydro will no longer be required to acquire an additional reserve of electricity for insurance purposes. These changes are intended to allow the utility to "optimize" its system and profit from short-term trading opportunities in power, and will ensure BC Hydro customers continue to pay some of the lowest prices for electricity in North America, while demand for electricity grows.

IMPLICATIONS

As noted by BC Chamber of Commerce President and CEO, John Winter, the LNG Strategy represents the first time in over a decade that the B.C. government has attempted to create an entirely new industry. As such, not surprisingly, the LNG Strategy is expected to have significant impact on B.C. citizens and industry alike.

For citizens, the direct effects of the LNG Strategy are likely to be increased job opportunities and, possibly, increased BC Hydro rates. Indirect effects will include increased government services like health care and education, as a result of the billions of dollars in new investment (and, therefore, increased government revenues) the industry is predicted to bring to the province. For industry, the LNG Strategy is a strong message from the government that it will support proponents' LNG projects in any way that it can, including working to minimize historical barriers – whether regulatory, administrative or socio-economic – to construction and operation. In any event, the LNG Strategy is sure to add fuel to the proponents' race to operation, and we expect that many will be watching with great interest the progress of the Kitimat LNG facility, which already has federal and provincial environmental approvals and the first-ever federal LNG export licence in place.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

12 Nov 2018, Other, Toronto, Canada

Stories aren’t falsehoods. Stories are the root of all effective human communications: they motivate, animate and clarify. If you aren’t telling stories, you probably aren’t getting your point across.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions