It is interesting to compare the hypothetical set of assumptions
set out in the E&Y Analysis regarding the intensity of
development which the province is assuming compared to the
historical growth in other countries such as Qatar and
The E&Y Analysis assumes a "base case" scenario of
five LNG export facilities with a combined capacity of 82 million
tonnes per annum (MTA) from 2018 to 2037. The E&Y Analysis also
considers a "high capacity" scenario assuming 82 MTA for
2018 and 2019 increasing to 120 MTA (reflecting the addition of two
facilities) from 2020 through 2037.
In comparison Qatar, the global leader in LNG export to date,
grew from zero to 77 MTA of export capacity in 14 years. Similarly
Australia, which has seen rapid expansion of its export capacity is
poised to add 60 MTA in seven years for a total of 80 MTA by 2018.
Comparing the growth numbers in Qatar and Australia to the base
case scenario identified in the hypothetical set of assumptions of
the E&Y Analysis, the base case seems to be, shall we say,
ambitious. This is especially true when considering the challenges
facing the LNG trade globally, including escalating capital costs,
pricing challenges and increasing competition among potential
That being said, the economic impact of LNG development in
British Columbia is potentially significant. Recent estimates place
the capital cost of greenfield projects at roughly $1.5 to $3
billion per MTA of export capacity and the hypothetical base case
scenario implies aggregate capital costs in excess of $100 billion
and estimates aggregate royalties and taxes on twenty years of
operation to be in excess of $150 billion. If British Columbia is
able to achieve development of even a fraction of their
hypothetical base case over the next ten to fifteen years the
economic contribution to the province will be substantial. The
uncertainties facing British Columbia's LNG opportunity are
massive – but then there is no doubt that the potential
benefits are too.
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