When Christy Clark was at the Heritage Inn, Cranbrook on Tuesday April 30th, she enthusiastically talked about how LNG, Liquefied Natural Gas would help solve the Province's debt. At last evening's debate at the College of the Rockies, MLA Bennett spoke enthusiastically of how Liquefied Natural Gas was going to help solve the Provinces debt problem.
This is what CBC's Reality Check had to say:
The B.C. Liberals claim
future liquefied natural gas sales will help pay off the province’s debt. The
CBC News Reality Check team wades through the spin to figure out whether the
plan is hype or hope.
But Peter Hughes, a UK
energy consultant who specializes in the international trade of LNG, says
Japan's willingness to pay sky-high prices is not unlimited. He says the
current system of pricing LNG based on the price of oil could soon change.
“The Japanese have now decided they need to move away from
oil indexation as the pricing basis for their LNG imports and the government
has issued instruction to that effect, which in Japan is a very powerful
factor,” he said.
B.C. has major LNG competitors in Qatar, East Africa and Australia.
If Asia succeeds at creating a more competitive commodity
market, countries that can produce LNG cheaply will have a better shot at the
lucrative contracts. Deciding the future price of LNG is right now a sticking
point on B.C.'s ability to move forward.
But on the campaign trail — Clark sticks to her pitch.
“Development in natural gas can stimulate $1 trillion \in
new economic activity across the province — 100,000 new jobs. $100 billion in
30 years,” she said last week.
The
B.C. Liberals claim future liquefied natural gas sales will help pay off the
province’s debt. (CBC)
But Hughes says that
plan is far from certain.
“It strikes me as a little bit of wishful thinking,” he
said. “B.C. has to compete for that market going forward and compete with a
number of different potential sources of LNG and will have to so on the basis
of its cost competitiveness.”
He’s one of more than a dozen LNG analysts predicting a
price correction in the uncertain future market.
In Australia, a $45-billion project was scrapped earlier
this month because of escalating costs.
Plummeting prices?
The NDP accuses Clark of trying to get elected on a dream.
“She's putting all her eggs in one basket and saying LNG
is going to be the savior for everything,” former NDP leader Carole James said
earlier this month.
NDP Leader Adrian Dix puts no faith in Clark’s talk of an
LNG windfall.
“They've been promising some sort of natural gas
prosperity magic fund,” he said.
Conservative Leader John Cummins doesn't buy it either.
“The suggestion is, from this Liberal government, is that
prices are going to hold firm,” he said. “I don’t think that is the case at
all. I think there is a very good chance that natural gas prices will plummet
in the future.”
Still, Clark insists the first plant will be running in
two years and two others will be shipping LNG by 2020, while insisting her
projections are quite modest.
“In setting out the amount of money that we'd be putting
into the Prosperity Fund, at $100 billion over 30 years, set a very
conservative number. But we'll see.”
Time will certainly tell, but the B.C. Liberals have a
history of overestimating natural gas revenue. The last two B.C. budgets
projected nearly double the natural gas revenues of what they actually took in.
Furthermore, Clark has yet to sign any actual deals with
investors to build LNG plants in B.C., though talks with several interested
companies are ongoing.
In the end, CBC’s Reality Check team finds for Clark to
make these claims with no deals in place, it's more hype and hope than fact,
and we are calling them political spin.
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