IS BRITISH COLUMBIA’S LATEST ECONOMIC GOLDEN goose about to lay too many eggs in one basket? That’s the concern, as B.C.’s recently re-elected government pulls out all the stops to establish a potentially massive liquefied natural gas (LNG) industry for Asian markets.

This new sector’s feedstock will be B.C.’s huge northeastern natural gas reserves. The gas will be shipped via pipelines to tidewater LNG processing plants to be liquefied through subzero cooling and loaded aboard specialized tankers for overseas delivery.

But the Christy Clark government’s current hyperpromotion of LNG would have you believe it’s the province’s economic salvation for the rest of this century. Says a recent B.C. government press release: “If five large LNG plants are built, the gross domestic product benefit to B.C. is expected to add up to $1 trillion by 2046.”

And during last May’s election, Clark’s B.C. Liberals aggressively promoted the promise of hundreds of thousands of potential jobs from LNG on the way to the party’s upset win over the NDP.

This hype is based on the fact that there are about 10 proposed LNG export projects in the planning stages for B.C. And, yes, three now have federal export licences.

Although some proposed projects may indeed be pie in the sky, a few appear to be realistic. Early last month, Malaysia’s prime minister, Najib Raz, confirmed that his country’s state petroleum company, Petroliam Nasional Berhad (a.k.a. Petronas), is pressing ahead with plans to invest $36 billion in B.C. to build LNG export facilities, including a processing plant near Prince Rupert and a supply pipeline.

Petronas has already spent $6 billion to purchase Calgary-based Progress Energy Canada Ltd. in preparation for establishing a B.C. LNG operation. Petronas also is making investments in upstream gasfields. Petronas is one of the world’s largest LNG shippers and has many established customers. Business Council of B.C. chief economist Jock Finlayson, for one, says the company’s investment is “potentially very big, but there’s still a lot of work to do.”

To that end, B.C. energy minister Rich Coleman completed a comprehensive LNG-related trade mission to Asia last month. Premier Clark is expected to lead a similar mission to Asia in November.

And throughout this hyperpromotion, politicians are quick to cite B.C.’s LNG export advantages: huge gas reserves; a shorter shipping distance to Asia compared with other North American ports; the safe investment climate; and B.C.’s plans for training LNG-related skilled labour.

But there are disadvantages, too, including: a fiercely competitive global environment among LNG producers, such as Australia; the B.C. carbon tax; a costly regulatory process; and complex legal issues, such as unsettled First Nations’ land claims.

Another major unknown is whether or not B.C.’s government can establish a balanced tax regime for this new sector that will maintain global competitiveness but give taxpayers adequate returns.

And, lest we forget, B.C. has been burned by similar political hype before: several decades ago, the promise of riches from northeastern coal development turned out to be a bust – thanks to unexpected commodity price turns.

As Finlayson notes: “Anytime you do a major resource development like this, commodity market volatility is always a risk.”

In other words, this golden egg is best seasoned with a grain of salt.

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