We suppose it was inevitable, the gleeful crowing when Royal Dutch Shell announced postponement of its Final Investment Decision (FID) on the LNG Canada project in BC.
“LNG is dead” and “Christy Clark blows LNG,” gloated the more polite social-media opponents of LNG and of her government.
But think about this for a moment: Is it not reasonable for a company to take a deep breath on a $50-billion project after (i) its 2015 earnings sank to $3.84 billion, from $19 billion in 2014, and (ii) Shell was but days away from a $78-billion takeover of BG Group?
At worst, the FID for LNG Canada’s Kitimat project is delayed from the spring until the fourth quarter of this year. Or, as the LNG Canada website said, “right at the end of this year.”
Andy Calitz, CEO of LNG Canada, told CBC News: "We have always stated that our joint-venture participants plan to make a Final Investment Decision in 2016.
"We are pleased, given the current oil and LNG prices, and turmoil in global energy markets, that the joint-venture participants in LNG Canada are still working towards a Final Investment Decision for the proposed facility later this year."
Shell owns a 50% stake in LNG Canada. PetroChina is in for 20%, Korea Gas Corporation 15% and Mitsubishi Corporation 15%.
Stakeholders like that do not make $50-billion decisions based on the spot price of oil or natural gas. They focus on supply, demand, and potential prices and profits 10 and 20 and 30 years down the road.
LNG Canada is big one. As Calitz told Business in Vancouver in October: “Any LNG project is the world’s largest industrial project. Compare it with any other industrial project that manufactures something; there is nothing larger.”
Calitz and Premier Christy Clark were in Ottawa last week, and the premier returned with some optimism. The federal government, she said, is not going to delay BC LNG projects.
“(The federal government is) really enthusiastic about making our LNG dream in British Columbia come to life."
If so, it has been moving slowly on the other huge BC LNG project, the $36-billion Petronas-led Pacific NorthWest LNG plan that includes a gas liquefaction plant and tanker terminal on Lelu Island, Prince Rupert.
Petronas has made a conditional FID—conditional on getting environmental approval from Ottawa. But the 365-day federal environmental review now has been running for almost 800 days. And, while Fisheries and Oceans Canada scientists say the project poses a low risk to salmon, some First Nations leaders think otherwise.
For now, let’s highlight the premier’s words on LNG Canada: "To me the good news is that when you see energy projects getting canceled all over the world, Shell Canada, LNG Canada announced that they are recommitting to the project in British Columbia. The date’s changed, but their commitment to it hasn't."
LNG Canada estimates it will need between 4,500 and 7,500 people for construction over five years, and provide 300 to 450 permanent jobs for operations. Add billions spent on goods and services in BC and significant revenue to all levels of government.
Dear Santa: Here’s hoping that “right at the end of this year” means a huge and welcome Christmas present for British Columbians.