Red tape puts BC LNG export strategy at risk: Fraser Institute

Report calls for a further streamlining of overlapping regulations and environmental reviews.

October 16, 2012   by PLANT STAFF

VANCOUVER — Investment and jobs from exporting liquefied natural gas (LNG) to Asia could be at risk unless the cumbersome and overlapping regulatory process and environmental reviews are further streamlined, concludes a new study by the Fraser Institute.

The Vancouver-based think tank’s report estimates that LNG exports from BC to Asia could generate $134 billion more for natural gas producers from 2014 to 2035 than if the same volume of gas were exported to the US.

Infrastructure would contribute $4 billion to GDP and generate more than 50,000 person-years of employment, plus “considerable” full-time employment by the operation of the facilities and the expansion of natural gas production.

LNG use has grown in Taiwan, Japan, and Korea, which accounted for 86% of Asia-Pacific LNG trade in 2009, while China represented 13% of that market. Prices in this market are 90% of the oil price, which is considerably higher than North American prices.

Canadian gas producers have been exporting to the US via pipeline but the potential for maintain or growing the market is limited because US gas production has dramatically increased as new technologies make tight gas and shale gas resources commercially viable, which is also lowering prices.
But the report also highlights examples of lengthy National Energy Board approval hearings, separate environmental reviews conducted by both the federal and provincial governments, and requirements for project proponents to make separate applications for approval of natural gas pipelines and liquefaction facilities, even when both are part of the same project.

Gerry Angevine, Fraser Institute senior economist and co-author of the report, said government agencies appear to be oblivious to the commercial and economic costs of protracted regulatory procedures and warned potential investors may look elsewhere if the project review process is dragged out and unnecessarily duplicated.

The report makes several policy recommendations, including:

• Restricting the scope of the National Energy Board’s mandate to construction, operational standards and efficiency, property rights and claims, and environmental impacts.

• Having the National Energy Board conduct a ‘generic’ hearing on issues in common to anticipated BC LNG export applications such as environmental issues and the impact that such exports would have on British Columbian and Canadian natural gas prices and consumers.

• Placing shorter, clearly defined limits on the time regulators and elected officials may take to review energy project applications and reach decisions.

• Federal and provincial governments and First Nations organizations working with industry representatives to identify and approve transportation corridors that would be used for infrastructure development.

• Requiring a single construction application where an export terminal, facility and a new pipeline are being proposed by the same investors.

• Establishing joint federal-provincial environmental reviews for projects, or substitute provincial environmental assessments that meet the requirements of the Canadian Environmental Assessment Act in place of a federal review.

Download a pdf of Laying the Groundwork for BC LNG Exports to Asia.

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