Fraser Institute Releases BC LNG Exports Study (Canada)

The BC government’s dream of creating jobs and investment by exporting liquefied natural gas (LNG) to Asia could be at risk unless the existing cumbersome and overlapping regulatory process and environmental reviews can be further streamlined, concludes a new study released today by the Fraser Institute, Canada’s leading public policy think-tank.

The report, Laying the Groundwork for BC LNG Exports to Asia, examines the barriers and obstacles that could delay or inhibit the construction of natural gas pipelines, gas liquefaction facilities, and marine terminals critical to building an LNG export industry.

“With the release of its Liquefied Natural Gas strategy paper in February, it’s obvious the BC government is hoping to capture the many economic benefits such an industry could bring to BC,” said Gerry Angevine, Fraser Institute senior economist and co-author of the report.

“Unfortunately, the government agencies responsible appear oblivious to the commercial and economic costs of protracted regulatory procedures and the fact that potential investors may look elsewhere if the project review process is dragged out and unnecessarily duplicated.”

The 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. Building the required infrastructure would contribute $4 billion to Canadian GDP and generate more than 50,000 person-years of employment. In addition, considerable full-time employment would be generated by the operation of the facilities and the commensurate expansion of natural gas production.

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.

Angevine notes that the federal government made an attempt earlier this year to streamline regulatory procedures through its “Responsible Resource Development” plan, but he and his co-author point out that the allowed timeframe for reviews remains too long and more could be done to reduce duplication.

“Although the duplication of the regulatory process in relation to related projects may be lucrative for lawyers and consultants, the unnecessary repetition inevitably adds to the time and costs required to secure project approval,” Angevine said.

In order to reduce the barriers that could inhibit building a BC natural gas export industry, the report makes several policy recommendations, including:

• Restricting the scope of the National Energy Board’s mandate to matters necessary to protect the public interest such as construction and 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.
• Involving federal and provincial government and First Nations organizations with industry representatives to identify and approve transportation corridors to 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 that require approvals from both levels of government, or substitute provincial environmental assessments that meet the requirements of the Canadian Environmental Assessment Act in place of a federal review.

“With the necessary infrastructure and a sensible policy framework, exporting liquefied natural gas from BC to Asia would bring staggering economic benefits to all Canadians,” Angevine said.

[mappress]
LNG World News Staff, October 17, 2012; Image: The Fraser Institute