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BC Premier Touts Lucrative LNG Export Potential

High hopes for budding overseas exports of liquefied natural gas (LNG) dominate an ambitious economic growth forecast made last week by British Columbia Premier Christy Clark. Of C$25 billion (U.S. dollar at par) in investment anticipated by Clark within 10 years, her Liberal government is relying on LNG for C$18 billion or 72% of the total.

In a Vancouver, BC, speech that was long on economic vision and short on details -- and immediately described by political rivals as a prelude to an imminent provincial election -- Clark laid out her administration's expectations under the title of the Pacific Gateway Transportation Strategy. Aside from LNG, the outlook chiefly includes anticipated gradual expansion of road and railway service to carry a variety of commodities from potash to wheat across BC for industries in the other western Canadian provinces.

"Asia is right at our doorstep -- our ports are closer than anywhere else in North America," proclaimed a widely distributed text of Clark's address. "Our government is making sure we can get our goods to market as efficiently and quickly as possible."

Rather than commitments of taxpayers' money to big government public works programs, the Pacific Gateway strategy consists mainly of supporting industry plans. The biggest developments currently on BC's horizon focus on the northern Pacific coast port at Kitimat.

Industry projects for the area to date include two planned LNG export terminals that obtained export licenses this winter from the National Energy Board (NEB), an allied gas pipeline project, and the Northern Gateway oil sands export pipeline proposal.

Clark maintained her government's neutrality on Northern Gateway, which is in the midst of marathon hearings before the NEB that have become a political hot potato with BC Aboriginal and environmental groups forming long lineups to fight the industry.

The LNG projects and supporting gas pipeline have contended with some opposition from environmental groups but are far less contentious because they are being mounted in partnership with the Kitimat native community, Haisla First Nation.

The group's interests in gas include a terminal lease agreement with the KM LNG project planned by Apache Corp., EOG Resources and Encana Corp. (see NGI, Feb. 13), a Haisla partnership with a Texas gas trading house on a second and smaller terminal project, and a participation agreement with the pipeline development. The LNG terminals and the pipeline already obtained provincial and federal environmental approvals.

Numerous other companies from BP plc to Royal Dutch Shell plc have tentatively raised possibilities of developing more LNG export projects as natural marketing outlets for their interests in BC's northern shale gas development zone, the Horn River Basin.

At the same time as Clark outlined her government's ambitious vision, the provincial justice department went to bat for gas producers before the NEB. In a written filing, BC's lawyers sided with the Alberta Department of Energy, Canadian Association of Petroleum Producers and Small Explorers and Producers and Explorers Association of Canada against toll hikes proposed by TransCanada Corp. for its Nova gas grid (see NGI, Jan. 9).

The Nova network has since 2008 expanded beyond its birthplace Alberta into BC as a cornerstone of Horn River shale gas development. TransCanada's hotly contested blueprint for a business restructuring to reduce tolls on its eastbound Mainline to Ontario, Quebec and the United States includes redefining the Nova web to include BC and Saskatchewan as well as Manitoba. Mainline costs would be rolled into Nova shipping rates (see NGI, March 26).

In an NEB filing, BC says TransCanada's plan -- the Alberta System Extension -- should be shelved without receiving so much as a trial run. "It has, in the province's view, a chilling effect on the market for western gas, particularly for gas produced in northeast British Columbia," the BC government's lawyers say.

"Under TransCanada's proposal natural gas produced in the Horn River Basin and transported on the Alberta system would be charged for having ability to access eastern markets even if there is no need or intent to use that ability. Thus western producers will bear excessive costs that may equate to reductions in investments in British Columbia," the provincial government's attorneys predict.

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