Premier Christy Clark has promoted liquefied natural gas as an economic cure-all that could pay off the provincial debt and eliminate sales tax. But while there appears to be an LNG gold rush, the outcome might be a bit less rosy.
A dozen new LNG projects are proposed for the coast 鈥� along with numerous pipelines to connect the Peace River Country with the 91原创. Global giants such as Chevron, Shell, PetroChina, Petronas and British Gas are scrambling to join the feverish race to export LNG, with new development announcements almost weekly.
However, the current rush is based on lucrative gas prices in Asia, which are triple the North American price. The critical question is whether those high Asian prices will continue. Gas prices are notoriously volatile. For example, in the last five years, new fracking methods increased supply so much that North American gas prices plunged from $13 to just $4听per unit.
Asian prices could easily follow suit. China has the world鈥檚 largest shale gas reserves. Russia, Australia and the U.S. are dramatically increasing gas exports to Asia. And Japan and Korea are developing technology to extract natural gas from vast seabed deposits. If just some of this comes on line, the price bubble could collapse.
On the environmental side, boosting gas production could violate B.C.鈥檚 legal commitments to reduce greenhouse-gas emissions 鈥� perhaps unwise as climate change floods Calgary. Expanded production will further industrialize the beautiful Peace River Country. And running new gas pipelines across the province will put fish, grizzlies and caribou at risk.
Still, proponents can point to truly tempting short-term profits. It鈥檚 a difficult social choice. But, if we do go ahead with this new industry, we should at least be smart about it.
As energy-industry lawyer David Austin has noted:
鈥淲e have to move away from a higgledy-piggledy planning approach to a modicum of planning so we don鈥檛 trip over our own two feet. You can only have so many pipeline corridors across British Columbia; there鈥檚 only so much water to produce the natural gas. The airshed in Kitimat can only take so much pollution. And you have to sort some of this out in advance 鈥� so you don鈥檛 use up the Kitimat airshed for one LNG facility, thereby preventing the possible construction of two or three.鈥�
In Queensland, Australia, this kind of critical up-front planning didn鈥檛 take place, and the costs have proven enormous. For example, three LNG plants were built in one location by three different companies 鈥� each with its own separate pipelines. This caused unnecessary environmental and economic damage.
In fact, a British Gas official says they 鈥渞ue the day鈥� when the companies decided not to get together to build one plant. Pell-mell development has driven up labour and other costs, too 鈥� and higher prices are costing Australia new LNG contracts. Korea recently cancelled $60 billion in Australian LNG development.
We need to be smarter than that. Instead of simply reacting to a series of one-off LNG proposals, B.C. needs to step back and take a hard look at the big picture. It鈥檚 not enough to do individual environmental assessments on one project at a time. We need a strategic environmental and economic assessment to determine how to best provide jobs and protect nature. The assessment could consider:
鈥� Should we allow numerous pipelines to cross the province by different routes 鈥� or establish a single pipeline corridor? Restriction to a single corridor would reduce environmental impacts.
鈥� Can redundant processing facilities be shared or rationalized?
鈥� Should taxpayer subsidies for LNG companies be prohibited for this lucrative 鈥� but high-risk 鈥� venture?
鈥� Should industry guarantee that taxpayers won鈥檛 pay to clean up contaminated sites if the boom collapses? (Taxpayers face massive liabilities to clean up previous oil/gas operations.)
鈥� Should government prohibit future conversion of gas pipelines to carry bitumen?
鈥� What are the environmental and economic costs of dramatically expanding fracking in the northeast?
Fortunately, B.C. law provides for strategic assessments when broad provincial policies are in play. In the end, such an assessment could be far more efficient and timely than just doing assessments of individual projects. And it could ensure that we choose a better economic and environmental future for all British Columbians.
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Calvin Sandborn is legal director and Erica Stahl and Gabrielle Clark are law students at the University of Victoria Environmental Law Centre.
