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Resource World - Dec-Jan 2015 - Vol 13 Iss 1

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D E C E M B E R / J A N U A R Y 2 0 1 5 www.resourceworld.com 53 Justice Shelley Fitzpatrick dismissed the application. Market diversification is critical. Producers have seen traditional markets in central Canada and the US decline recently due to abundant supplies closer to these markets. Globally, however, demand for natural gas is increasing, particularly in Asian countries such as China, Japan and South Korea. Thus, an LNG industry is emerging on the west coast. "Even a modest west coast LNG indus- try, exporting about 25 million tonnes per year, could double natural gas production to 7.5 billion cubic feet per day by 2030 and generate substantial new government revenues, economic growth and perma- nent jobs," said Ermisch. The BC government has staked much on LNG. Original claims that up to 16 LNG plants would bring $170 billion in provin- cial revenue plus $1 trillion in economic activity, creating up to 100,000 jobs and funding a $100 billion Prosperity Fund while paying off the province's $60 bil- lion debt have softened, along with plans to tax LNG at 7%, now set at 3.5%. Most now say BC will be fortunate to have two plants. Only consortiums led by Petronas [PTG-Kuala Lumpur], Royal Dutch Shell PLC [RDSA, RDSB-LSE], and Chevron [CVX-NYSE] are contenders, although the latter suffered a blow when partner Apache Corp. [APA-NYSE] announced it was pulling out. But the industry has a bright future, says the president of the BC LNG Alliance. "The new LNG industry in British Columbia is not a foregone conclusion," David Keane recently told the Vancouver Board of Trade. "If LNG is to be viable in this province, our industry, along with each level of government, will have to make some difficult decisions in order to cross the finish line." The six projects proposed by the Alliance's members would constitute the largest investment ever in BC. Up to 4,000 new jobs could be created to construct each LNG plant (Shell estimates its plant will cost up to $40 billion), while thou- sands of jobs would be required to operate the plants and support the industry. The demand is there. In 2012, Asia took 71% – more than 167 million tons – of worldwide LNG output. In areas where there is no domestic production or pipe- line network to import gas, LNG is the sole source of supply: Japan (the world's leading importer with 87.4 million tons in 2012), South Korea (36.2 million tons) and Taiwan (12.8 million tons). In Europe, an increase in natural gas imported from Russia and the Middle East won't offset declining North Sea gas production, so the share of LNG in the European gas mix will rise. But LNG, as with other components of the oil and gas sector, will have to wait and see what the future holds with proponents planning for the best but preparing for the worst. n

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