LNG Be Careful What You Wish For
If we are to have the five or six LNG plants built and in operation over the next ten years , there is going to have to be some very serious soul searching on the issue. As it stands now, if the head butting continues we could see a repeat of the McKenzie pipe line.
The latest comments by the Mayor of Ft Nelson, that his community is open for business, and the move by the First Nations to kick the provinces representative out of a meeting last week, suggest that we are a long way from coming to some common sense in the matter.
By way of background, in the 1970's the McKenzie pipe line was proposed to carry natural gas down a line some 1,000 kilometers long, to tie into lines heading into the USA. The price of natural gas was high and the USA was in short supply. The proposal got the boot and the idea sat on the table until 2004 when the First Nations received a one third share in the project. That sat on the table until March 11th-2011, when the project received approval from the federal government.
Originally the price of natural gas in the US was sitting at about $15.33/mmbtu, by the time the project received approval that price had dropped to $4.57. The project was no longer feasible as the USA had ramped up its drilling and was quickly becoming self sufficient in natural gas.
That leaves the off shore market open, of course keeping in mind that Canada entered the LNG market at the 11th hour. If we drag our heels, countries such as Australia will own the markets long before we get off the ground. We either get it together now or we face the same fate as the McKenzie project. That project, with a 17 billion dollar price tag, is not likely to ever see the light of day.
So if all of the parties are hoping to cash in on the need, they had better get off their seats and begin to negotiate in a meaningful way.
Suggesting that we can leave the gas in the ground and use it when we need it down the road, is poor reasoning. Back in the days when we were awash with coal, society thought that the coal gravy train would never end. Well, the world switched to natural gas, and that pretty much derailed the gravy train. Who knows what the next fuel will be, so the time is now.
I'm Meisner and that's one man's opinion.
Comments
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Same could happen with the Enbridge pipeline and Keystone.
Hopefully the next fuel won’t be so hard on the environment and everyone can have access to well paying jobs…..
Right on Ben.
China has large reserves of natural gas. Their shale gas reserves are larger than either Canada or the United States.
What happens when China starts to develop their reserves? Can China ship gas to Asia cheaper than we can?
Like the Mackenzie pipeline, I question how much money we’re going to make from these LNG plants.
If we know we’re going to make money, then I say go for it. If we are playing poker with our resources then some cool thought may be needed.
Australia, Qatar, Brunei, and Russia, already own the LNG market. These Countries have been exporting LNG for the past 20/30 years. In the case of Australia they are in the process of building additional plants as we speak.
In order for us to break into this competitive market we will have to practically give the gas away. So the question is??? Is it worth the time and effort, or should we be looking at using the gas for producing jobs in Canada.
Cheap natural gas would do wonders to make other business’s in Canada more competitive.
You cant build a natural gas exporting industry on the basis of a few election promises made by Christy Clark. We are now entering the area of hard negotiations both with the Oil Companies, and First Nations. If we cannot get past those two big interest groups, then the whole issue is dead.
We will have a market for the natural gas for sure. The untapped third world market is enormous and the amount of coal fired generation plants that need to be shut down assures us there will be a market for the LNG.
What comes into question IMO is the location of the export terminals. I don’t see Australia as our biggest competitor, but rather Nova Scotia and Atlantic Canada. The east coast is going to take a hard run at cornering this market… they had a cold winter and more options is very much in play politically in those parts. They got gouged huge by Enbridge, and are already approving LNG export terminals.
Geopolitically our western politicians are busy provoking WW3 with Russia over the market for LNG. Europe is the target market and if Russia turns to China as a client state, then we won’t need to worry whether China is a client or not. We will have proximity to the EU market through Atlantic Canada LNG terminals.
LNG has huge market potential in island nations like Japan, the Philippines (160 million people powered by coal fired plants), South Korea (land locked), and most of Africa where GDP growth potential is massive as they modernize and require a clean source of fuel.
The new cold war will have Russia and China forming their own economic block potentially with India and Iran… depending how deep the divide becomes will those really be the markets we will be selling to in 5-years time anyways? Likely we will be selling to their strategic competitors and former client states.
I don’t think we need to worry about China fracking and demand drying up anytime in our lifetimes. The next latest thing is hydrogen distribution networks, but those beginnings are still 10-years off in the distant future.
Why are we always so concerned about “producing jobs in Canada”?
That’s the FIRST thing that’s wrong with all the controversies over resource exploitation. The fixation so many people can’t seem to get over that the ‘job’ and an ‘income’ are one and the same thing.
They’re NOT.
They’re two very separate things.
The primary goal of every sane economic system is to provide the citizens of the country with ACTUAL goods and services up to our own full capacity to produce and deliver them, or the satiation of a real and existing consumer demand for them, whichever comes first.
And to do this in the most EFFICIENT manner possible, and continually improve that efficiency as it becomes increasingly possible to do so.
It is definitely NOT to “make work” simply for the sake of giving someone a ‘job’, as if having one was the be-all and end-all of everything. It isn’t. It it was, then why don’t we all just go out and dig holes and then fill them back in again? We can create a whole lifetime of jobs for everyone simply doing that. It’s inane, but no more so than doing a lot of other things we’ve been trying to do ostensibly for the same stupid end. Creating ‘jobs’.
Why don’t we face some facts? First of all, any country that needs to have 100% of its workforce employed to provide itself with 100% of its material needs, and keeps talking about how its people now need to work harder and longer or all its citizens are headed for financial ruination, must be a hopelessly inefficient country. And have a population that has been so dumbed-down in all its affairs ‘financial’ that those people are not all that different from an igloo-living Eskimo thinking he needs a refrigerator.
Secondly, when we displace workers from existing jobs with new technology, and we re-train those workers for new jobs, the wages they’ll make in those new jobs are a PART of the costs of the NEW goods and/or services they are then providing, BUT the machines that replaced them in their OLD jobs also have costs attached to them that are continually coming forward into the prices of the OLD goods and services those machines are then producing ~ only those costs, unlike workers’ incomes, are not DISTRIBUTED to anyone.
We don’t pay a wage or a salary to a machine. When a machine ‘consumes’ something ~ lubricants, electricity, spare parts, etc. ~ there is NO final LIQUIDATION of cost as there is when a human being ‘consumes’ something.
The machine’s costs are simply allocated and carried forward into prices. Prices of goods and services human beings, overall, are supposed to be able to pay, in FULL, when they’ve only ever been paid, overall, a PART of the costs that went into them. And we wonder why consumer debt keeps increasing, and increasing, and increasing? Wake up!
You cannot solve this problem by going the way we’ve been going. By producing ever ‘more’, in the way of whatever product is currently thought to be in fashion globally, and then hopefully be able to wish the unpurchaseble surplus (here in Canada) off onto the citizens of some other country, who, in reality, can never really ‘pay’ for it anyways either. Not in any manner that provides us with the deficiency of INCOMES needed here. All we’re doing when we try, is actually impoverishing our own country of resources, and ourselves in our ability to continue to afford of them what we’re still able to afford of them. It is utterly mindless to continue to do that, especially with a hope that it’s going to lead to increased ‘financial’ security through permanent ‘jobs’ ~ which it clearly will NOT for ever increasing numbers of us.
Ben’s 11th hour analogy is bang on. Russia and China already talking. I disagree Eagle, Australia is a large competitor with us for much of Asia. Add to that, China spent 68 billion in 2012 on renewable generation, and is the world leader in investment of that type. I am not sure we should be pinning all BC’s financial future on huge, high dollar exports of LNG there right now. Has the boat sailed? Maybe so. Africa is a whole different paradigm. Development there is going to be on a totally different paradigm than the rest of the world I think. The psychology is different, the culture is different, and the infrastructure is different. They may well, and have to a degree already, bypass completely the fossil fuel trap we are in. I wish them success in that regard.
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