LNG – Through a gas darkly Part 1
By Peter Ewart
“For now we see through a glass, darkly” – 1 Corinthians 13:12, The Bible.
There is no doubt about it. Premier Christy Clark wants a drastic re-ordering of our provincial economy. In her keynote speech to the Second International LNG conference on May 22, 2014, she declared that the provincial government is looking at “every decision we make through the lens of whether or not it furthers our purpose in creating an LNG industry here in BC … This is our central preoccupation.”
She further noted that she personally chairs “a special cabinet devoted to making sure we coordinate our decisions across government” so as to create an LNG industry in BC.
In effect, she is saying that British Columbia must become a petro-state, whereby the affairs of state and of the economy are dominated by natural gas interests, where all matters are seen through the murky prism of the natural gas sector.
Perhaps this is not surprising given that individuals and companies connected to the natural gas / LNG industry played a major role in funding her Liberal Party leadership campaign, catapulting her into power as premier.
The impact of this dramatic re-ordering, or as some would argue, skewing of economic vision is already upon us. The provincial government recently created an entire ministry all on its own for the natural gas / LNG sector, i.e. the Ministry of Natural Gas Development. Other key industrial sectors are not so lucky, being forced to share a lumpy bed with other sectors in huge conglomerate ministries such as Forest, Lands and Natural Resource Operations; Jobs, Tourism and Skills Training; Technology, Innovation and Citizens’ Services; and Energy and Mines.
Recently, Gwyn Morgan, former CEO of EnCana Corporation, the giant natural gas monopoly, was appointed as chair of the province’s Industry Training Authority which oversees B.C.’s trades training system. This appointment to such a key position is another indicator of the relative importance that the natural gas / LNG industry now holds for the Clark government in relation to other industrial sectors in the province.
Indeed, the Clark government has promised to “re-engineer” B.C.’s entire education and training system to meet what it terms to be labour market priorities, natural gas / LNG development being at the top of the list. The shift in training funds is massive, starting off with $160 million a year and eventually reaching $400 million annually, amounting to $3 billion over ten years.
In case anyone overlooks which sector has priority in training, government documents repeatedly cite LNG as the first, or in some cases, the only example. In the government news release / backgrounder on the topic issued on April 29, 2014, the LNG sector gets a special section devoted to it (no other industrial sector gets this treatment).
Nowhere, of course, does the provincial government raise the issue that the biggest problem in trades training is that these giant private companies refuse to adequately fund and provide apprenticeships for their own workers. Instead, they expect government to use public funds to shoulder the bulk of the training costs, which amounts to a massive subsidy for these companies.
In addition, it is in the interests of these companies to hype and exaggerate future training needs, the aim being to create an over-supply of workers, thus creating a downward pressure on wages and benefits. One of the problems often cited in business publications about the Australian LNG sector is that shortages of workers have caused wages to rise there, thus cutting into corporate profits. Creating an over-supply of workers helps solve that problem, at least for the big LNG companies. But, of course, it will be a big problem for all those workers who, when the crunch comes, won’t be finding a job in a flooded labour market, as well as for the communities they live in.
To think that this won’t happen is to be naïve about the cyclical nature of the economy, and especially the highly volatile and unstable natural gas sector. Yet, as to be discussed further in the next installment of this series, it is precisely this volatile industry that the Clark government is using as a smudged prism or “glass” to peer through when making its decisions, not just in the gas sector, but across the entire operations of government from agriculture and provincial parks to environmental policy and the K-12 curriculum .
What are the implications of such a distorted vision, of seeing things “through a gas darkly” so to speak? Will it lead us to 100,000 new jobs, elimination of the provincial debt, a $100 billion Prosperity Fund, and a trillion dollars of economic activity, as the Clark government claims?
Or will it lead us somewhere else? To a skewed provincial economy with all the negative political and economic features of a petro-state, such as lack of diversification, erosion of manufacturing, extreme boom and bust fluctuations, and so on?
Has the natural gas / LNG sector literally seized control of the province’s economic and political agenda before our eyes? If so, what are the implications of this reckless coup and what happens to the public interest as a result?
Furthermore, what does it mean for our forests and forest industry which have sustained us for over one hundred years but are in desperate need of rejuvenation and renewal? Or for other key industries such as tourism, technology and agriculture which are put off in the shade?
These are matters which all British Columbians should think about.
(Stay tuned for Part 2 of “LNG – Through a gas darkly.”)
Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: peter.ewart@shaw.ca
Comments
The main point here is that through side roads, the LNG is getting free labour in the name of apprentice and this is paid by you and me.
Another terrible article. Either you try to adapt to a changing landscape, or you get left in the past. Peter seems to be happy stuck in the past, not unlike many posters on this site. I suspect this article will be well received by them.
Current expert predictions are for 2 LNG plants to be built in BC. With current LNG world prices (and they’re in rapid decline btw), capacity of those 2 LNG plants, and proposed provincial tax regime, the expected provincial revenue is $350M a year. While this is no small sum, keep in mind it wont even pay a quarter of our debt servicing costs, never mind building the Preem’s prosperity fund.
The province is making massive changes to our education system, sinking huge dollars into promoting the industry and taking on huge environmental long term risk from fracking, for a pittance. The LG companies make huge profits and we’re left with the environmental devastation. Sad really that the populous bought this charade hook, line and sinker.
Wow, lets all be very negative. It will be 100 years to get our forest back, due to bug kill primarely, we need to move on to mining and oil and gas. Further more, Christy might just be right. Have a happy day.
Yes the negativity, I guess the economy exists on ferry dust.
I believe the jury is still out on LNG. It’s a little too soon to be making claims about a failed/successful idea.
Since it seems some people here just post without knowing anything about the LNG industry in bc. I’ll let u know what it’s like from my perspective and I work in the industry. First of all if u think this province is never going to change and evolve your already too far behind to catch up. And for the guy who said these companies are getting free labour I’d like you to understand what the labour really costs. As a first year apprentice crane operator I made 125,000$ in 10 months. ( I also had to go to school. ) I work for a union company. I get 5.00$ an hr into my pension I get over time after 8 hours. I get double time on Saturday. Sunday and any night shift. So if you think these companies are getting free labour you need to get some facts.
Yes I no these companies will make billions. Will cause spills and will try take advantage of a lot of things but from first hand experience I also know safety for the most part is as good as I’ve ever seen it. Drug testing is done numerous times a year and this industry has given me a chance to get ahead in life instead of struggling to stay afloat
gee Peter look no further than what community colleges are doing. Pumping out people in foundation programs in all the trades. The student does not pay all the freight – the taxpayers pay a portion. A high percentage of these graduates never find jobs in the trade they are trained in so how is this different from those awful companies you speak of.
I guess you believe in the tooth fairy. You think if you put crap like this under your pillow money will appear in the morning.
You guys missed his point about apprentices. 20 years ago, all apprenticeships were paid for by the companies that needed trades. They had apprenticeship programs, identified good candidates, trained them and had employees for life. These days, the provincial government pays for it and a company only hires an apprentice when they’re desperately short on labour, and only keeps them as long (or short) as necessary.
Got love autocorrect. Fairy dust.
Sportsfanatic thanks for the reality. Sadly Most won’t pay attention.
Peter spends his time acting as the official opposition under ruse of being a journalist.
Besides the NDP, is there anything that Peter actually supports?
Thanks for the great article. We needed an analysis of this issue.
Christy needed an issue to get elected and she used the LNG benefits.
Anyone ever notice that she doesn’t talk about the decline in LNG exports to the USA. She pooh poohs Russia signing a huge LNG contract with China. She rarely if ever mentions that we are 20/30 years behind other LNG exporting Countries. Are we to believe that these Countries will just throw up their hands and quit, when we come into the market. Not bloody likely.
When it comes to LNG exports, we have a long way to go, and a short time to get there. As we build up our industry, the Chinese and other Countries will be opening up their natural gas deposits, thus increasing the amount of gas available, and reducing the need to import.
Much more to this file than meets the eye. My guess is that LNG exports is more about getting re-elected than anything else.
Remember that it was only 5 or so years ago that there was a LNG plant being built in Kitimat to IMPORT natural gas because of a shortage. We are now EXPORTING lng because we have a surplus.
Let there be no doubt that this whole situation will change again the near future.
In order for us to compete on the world stage, we will have to give huge tax breaks, and royalty breaks to business. So in essence they will make a profit, and we the taxpayers will foot the bill.
Some jobs will be created so its not a total loss, however seems like a rather strange way to move the Province forward.
Perhaps what we have is an LNG pipe dream.
So what, do nothing? Think China will only buy from Russia? Look at the games Russia has played with countries it sells to. Yes companies will play the subsidy, tax break card. Name me one company that doesn’t? It’s the scam artists like IPP’S and political payoffs we have to watch out for. But don’t sit on your hands and do nothing.
Russia is selling to China for less than they currently sell to Europe for. Like half what the going rate in Asia is today. Problem is Russia still has to develop the gas fields in Siberia and the pipelines to deliver it. Russian gas to China is at least 3-5 years away.
Meanwhile Obama has brought in new legislation to reduce carbon by 30%. In places like Kuntucky they get 90% of their electricity from coal fired generation and are now building gas fired generation to replace coal. Long term American use of NG is going to increase by factors of 3or4 and no doubt we will probably always export more to the US than Asia.
Obama the joker is destroying the US with his idiotic energy policy. Energy costs rising putting the country into energy poverty.
No seamut, Obama is an idiot because he bailed out the banksters with a get out of jail card so they could double down on their manipulation of the energy bubble among others that are fabricated with printed money creation that undermines market capitalism. We have an economy dressed up like the joker with a different story of how we got there every time the banksters get in a corner… an economy that doesn’t even relate to reality anymore.
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