Last Chance Gas For B.C. LNG

JWN Energy Group’s Daily Oil Bulletin
28 May 2018

There finally appears to be light at the end the tunnel for British Columbia’s fledgling LNG industry, and it’s not a bitumen-laden unit train.

By all indications, a favourable final investment decision (FID) should be coming before year-end for the first phase of the $40 billion Royal Dutch Shell-led LNG Canada project, with the B.C. government appearing to have learned from its past mistakes. For example, in March, Premier John Horgan announced some tax breaks for potential LNG projects in the province, effectively reversing a specific LNG tax his predecessor Christy Clark had proposed, contributing to Malaysia’s Petronas cancelling its Pacific NorthWest LNG project last July.

But the next several years may be the province’s last chance to establish a significant LNG industry — hence, last chance gas — given natural gas may not be quite the bridging fuel to a low carbon world as previously anticipated. The reason being rapid declines in the cost of wind and solar power, in conjunction with the rapidly declining cost of battery storage, could make gas uncompetitive in the all-important power sector sooner rather than later.

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