YUILE -- The bottom line for LNG investors is profit - there is nothing altruistic about pursuing these projects, no matter how much proponents try to paint them green and clean

Having been a firm critic of fracking and the pursuit of LNG in BC for many more years than the NDP have been in power, I can still recall the time John Horgan said Christy Clark needed to do the LNG math and warned about focusing on LNG too much.

Even though he was very open then about being a supporter of LNG, he wasn’t convinced it was prudent to invest so much into it, at the risk of leaving other sectors behind. Even back then he expressed concern about whether or not the world would actually need the supply and criticized the money being invested into communities that may ultimately suffer when the boom goes bust.

“Horgan said that while he supports the industry “in principle”, there are many questions that must be answered before the government can claim success. “What are the greenhouse-gas consequences of expanding the industry?” he said. “Will that blow our legislated targets out of the water? Quite possibly.”

“Horgan also stated that recent international developments raise doubts about whether liquefied-natural-gas prices will remain high in Asia. According to a recent report by the consulting firm Ernst & Young—which cited Deutsche Bank figures—LNG projects require an Asian price of US$12 to US$13 per million British thermal units (BTU) to be viable.

Meanwhile, Russia recently signed a US$400-billion deal to supply China with this fuel for 30 years. According to the financial news service Bloomberg, the negotiated price was US$10.50 to US$11 per million BTU. That’s significantly lower than the Deutsche Bank threshold. Horgan predicted that the Russia-China deal will drive down the LNG price in Asia.

As the Straight went to press, LNG was selling at US$15.23 in the world’s largest LNG market, Japan. That’s down from a peak of US$17.20 in June 2012…”

Hmm. So, in 2014, LNG projects needed an Asian price of US $12-$13 dollars per BTU to be viable. (trying to locate a current viability price for comparison, will update when I do)

What’s the Asian price of LNG being paid right now on incoming deliveries? Export plants in Brunei just sold LNG for delivery in March, at a low of $3.90 – $3.95 per BTU … far below the viable price needed to profit given above.

We are sitting at a 10-year low right now, due to a massive glut from so many trying to cash in globally. This has been the case for quite a while, and these low prices and plethora of projects globally, is why Horgan doubled down on the subsidies. Without extensive credits and breaks, LNG Canada wouldn’t have invested at all because the industry just isn’t profitable in BC unless its subsidized heavily.

That’s a fact.

The only people heralding the prosperity and opportunities LNG in BC will bring, along with how it will save the world, are those with skin in the game who will benefit: the various LNG alliances, CAPP and all the elected politicians who carry on with this facade as if some of us can’t read or understand financial reports and analyst forecasts.

And to be fair, most don’t read these things and just blindly digest whatever sugar coating is fed to them. Because both the NDP and the BC Liberals are in support of all this, supporters of either don’t engage on the subject, nor will they criticize even when they agree with what I am saying.

It’s all so oddly silent and shameful to watch and I often wonder what Rafe Mair would say about all of this. He had colourful but accurate comments about CAPP and the big papers in BC.

But I digress. Lets get back to the all the pro LNG boosters who have invested so much into forcing this industry in BC, who won’t talk about things like this ... Seeds of next LNG glut already being sown. 

“But while the current glut is set to come to an end, which should lift rock-bottom spot prices, the race to give the green light for new projects has intensified, the analysts said. The winners in the next race would be low-cost producers with clear funding plans and some LNG service companies.

“Competition to sanction the next wave of LNG projects has intensified risking another glut in the mid-2020s,” Bernstein said. “The seeds of the next cycle are already being planted.”

After a series of final investment decisions over the last 12 to 18 months, Bernstein expects a further 70 million tonnes a year of LNG projects to get the green light for construction over the next 18 months.

The bottom line for LNG investors is profit. Let’s be real, there is nothing altruistic about the pursuit of these projects, no matter how much proponents try to paint them green and clean. Analysts have been predicting for a while, that low LNG prices will force many producers to shut down.

Which is why the recent news that Chevron is selling their stake in Kitimat LNG and cutting funding to the other LNG investments is no surprise to anyone who has followed global forecasts.

While politicians continue to pretend all is well and that this is an amazing opportunity for prosperity for BC, a new report taking the shipping and cruise line world by storm this week, shows that LNG is worse than what is being used now, for climate change. The report detailed by Hellenic Shipping News gives all the details:

A new report from the International Council on Clean Transportation (ICCT) has found that the most popular Liquefied Natural Gas (LNG) ship engine, particularly for cruise ships, emits between 70% and 82% more life-cycle greenhouse gas (GHG) emissions over the short-term compared to clean distillate fuels. The shocking new report, “The climate implications of using LNG as a marine fuel”, comes as the shipping sector grapples with its enormous climate footprint, and more ship operators are turning to LNG as a purported climate solution.

The ICCT report examines the lifecycle GHG emissions from marine fuels, including a previously poorly understood source of climate emissions from LNG-powered ships — the unintentional releases of the climate super-pollutant methane from ship engines, known as methane slip. The authors found that using LNG could actually worsen the shipping industry’s climate impacts compared to marine gas oil (MGO) when considering the amount of heat these emissions will trap over a 20-year period.

Isn’t that something? This is called unintended consequences perhaps, and kind of really puts a damper on efforts to promote clean BC LNG for shipping. You can’t claim its clean when its being used in an engine that increases emissions.  (Which engines are those BC ferries using?)

Which makes you wonder about forging ahead with the LNG bunkering, refueling and export plans for LNG happening in the Fraser river on Tilbury Island, along with expansion planned for the port on Roberts Bank.

With so many questions and additional problems relating the governments own reports detailing the lack of science and lack of answers related to fracking, I can surmise the heart of this expansion is jobs.

Since there has been little to no effort being put into other infrastructure projects of any kind up north to provide jobs other than site C, we have continued the same single minded, boom and bust focus Horgan chided Clark for.  And to what end when respected analysts are already forecasting another LNG glut right for when Canada LNG comes online?

How much will Canadian LNG be selling for overseas, per BTU then? Does anyone ask our politicians these questions? Do they ask themselves these questions? Or do they only look as far as the next election?

It’s one helluva financial gamble, by any perspective, and with Chevrons sale and decision to stop funding Kitimat LNG, the writing is on the wall, in my opinion.

Which brings me to the lobbyists. Yes, big money is still impacting BC politics, thanks to industry groups with deep pockets wanting to impact and influence policy decisions in the province. And while some register to lobby politicians, savvy lobbyists often register to lobby deputy ministers and staffers who are more directly involved in policy making.

I would love to show you all the screenshots of all the lobbying going on relating to LNG, but it’s just way too much to show you individually. I would suggest you head over to the Lobbyist registry and search the following items separately: LNG and Site C.

What you will find are lists of oil and gas associations, resource companies and others who all want to talk to ministers, staffers and deputy ministers about their goals. Some of those goals include ensuring the industry remains competitive, incentives to encourage electrification of the gas industry (read bigger subsidies via lower hydro rates) policy changes that promote LNG, promote the oil and gas sector, etc etc etc. CAPP alone has an extensive list of registrations with other industry partners on that aspect alone.

I see a lot of complaining online about activists by pro resource groups and people. Those damn activists, put them all in jail, they cry.

But they never complain about how deep industry pockets get direct access to government officials and staff. That kind of influence is apparently ok…when its industry. If we started raising cash to access government officials directly you can bet industry would be screaming loudly.

No one tells the public what the final result was or if the lobbying was successful.

We don’t know who actually motivated policy changes. I do know that in the Ministry of mines and energy, at least one high level staffer has helped direct policy through successive governments for both hydro and resources. That same person is being actively lobbied right now.

What I do know is you and I do not have that kind of elite access. Which is why activism exists. And it works well as we have seen with the recent announcement from Blackrock - worlds largest investment manager – that it will avoid fossil fuel investments that have a high sustainability related risk. 

BlackRock, the world’s largest money manager with nearly $7 trillion assets under management, will begin to exit investments in coal production, introduce funds that ban fossil-fuel stocks and vote against corporate managers who aren’t making progress on fighting climate change.

“Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance,” Fink wrote in the annual letter to company executives. “The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.

Oh, is that another thing industry and government didn’t tell you? Imagine that. I can’t imagine why…