The federal budget released March 22 painted a dim picture of Canada’s financial health. With minimal oil and gas production, Canada will be $30 billion in the red. There is no light at the end of the tunnel. No balanced budget in sight.
But what if Ottawa approves two big and one small LNG plant today? An LNG industry in B.C. would create new markets for Canada’s natural gas, generating income and jobs for governments and citizens. It would also reduce global greenhouse gases (GHG) if used as a substitute for coal, bunker fuel and diesel, even if we consider the added GHG these LNG plants would generate.
What if Ottawa approves just three of the 21 proposals vying to be a part of Canada’s LNG industry? What would be the impact on the economy and the labour market? After all, these three LNG plants would require that Northeast B.C. produce an additional five billion cubic feet per day (bcf/d) of natural gas, approximately double the 2014 production.
To support an LNG industry, the majority of initial investment spending would occur here in the northeast, in the upstream sector of the natural gas value chain. We need to produce a sufficient quantity of natural gas to supply LNG terminals with feedstock and fuel.
According to a February 2016 Conference Board of Canada report on B.C.'s LNG industry, more than $26 billion will be invested over five years in the northeast. That is more than $5 billion per year to be spent in our backyard!
These expenditures will have a multiplier effect in the northeast. Induced economic impacts, such as increased household spending, would also create employment opportunities in the wholesale and retail trade industry. This is just for the upstream industry.
If we add the annual spending across the upstream, midstream, and downstream sectors, this will average $7 billion, according to the Conference Board. Over the next 30 years, these investments would increase real Canadian GDP by an average of $7.4 billion per year, of which $5.3 billion would occur in British Columbia. Remember, this is just with three of the 21 proposed LNG facilities in B.C.
The Conference Board estimates this increase in economic activity will also create 65,000 well-paying jobs in Canada, 46,800 of which will be in B.C. Most of these jobs will be in the north. An increase in labour income and corporate profits would result in indirect taxes of $808 million and $577 million in revenue annually to the B.C. government and federal government, respectively.
Global LNG trade will continue to grow with 80 per cent of the planned new capacity located in North America. We have seen how three LNG plants will benefit Northeast B.C., B.C. and Canada. A full LNG industry in Canada will lift our economy back to a balanced budget and beyond.
The economic and labor market benefits of an LNG industry are simply too big to set aside. We can balance our concern for the environment with our desire for a better Canadian economy with all the environmental reviews and regulations that Canada has put in place.
But, as Canadians, we need to educate ourselves with the facts about LNG. The economic and labour benefits are just too much that we have “environmentalists” taking advantage of Canada’s lack of accurate information about LNG to keep this promising industry away from Canada and solely that of the USA.
Let us ask ourselves why the U.S. has one exporting LNG plant in Alaska, one in the U.S. mainland, with four more LNG plants waiting to go into operation in a few years.
Note: Information taken from The Conference Board of Canada’s “A Changing Tide, British Columbia’s Emerging Liquefied Natural Gas Industry” published in February 2016.
Alan Yu is a Fort St. John resident and founder of FSJ for LNG.