VICTORIA – The B.C. legislature is being recalled July 13 to examine and approve a 25-year tax and royalty agreement for B.C.’s first major liquefied natural gas investment.
Finance Minister Mike de Jong said Tuesday a project development agreement for Pacific Northwest LNG’s pipeline and export terminal near Prince Rupert has been approved by the energy companies proposing the investment of up to $36 billion. The project still needs federal environmental approval and an agreement with Coast Tsimshian and other First Nations in whose traditional territories the pipeline and shipping facilities would be built.
Members of the Lax Kw’alaams Band voted down an offer from Pacific Northwest LNG in May, citing concern about the terminal’s impact on salmon habitat in the Skeena River estuary, despite a design change to build a bridge for the pipeline above the area known as Flora Bank.
The province revealed the general outlines of the project agreement in May. It provides minimum gas royalty revenues for B.C., with increased revenue to the investors if the spread between North American and Asian prices increases during the term.
It also provides for compensation to the investors if future governments impose “discriminatory” increases to carbon tax or greenhouse gas regulations on LNG plants during the next 25 years. NDP leader John Horgan said he is concerned that the B.C. Liberal government over-promised the benefits of LNG development and may now be offering “too much lolly” to land the first big deal.
Pacific Northwest is a consortium led by Malaysia’s state-owned energy company PETRONAS, its Canadian subsidiary Progress Energy, Chinese state firm Sinopec, Indian Oil Corp., Japan Petroleum Exploration Corp. and Petroleum Brunei.
The B.C. government approved a separate 3.5 per cent LNG income tax last fall, and passed legislation to control the amount of property tax the local government can impose on the project.
Limits were also placed on conventional pollution and greenhouse gas emissions from the project, with carbon offsets required if the operation exceeds 0.16 tonnes of carbon dioxide equivalent per tonne of LNG produced.