BC premier leads effort to capture South Korea gas market

Photo/Bob Tkacz/For the Journal

SEOUL — On the heels of the announcement that British Columbia’s shale gas reserves are double previous levels, Premier Christy Clark hosted a natural gas forum here Nov. 29 to promote energy sales, infrastructure construction partnerships and overall business relationships.

The Canadian National Energy Board announced in November that B.C.’s estimated “gas-in-place” reserves total more than 2,900 trillion cubic feet, a 150-year supply at current usage rates.

Clark said the news confirms her province’s ability to expand its gas sales beyond North America, become the continent’s leading supplier of the clean fuel to Asian markets and to use South Korea’s world class steel and ship building industries to enhance already strong trade links.

“Nobody knows how to build liquefied natural gas operations better than Korea, so I expect there will be a large Korean manufacturing content in the projects,” Clark said with reference to 10 proposed gas pipeline, export and other projects in B.C.

South Korea is the world’s second-largest gas importer at 38 million tons annually, according to Minister of Trade, Industry and Energy Yoon Sang-jick.

“We can expand our cooperation well beyond just trade to gas field exploration and plants,” Yoon said through an interpreter in opening remarks at the forum.

Clark, in a subsequent interview, said she doesn’t expect B.C.’s new energy reserve levels or increasing U.S. natural gas production to depress world prices.

“I know in America people are talking about whether or not you want to even export it and I’m sure that the facilities will eventually be built, but they may not be built as quickly as ours and part of our advantage is getting first to market,” she said with reference to U.S. export projects.

Visiting China before her second Korean visit this year, Clark said she was told China National Offshore Oil Corp., the country’s second-largest gas importer, wants to increase those purchases by 45 million metric tons over the next 15 years.

Clark also emphasized that B.C. is moving with all possible speed to finalize tax and regulatory terms for “LNG Canada,” the most advanced of the Canadian projects. A joint venture of the state-owned Korea Gas Corp., or KOGAS, PetroChina, Mitsubishi and Shell Canada Ltd. the liquefaction and export facility is planned to export 12 million tons of LNG annually from facilities near Kitimat.

Clark said the project “will come on line in 2020” and that the parties are nearing conclusion of negotiations over fiscal terms.

“What we’ve heard from our partners on the KOGAS/Shell project is that we’re landing at the right place, we think. We’re still negotiating but we’re hopeful we’re getting very close to a good price, to the right price that will work,” she said in the interview.

In a luncheon speech following the forum Clark declared, “We intend to give your business certainty, and when we have the final numbers you will know this.

“We will establish those numbers, that taxation and royalty regime in legislation. It will be law so that we can help you protect your long-term investments. We are looking to provide as much certainty as we possibly can while we’re also looking to protect our environment.”

Andy Calitz, of Shell Canada Ltd. and vice president of LNG Canada said the project is “absolutely unique.”

“We have engaged the public, in a broad sense of public in British Columbia and beyond that with a real vision of changing the energy future of British Columbia and Canada,” Calitz said in his forum presentation.

“We are also seeking input from local communities to assure concerns are addressed very early in the project,” Calitz said, adding that project developers are “engaging First Nations fully.”

“We will take the time to do it right. Wherever we are from, we need to take the time to do it right in Canada,” Calitz added. He declined to be interviewed following the forum.

Ellis Ross, elected chief of the Haisla Nation, which owns or controls much of the land in the LNG Canada project, said the Haisla support natural gas, but not crude oil development. Also chairman of the provincial Aboriginal Business and Investment Council, Ross said his tribe “has been excluded for the last 60 to 100 years from all the development in the territory” and that their new participation is based in environmental protection.

“It doesn’t matter what the plan is. Our people expect to see stewardship for environmental protection,” Ross declared. Adding that more than 20 First Nations bands are aligned in LNG development projects and that $37.6 billion (U.S.) worth of projects have been proposed in Haisla traditional territory alone.

Ross said Clark, “has done a very good job of including us as First Nations in the economy. Whether or not she played by the rules, she did it.”

Clark heads B.C.’s Liberal Party and the forum included a presentation by union leaders and a strong endorsement for project labor agreements, or PLA, which have become a standard element of almost all major development projects since the first was used in a 1994 Vancouver Island Highway project.

“This is the first time we’ve been invited to the table in a dozen years,” said Tom Sigurdson, Building Construction Trades Council.

He said the Vancouver project “was the first project in Canada that was to integrate First Nations, women, physical minorities.”

Sigurdson added that PLA apprenticeship programs, currently including about 5,000 workers, enjoy an 85 percent to 90 percent completion rate compared to 35 percent in similar private sector efforts.

Lee Loftus, president of the Trades Council, said the “open market” sector in B.C.’s construction industry is the only opponent of PLAs “because it allows for standardization and they particularly don’t like standardization because they like to find an angle and be competitive.”

“It levels the playing field and if you level the playing field it works for the client. It works for the work force. It works for the local community but it doesn’t necessarily work for those that are trying to use a competitive angle to secure the work.”

Bob Tkacz is a correspondent for the Journal based in Juneau. He can be reached at [email protected].

12/04/2013 - 10:35am