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Two years after the earthquake, tsunami and nuclear meltdown in Japan that prompted a hard look at natural-gas rich British Columbia as an alternative energy supplier to Asia, plans for a liquefied natural gas hub on the north coast are progressing at great speed.
Five terminals have been proposed, and more could be on the way. The resource, now estimated at 1,200 trillion cubic feet, is massive; it’s located closer to Asia than other suppliers such as the U.S. Gulf Coast or East Africa; and because average temperatures are cooler, plants are more productive than in warmer parts of the world, Betsy Spomer, senior vice-president, global business development, at BG Group, said in an interview Monday.
But as plans get closer to reality, proposals for fiscal terms are surfacing at the provincial and federal level, and they could douse the enthusiasm shown so far.
With visions of scooping a windfall in resource revenues similar to the one reaped in Alberta from the oil sands, B.C. Premier Christy Clark’s government has proposed an LNG export tax, which it plans to finalize over the next year.
The premier also announced Monday $120-million in royalty credits in exchange for building new roads and pipelines.
Meanwhile, LNG producers are keen on terms of their own. They have asked the federal government for billions in tax savings through an accelerated capital cost allowance that would allow them to write off their investments in seven years, rather than the 27 years it takes under current tax regulations.
The discussions are complicated by a lack of Canadian content. With the exception of the Haisla First Nation, all proponents in Canada’s nascent LNG industry are now foreign entities. They include state-owned enterprises from China, Malaysia and Korea.
For the rest of this article, please go to the National Post website: http://business.financialpost.com/2013/02/25/heavy-foreign-content-of-lng-model-puts-canada-at-risk/?__lsa=d1ab-3bf2