B.C. gov’t says tax deal with LNG investors is imminent

WATCH: B.C. close to deal with LNG investors 

The B.C. government says they are close to reaching a tax deal with energy firms such as Malaysia’s Petronas and Shell, companies vying to develop liquefied natural gas projects in the province.

Backed by Asian partners, Shell is hoping to build an LNG facility in B.C., with plans to drive the country’s push in becoming an energy super power.

“We are sitting on the third largest resource in the world,” says Shell CEO Lorraine Mitchelmore. “We are looking at innovative ways to unlock that resource so that we can responsibly develop it.”

And Shell,  isn’t the only company eyeing B.C.’s resources. On Sunday, Malaysia’s prime minister said state owned Petronas will invest $36 billion into B.C.’s natural gas sector.

Unlike Alberta, B.C. has never been an energy hub, but as demand grows, particularly in Asian markets, the opportunity for growth is undeniable.

“The underlying demand for energy will be three times as much by 2050 as it is now,” says Jeremy Bentham from Shell’s Scenarios Team. “It gives you a sense of the underlying demand for energy.”

Experts say there’s a five-year window to lock in Asian customers, but before that B.C. needs to resolve concerns around taxation, Aboriginal issues, environmental battles and making sure there are enough workers to build the plants.

The immediate concern for the firms is how much they’ll be taxed.

B.C.’s minister of natural gas development Rich Coleman is leaving for Asia this week and admits that private talks with companies are progressing and a tax deal is imminent.

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He said the creation of his new ministry allows for the process to move along quickly.

“It’ll go through the normal environmental process, but certainly the way we’ve structured it is we have the ability to move permits along in a way that will be seamless and work together,” he told Jill Krop on Unfiltered.

“We’ve basically taken everything in government and focused it in one ministry…  I wouldn’t think that means we’re going to fast track or expedite it, but certainly what it means is that we’re going to get the job done,” he says.

Even if B.C. is able to reach a tax deal, which Coleman predicts could happen next month, billions are at stake and energy firms won’t make final investment decisions until late 2014.

WATCH: Rich Coleman talks LNG on Unfiltered with Jill Krop

Protecting B.C.’s environment

The other important consideration for LNG development in B.C. is protecting the environment.

Last year, Premier Christy Clark set a goal to have the cleanest LNG in the world, but critics say she has diverged from that path.

Young people gathered on the steps of the legislature Monday protesting, among other things, oil pipelines they say endanger the environment.

LNG development could inject as much as $9 billion a year into the province’s economy, a number that may be elbowing out reducing greenhouse gas emissions as a top priority for the government.

Critics say that burning natural gas to make LNG means the government won’t meet previous climate change targets set out by former-Premier Gordon Campbell.

But Coleman says the commitment remains.

“I don’t think we’ve abandoned any of our commitments. The world has changed with regards to this… the opportunity is in front of us,” he says. “We will be able to … find new ways to build technology to reduce CO2 and all the rest of it.”

WATCH: Environmental concerns over LNG projects

But while LNG development may have environmental impacts for B.C., it could help the environment on a larger scale.

Experts say that by exporting LNG, B.C. would help to reduce China’s reliance on burning coal, which would reduce greenhouse gas emissions globally.

With files from Jas Johal and Keith Baldrey