LNG Canada CEO Andy Calitz announces natural gas export project partnered with Shell, Korea Gas, PetroChina and Mitsubishi Corp. of Japan in 2014. (Black Press files)

B.C. NDP offers tax breaks to jumpstart LNG Canada in Kitimat

‘We’re not giving away more money,’ Premier John Horgan says

The B.C. NDP government has offered additional incentives to LNG Canada for its proposed $40 billion natural gas export project from northeastern B.C. gas fields to Kitimat.

Premier John Horgan announced Thursday his government has offered the Shell-led project an exemption on provincial sales tax for its construction, and is getting rid of the previous government’s income tax on liquefied natural gas (LNG) sales.

The incentives would take effect if LNG Canada decides to go ahead by November 2018.

Horgan told reporters at the legislature the opportunity is “spectacular,” but there are significant risks. He also responded to questions about his previous opposition to former premier Christy Clark’s plan, which Horgan said was too generous to natural gas producers, even including the LNG income tax.

Government officials estimate that the new NDP incentives would result in the province forgoing $6 billion in revenues over 40 years that would have been collected if LNG Canada had proceeded under the previous government’s tax and gas royalty system. The new tax regime is estimaed to generate $22 billion in tax and other revenue for the province if LNG Canada proceeds, down from a previous estimate of $28 billion.

Horgan said the new government’s review of the previous B.C. Liberal tax system, including the world’s only LNG income tax, would not have resulted any large LNG plants being approved by investors under current market conditions.

Horgan said he has discussed his latest proposal extensively with B.C. Green Party leader Andrew Weaver, who said in January he would withdraw his support for the NDP minority government if it promoted LNG exports.

Weaver said he does not support carbon tax breaks for LNG producers and is concerned that LNG development places an additional burden on other industries to meet B.C.’s greenhouse gas reduction targets. But he intends to continue supporting the NDP government while it works towards meeting those targets, despite an estimated 10 per cent increase that would occur with LNG Canada operating.

“We’re not giving away more money” with the extra tax incentives, Horgan said Thursday. B.C. Hydro will sell power to any new LNG project at standard industrial rates, and future carbon tax increases could be rebated for LNG Canada only if it meets standards for the world’s cleanest LNG production that will increase over time.

The B.C. Liberals were quick to circulate Horgan’s quotes from 2013, when the Clark government was working with Petronas-led Pacific Northwest LNG, LNG Canada and others. Horgan opposed selling B.C. Hydro power at the standard industrial rate to LNG producers, at one point calling it a “subsidy” to them from residential ratepayers across the province.

LNG Canada is a partnership of Shell, which owns 50 per cent of the project and has extensive gas well developments in northeastern B.C., along with PetroChina, KOGAS of South Korea and Mitsubishi of Japan.

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