Declining LNG prices spell bad news for Premier Christy Clark's dream of a new industry
Asian prices for liquefied natural gas have fallen to their lowest levels since April 2011.
According to an article in Business Day, the spot prices for August delivery are down to US$12 per million British thermal units.
If these prices were to hold, it could kibosh B.C.'s LNG industry before it is even launched.
That's because an Ernst & Young report concluded that North American LNG projects require an Asian price of US$12 to US$13 to remain viable.
In early April, the Georgia Straight published a cover story highlighting the possibility that falling LNG prices could derail Premier Christy Clark's oft-stated desire to create a new B.C.-based LNG export industry.
A key consideration is whether the Japanese government decides to restart a significant number of the 54 nuclear reactors shut down in the wake of the March 2011 earthquake and tsunami, which crippled the Fukushima power plant.
In June 2012—nearly a year before the last provincial election—LNG prices peaked at US$17.20 per million BTUs in Japan, which consumes more than a third of the world's LNG.
But prices have been on a downward slide since then.
There are 14 proposed LNG projects in B.C., according to the B.C. government's website. None of the proponents have made a final investment decision.
The B.C. Liberal government's goal is to have three new LNG plants in operation by 2020.
Last month, NDP Leader John Horgan raised more questions about the future price of LNG after Russia signed a massive gas-export deal with China.
At the time of that article in the Straight, LNG was selling at US$15.23 in Japan, the largest LNG importer in the world.
Business Day reported that this week's low prices are linked to milder-than-usual weather in May and June, as well as high inventories in Japan and South Korea.
"But analysts said that Asian prices may be close to bottoming out as the region switches from the low demand spring season to the high demand summer air-cooling period, which will be followed by the peak demand winter," Business Day added.