Declining LNG prices spell bad news for Premier Christy Clark's dream of a new industry

Comments6

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.

Comments (6) Add New Comment
Curt French
It's the mild season before peak summer demand starts in SE Asia, followers by the highest level
Of consumption of gas which is winter. Spot prices will be back at $18/Monty by winter
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Whiners and welfare cases
need the revenues from resource extraction to provide their handouts. Every public employee relies upon taxpayer funds well over 50% of which comes via the exploitation of natural resources. Opposing resource development whilst demanding more handouts is ignorance of the first order, but of course the solution is always so simple: change he economic system. "Socialism" has created basket cases like Venezuela & Cuba where the goal is sharing the misery rather than raising living standards: our welfare cases here are in a much better position than those in Venezuela where basics of life like rice, corn and toilet paper are in short supply. "Social democracy" is almost as pathetic as the decline of Sweden from every soft leftists dream country has completed. The only "alternatives" to which the anti-capitalists can point are either basket case failed economies or fantasies from 19th century theorists.
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Christy's dreams are our nightmares
Christy Clark doesn't have a clue. If she wanted to "create jobs" (she doesn't), she'd have awarded BC's shipbuilders the ferry building contract. Instead she's contracting with Poland to build them USING OUR TAX DOLLARS. How does this benefit us?
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Reply to "whiners and welfare cases"
Harper gives the oil and gas industry $1.4 billion in public money every year and this doesn't include the EAP ads for the oil industry that taxpayers fund to the tune of half a million annually. We are subsidizing private sector wages and government workers are employed to allow employers to streamline temporary foreign workers even though bank economists have demonstrated labour shortages are a myth. All to keep wages low and to bottom out standards here.

Near as I can tell, it's the corporations who are on welfare, not the citizens.
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Alan Layton
@Christy's dreams are our nightmares:

A BC shipyard (Seaspan) was short-listed for the ferries but pulled it's bid near the end of the competition because they were already full up with orders and couldn't fit it in. Seaspan is the shipyard that was awarded the $3.3 billion dollar Federal contract for coast guard vessels...which is expected to balloon considerably due to cost overruns and delays.

http://www.cbc.ca/news/canada/british-columbia/3-new-lng-capable-b-c-fer...
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Raifon
Pray tell, why are Vancouver Islanders paying $15/gjl for natural gas when the rest of the province pays an average of $6/gjl. Don't tell me it is because of the pipeline build costs to the Island,it's 25 years old now and was paid for 10 years ago or more.It can't be the limited market potential as the Island packs 1 million customers into an area smaller that metro Vancouver.
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