Falling Prices Undercut British Columbia LNG Projects
It will likely be another decade before British Columbia can put together an economically viable project to ship liquefied natural gas (LNG) to Asia, according to a new study by the Oxford Institute for Economic Studies in London, UK.
“Despite large volumes of shale gas and government hype over the industry, the study found that changing energy markets, global price volatility, increased competition, and LNG cost overruns have dramatically changed the demand picture for high-risk and capital intensive LNG projects around the world,” The Tyee reports.
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“Even Asian demand for natural gas has softened significantly over the last year. Demand for imported gas in Japan is now ‘flat,’ and in Korea it has ‘dampened,’” Nikiforuk writes, citing the report.
“China’s thirst for natural gas has also slackened since 2010 due to pipeline expansions and the signing of long-term LNG contracts.”
Nikiforuk cites a Cambridge Energy Associates study that placed spot LNG prices during the peak winter season in China at $7 per million British Thermal Units (BTU), down from $20 a few years ago.
B.C. has 19 LNG development applications before Canada’s National Energy Board, alongside another five from eastern provinces. “The B.C. government, which wants to see three projects built by 2020, has lowered natural gas royalties, corporate taxes, and LNG taxes to entice Asian investors,” The Tyee notes.