Written by Grant G
In the run-up to British Columbia`s 2013 provincial election Christy Clark told the electorate, told the world and told the foxes(multi-national energy companies) that LNG was a $trillion dollar golden egg that would fix all of BC`s fiscal and economic woes, Christy was quite specific, a dozen LNG plants, BC would receive 5 times the North American price(Henry Hub pricing) from Japan..
My how times change...
If British Columbia who owns our natural gas resources wants to get 4 to 5 times the North American price for natural gas we must build our own British Columbia provincially owned LNG plant or kiss those monetary expectations good bye...
Fact...Other jurisdictions like Australia, Qatar, East Africa can get natural gas to liquefication plants cheaper than we can, our gas is a long way from the coast and fracked gas is more costly to produce than conventional natural gas fields.
Fact....Qatar alone has the cheapest natural gas production and have more than enough reserves to supply any added Japanese or Asian demand for LNG.
Perhaps you readers remember one of Stephen Harper`s and the BC Liberal`s favorite economists, his name is Jack Mintz..
Jack Mintz is the HST promoting spindoctor, and more...Remember the promises made to us BCers if we accepted the HST..
"Prices on products and services will fall, 100,000s of jobs will be created and our economy will be more competitive, more productive.."
We had the HST rammed down our throats by the BC Liberals, we lived with the HST for nearly 2 years, no prices fell in price and no jobs were created, in fact British Columbia lost jobs, an underground economy was created and more and more BCers bought goods and services from either non-sales tax province Alberta and non-HST state of Washington...The HST was a disaster, and corporate fraud..
We still have no final investment decisions from any LNG energy companies, we the people of British Columbia were promised an LNG taxation framework in place by the fall of 2013...it didn`t arrive, the new date for a completed LNG taxation royalty framework was promised for the spring of 2014 ...That date has come and gone, the new date for a completed taxation framework is now being promised for the fall of 2014, so what`s the hold up?...We know that energy companies have balked at the tentative LNG taxation details that the BC Liberals released, as sparse as they were..
Jack Mintz, he comes from the wildrose country, educated at the university of Calgary, Mr. Mintz is also...
A director for the energy company Imperial Oil
Well folks, the cat is out of the bag, we now know what these LNG companies want for a taxation royalty regime for developing an LNG industry in British Columbia, and Jack Mintz is the messenger, as a director for Imperial Oil what Jack Mintz is saying is not idle punditry but direct messaging from the natural gas energy industry, Mr. Mintz would never freelance his personal views on energy taxation as a member of Imperial Oil`s executive board without explicit permission to speak for and on behalf of the industry as a whole...
And this is real bad news for British Columbia`s BC Liberal Government revenue forecasts, as written here in multiple posts those promised revenues from natural gas converted to LNG for export would never accrue under the tentative proposed taxation framework already released, that framework was such..
1 1/2 percent tax until capital build costs are recouped, once capital build costs are recouped taxation jumps to 7 percent, ...And when these companies start paying the 7% tax/royalty the cumulative 1 1/2 percent tax they paid while recouping build costs would returned to the company as a perk..
This taxation model was thoroughly rejected by the LNG industry.
So what do these foreign national energy companies want...?
Straight from Jack Mintz`s mouth folks, straight from the man who lavished praise on the BC Liberals for ramming the HST down our throats..
What these energy companies want according to Imperial Oil and Jack Mintz is...
They want taxation, royalties to be applied on British Columbia`s gas/resource at the wellhead...!!!
These LNG energy companies want to be taxed on the gas extracted at the wellhead, that means being taxed at the Henry Hub price level, any value-added tax is out of the question, Jack Mintz states that it is unacceptable for energy companies to be taxed on what they sell the gas for in Asia, in Japan or anywhere...
Let me repeat something, courtesy of Christy Clark during the run-up to our provincial election and to this day..
"This is a once in a lifetime opportunity, a trillion dollar benefit to British Columbia, British Columbia can receive four and five times the price for our natural gas selling it to Japan" snip..Christy Clark
Let me be clear, we were never going receive anywhere near the money promised by the BC Liberals with their proposed taxation framework for LNG, and as for the industry`s counter-proposal, we will receive a mere pittance of what Christy Clark promised..
Christy Clark promised...Eliminating our massive provincial debt, a $100 billion dollar prosperity fund, monies for First Nations in LNG extraction areas, monies for northern communities affected by the LNG industry, crown debts paid off, elimination of road tolls, infrastructure money for schools and hospitals and even a vague promise of eliminating our provincial sales tax...Those were just a few of Christy Clark`s fantasy promises and wish lists we would receive through LNG taxation.
Jack Mintz gores further, Mintz claims it is illegal for provinces to add a value-added tax to provincial resources, Mintz claims only a taxation on resources before they are converted to, or as I say, value-added can apply, and he may be right...
Jack Mintz also states that Australia and Qatar can produce LNG cheaper, he states that Qatar all by itself can satisfy any and all Asian demand present and going forward...In other words Jack Mintz and the energy companies are calling the BC Liberals out, challenging them to comply with the industry`s demands or see this industry vanish into thin air..
Here is the link to Jack Mintz`s and the energy companies counter taxation proposal.
These LNG companies according to Jack Mintz, want to be taxed at the wellhead, ...A 1 1/2 percent tax at the Henry Hub North American price is a paltry sum of mere pennies...A 7 percent tax at the wellhead...We will never ever come close to those promises Christy Clark made..
One more thing, British Columbia has the second lowest corporate tax rate in North America and Jack Mintz in the above linked article claims our British Columbia corporate tax rate is too high..
Christy Clark did a whole bunch of clucking on LNG to British Columbia`s electorate, to the world buyers of LNG and to the energy companies too....
What was it Rich Coleman said months ago...? "We are real close to the sweet spot with LNG taxation" .....hmmmm..Sure thing Rich Coleman
In the picture atop this post, you can see the energy companies have heard Christy Clark`s clucking and have decided to have a face to face conversation..
Who made who?
and a little Food for thought, where British Columbia`s wealth is really generated.
The Straight Goods
Cheers Eyes Wide Open