Wednesday, March 19, 2014

Christy Cluck Cluck Clark Versus Jack Mintz And The LNG Energy Companies(who made who)

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..


VaughnPalmer 6h
Jack Mintz widely cited by BC Liberals on HST debate. Wonder if they'll quote his opinion of their LNG tax?

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 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



istvan said...

Well Grant, the right royalty at the wellhead may be the best way to ensure that the people of BC get something for the gas .
At least they would pay for the conversion to lng.
If this royalty was set right it might not raise our domestic rates.
A tax based on their profits is BS as they could just show no profit on their books.
I ,like you ,don't think these plants will ever be built.

Grant G said...

Sorry Istvan, I believe you are wrong..

Christy Clark promised British Columbians would receive 5 times the price for our gas from Asia..

These LNG plants cost $15 to $30 billion dollars to build..

These companies want a tiny tax until they until they pay for their build costs..

It could take decades on paper for these plants to recoup their costs.

British Columbia is producing more natural gas now then ever before, yet our royalties from natural gas are less than $300 million per year, the lowest return since BC was selling gas.


Anonymous said...

From back East.

Enbridge applies to Ontario regulator for a major natural gas rate hike

The exceptionally cold winter could get a lot more expensive for millions of people who heat with natural gas.
Households heating with propane and oil have already experienced a price shock.
Even those with price contracts have seen their bills go up because they've been using more energy.

But now, natural gas supplier Enbridge has applied to Ontario's regulator for a big rate increase and other suppliers are expected to follow suit.

If the hike is approved, Enbridge says the typical household will see their annual natural gas bill increase to nearly $1,400 from about $1,000.

Enbridge, which serves around two million customers in Ontario, says it has nearly run out of cheaper natural gas that it stored for customers this winter season and now has to buy more expensive energy supplies.

Other suppliers, particularly in Ontario and Quebec, are facing similar supply pressures and could raise their prices as well.

What a bunch of crock!

Run out of ... “nearly run out of cheaper natural gas it stored for customers”? Really. What a sham/scam.

Just like gas prices up this week here in the lower mainland and it’s not even summer yet. Oh, right, it’s “Spring Break” week.

These companies are robbers.

James F said...

Jack Mintz: "BC’s LNG tax could destroy the goose that lays the golden egg."

A strange way to end a column that, in effect, said there is no golden egg.

Jon Ghun said...

The way I see it, war has been declared and we are facing a three-front struggle.

1) We are up against a class of materialistic corporate globalists and their One Bank, all of whom see this province as a colony to be stripped bare for their own gain and accrued elsewhere. Now, unless you're willing to get on side with their agenda of raping. pillaging, and plundering, well, then you can take a flying leap off of a high cliff for all they'll care.

2) We must also contend with provincial and national governments who are utterly bereft of ideas and only too willing to sell out to the highest bidders in lieu of pushing through any ole' scam or rip-off, no matter how foolish or short-sighted or immoral, while also being capable of lying about it all with a perfect smile.

3)And we must ceaselessly do battle to combat a media corps(e) that has no qualms about mis-informing, dis-informaing, or just plain ignoring, in the interests of their bosses and owners.

We commoners had better start taking a stand for the truth and doing what it is best for us, which means challenging and resisting the corporatists, governments and media wherever necessary; or else they are going to ruin us and this province once and for all before sticking us with the bills.

Grant G said...

You are bang-on Jon Ghun..Corporate war is upon us.

James indeed noticed Jack Mintz`s contradiction, a golden goose that can`t afford to be taxed and provide provincial revenues of substance..

This so-called Golden Goose..I guess we now know who is actually getting the gold and who is getting goosed.


GW Andrew said...

Jim Willie phD, a unique and excellent economic analyst, wrote:

“The historians all too well are aware that the final chapter of a capitalist nation is embedded in fascism, as its institutions suffer from profound corruption, as inefficiency and greed deplete the wealth structures, as the system breaks down and the rule of law vanishes.”

Anybody doubt that we're screaming down the highway to the destination described above?

Time to start thinking about how to best get through a wicked storm coming our way.

Take care, lend a hand, stand your ground, live free, and do no harm to the innocent or injured.


Just for the Record said...

Well, well, even the loyal liberal media maven is starting to wonder aloud at the 'truthiness' of all the the hoopla around LNG in BC.

Vaughn Palmer: Criticism takes some air out of B.C. Liberals’ LNG tax proposals.

"The Liberals had better make that deadline and they’d better get the tax right. Otherwise, as noted here before, this opportunity could evaporate like LNG on a summer’s day."

More of the article:

"Also this week, Platts, one of the leading information services in the energy industry, had this report datelined Tokyo: “Japan’s Ministry of Economy, Trade and Industry Monday urged the British Columbia government in Canada to cut the rate of taxes it is planning to impose on proposed LNG projects in the province.”

The news service went on to say that the Japanese were balking at the Tier 2 tax rate of up to 7 per cent, then quoted Steve Carr, the deputy minister in charge of the file for B.C., as confirming that the final rate remains under review.

'What we have said is that the tax is up to 7 per cent,' Platts reported. 'Now we are working with the industry to make sure we get that Tier 2 correct and we are also looking at all costs to make sure it remains competitive.'

He also offered a novel justification for the special tax, tied to potential natural gas supplies from Alberta and Saskatchewan: “We understand that there is a large reserve outside B.C. that will be supplying this opportunity and in those instances we will not see a royalty revenue regime and that’s why what we are looking at is to introduce this new tax to make sure we can get a fair return.”

I wonder if neighbouring jurisdictions will object to B.C.’s roundabout attempt to tax their resource?

The article went on to quote Carr’s assurance, delivered at an LNG seminar at the Canadian embassy in Tokyo Monday, that the province will have all the details of the new tax regime in place this fall: “Companies will have everything you need by that time to make a (final investment) decision.”

The Liberals had better make that deadline and they’d better get the tax right. Otherwise, as noted here before, this opportunity could evaporate like LNG on a summer’s day.

On behalf of Bernard von Schulmann said...

Another realist is also having trouble seeing things work out all-rosey for LNG in BC.

'The Complication of Multiple Partners for LNG Plants.'

"One of the projects proposed for BC is LNG Canada in Kitimat, a partnership of Shell, PetroChina, KOGAS and Mitsubishi. The current capital costs of the project and pipeline is in the range of $17 billion. For Shell the investment represents $4.25 billion in capital, which is a significant amount for them. Given the increase in costs of similar projects elsewhere in the last few years a total cost of $25 billion is more likely raising the capital each partner would have to come up with is over $6 billion. These are not trivial amounts for a company like Shell.

For Shell to commit to the LNG Canada it has to make more economic sense to them than other projects they are considering for development around the world. Shell does not have access to unlimited capital for projects. The LNG Canada team will have to compete with a dozen or more major capital projects Shell has interests in.

Shell is in many ways the easiest of the four partners in LNG Canada to read and understand how committed they are to the project. The other three partners are not nearly as transparent. In the case of PetroChina we have no idea at all how solvent the company is. The long term track record for companies in countries without a free and fair legal system or a transparent and open banking system is not good, China has neither. Trusting in Chinese state enterprises is not a long term smart idea and expecting them to be viable partners in five or ten years is unwise.

The fact that all the serious LNG proposals for BC have multiple partners means we should reduce our expectations of how many LNG plants may be constructed here and assume that the timelines will be significantly further into the future."

Grant G said...

Just for the record...Isn`t there a shortage of natural gas in Quebec and eastern Canada?

Maybe Saskatchewan gas should go east??

Anonymous said...

Is the sky falling ? I can't believe what Vaughn Palmer is writing. Is he really hinting that the Liberal's tax plan for LNG is a bust ? Is he really making public comments from Jack Mintz that suggest the BC Liberals are making the wrong decision on LNG taxation.

Please tell me it's not true that even Vaughn Palmer will write something negative about the BC Liberals. What is this world coming to ?

Guy in Vic

Just for the Record Pt.2 said...

Von ponce took the pledge a long time ago and he will not be rejoining the side trying to do what is right for all British Columbians.

In response to your questions (though they're only rhetorical, I know), let me answer that, yes, there is a shortage of gas in Quebec and on the east coast, and, yes, Saskatchewan should--and probably will--route their energy resources eastward.

That being said, let me also write that, what von poncer is doing in his article is aimed at the provincials out here. He's taking the side of his bosses by framing the debate in such a way that it favours the play of the big energy conglomerates going forward.

The questions you raised are well aimed, as they show him tipping his hand. Instead of taking the reasonable perspective, he explicitly tries playing off BC against the prairies. For no apparent reason, he sets up this phoney dichotomy within the debate, thereby providing a cover story for reducing taxes in such a way that this outcome looks reasonable enough to the rubes while ultimately serving the vested interests he answers to.

The guy's a wolf in sheep's clothing, a mercenary advertising exec. masquerading as a so-called journalist. Which is why he can't even write a single article without giving himself away.

Anyway, I'm sure I'm not telling you anything you haven't known for years.

And, of course, this LNG play will go down like so many other P3 scams:

--open with big promises, while slyly playing one jurisdiction off against another
--stall on investing until you can negotiate to pay as little tax as possible when extracting the gas (bribe local officials whenever necessary)
-- negotiate (wink/wink) to get all the water and electricity and other requisite in-puts thrown into the process at the commoners expense (but don't let on and whatever you do--smile).
--avoid all further tax when refining and producing LNG;
--get favourable trade deals arranged so that you can have all the heavy-meatal work down in low-cost slave shops in Asia
--ship/pipe LNG great distances and charge highly inflated rates abroad
--hide all gross profits off-shore, while sucking up deductions like there's no tomorrow.
--run the resources dry as fast as possible.
--leave the jurisdiction
--kiss the local rubes good-bye
--repeat elsewhere
--laugh into your sleeve

Typing this just now made me start wondering if patrick kinsella isn't in this LNG mix somewhere along the line (grin)--seriously.

Hugh said...

Yes, if there's a shortage of natural gas in Quebec and Ontario, natural gas from Sask and BC should go there.

But I say, better to use BC natural gas in BC. As long as we're not polluting water with fracking.

Anonymous said...

Harper and the Campbell/Clark BC Liberals, never do anything out of the goodness of their hearts for the people. Absolutely all of them only do, what benefits them and to hell with the people.

Harper and Campbell worked as fast as they could to dismantle and destroy BC, before Campbell got the boot. They were selling BC out, to Communist China. Fadden of CSIS had even warned about China's huge inroads into Canada.

Christy's job action plans are identical to Harper's. Many of our resources and resource jobs are being given to, cheap foreign labor for the corporations to exploit.

Christy campaigned on 100,000 jobs for the people of BC. Where are Christy's jobs for, her families first?

Christy's LNG plots and scams are lies and deceit as usual. Who exactly is building, the LNG plant at Kitimat? Rumor has it? China paid for, 800 hectares at Prince Rupert. What is that for?

Anonymous said...

How is it that that den of Socialists in Norway can get the world's largest underwater pipeline built by a consortium of Petro giants and STILL get royalty revenue that's the equivalent of $1M for every citizen, when Alberta is in hock up to it's neck? The sometime free enterprisers in North America are being beaten, very quietly by others that can think for the future rather than the next election cycle.

Hugh said...

Just wondered if you're following the park amendment issue.

Grant G said...

What is there to follow?

BC Liberals will use their majority and ram it through..

The only thing I can say is..

The fizz has left BC`s LNG superpower dreams...

Very little news on BC`s LNG front, no one is talking about it anymore.

Investment dollars versus return on investment are now butting heads.

Unless the BC Liberals sellout our province on LNG taxation and royalties nothing is going to happen.