A new study by the Conference Board of Canada shows just how big the economic impact of a thriving Canadian liquefied natural gas (LNG) industry could be. This includes $500 billion in investments, and the creation of almost 100,000 jobs a year. The report, which was funded by the Canadian Liquefied Natural Gas Alliance (CLNGA), was released July 24.
Titled A Rising Tide: The Economic Impact of B.C.’s Liquefied Natural Gas Industry, the report examines the widespread economic benefits that would arise if all current project proposals for Canada’s West Coast proceed — creating a 56-million-tonne per annum (mtpa) LNG industry.
Noting that B.C. is becoming the focal point for developing a Canadian LNG industry, and that Canada produces almost twice as much natural gas as it uses, the report states, “Liquefying the gas and exporting it offers an important diversification opportunity, especially when our traditional export market — the United States — is becoming increasingly self-sufficient in natural gas.
“LNG-based natural gas prices in Asia-Pacific markets have been higher than North American prices for over a decade. Moving their product into those markets would provide Canadian natural gas producers and LNG investors with higher returns. Provincial and federal governments would also benefit from an LNG industry through new royalty and tax revenues.”
Among the report’s key findings are:
- Between 2020 and 2064, total annual investments under the report’s 56 mpta scenario would average over $11 billion, or more than $500 billion over the entire 44-year period.
- Canada’s GDP would increase, on average, by more than $11 billion per year over the 44-year term. B.C.’s portion would exceed $8 billion annually, an increase in the province’s GDP of more than three per cent. Alberta’s GDP would see an annual increase of $1.6 billion per year, and in Ontario the figure would be $1 billion annually.
- National employment would increase by 96,550 jobs annually over the life of the project. The gain of 71,000 jobs annually in British Columbia alone would represent a three-per-cent increase in total provincial employment (based on May 2020 employment statistics). Ontario, Alberta, and Quebec would all see permanent job increases.
- The industry would boost total wages in Canada by more than $6 billion a year, with B.C. realizing $4.6 billion of that increase.
- Over the 2020–2064 period, more than $108 billion in revenue could be generated for provinces in Canada. Of this total, nearly $94 billion would accrue to B.C. and more than $64 billion would be generated for the federal government.
- With annual tax and royalty payments in excess of $2.3 billion in, the LNG sector would become one of the largest revenue generators in B.C.
As Canada emerges from the economic challenges brought about by the global pandemic, a thriving LNG industry would mean long-term investment and production that can contribute to the country’s recovery.
… but challenges remain
The LNG industry is extremely competitive and global investors look for jurisdictions with attributes such as favourable policies, location, natural gas supply, supporting infrastructure, regulatory processes, and availability of skilled labour. While B.C. meets many of these criteria, creating a large LNG industry in Canada faces a number of challenges and barriers. Canada’s tax and fiscal environment, regulatory approval timelines, and policy support must be improved especially relative to competing regions such as the U.S. Gulf of Mexico states. Other LNG-producing regions offer accelerated regulatory approvals, municipal property tax breaks, enhanced capital cost allowances, existing pipeline supply infrastructure, and existing LNG facilities with trained workforces, all of which means attracting LNG investment to a fledgling B.C. industry will be challenging.
The report concludes, “It will take four to five years to build this size of industrial footprint. But LNG facilities are long-lived assets that would operate over an expected 40-year lifespan. The projected impact shows an LNG industry providing economic growth to B.C., other Western provinces, Ontario, Quebec, and the federal government for decades to come.”