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BC signs LNG Project Development Agreement

LNG Industry,

The Province of British Columbia (BC) and Pacific NorthWest LNG have signed a Project Development Agreement (PDA), the first agreement of this of this kind with an LNG proponent.

The ratification process for the company and for government is outlined and important milestones towards achieving project certainty are identified within. Overall, this agreement provides long-term certainty that the investments will be treated fairly and consistently across the course of the agreement.

LNG facility on Lelu Island

Pacific NorthWest LNG plans to build an LNG facility on Lelu Island in the District of Port Edward which would liquefy and export natural gas produced by Progress Energy Canada Ltd. The first phase of the project would consist of two liquefaction trains, two LNG storage tanks, marine infrastructure with two berths for LNG carriers, a material offloading facility, and administration and auxiliary buildings.

Pacific NorthWest expects the US$36-billion investment to support up to 4500 jobs at peak construction, 330 direct operational long-term jobs and 300 local spin-off jobs. Moreover, the company hopes that the facility will add to significant new revenues for local, provincial and federal government.

Prosperous potential economic returns

Michael de Jong, BC’s Finance Minister, has highlighted the potential economic returns from the proposed LNG facility on Lelu Island. BC has an estimated natural gas supply of 2933 trillion ft3 that could support domestic and export markets for 150 years – emphasising the potential of this development.The agreement provides assurance, through legislation, Pacific NorthWest will not face significant increases in certain taxes and environmental charges for the specified term of the agreement:

  • The LNG Income Tax
  • The Natural Gas Tax Credit
  • The Carbon Tax
  • The key features of greenhouse gas emissions regulatory scheme at an LNG facility

The PDA does not, however, provide the proponent with assurance on laws of general application, such as changes to provincial sales tax or corporate income tax.

Michael de Jong signed the PDA on behalf of the Province on 20 May 2015, initiating a ratification process by both the proponent and the BC legislature. The government is recalling this legislature on 13 July 2015, to introduce and publicly debate legislation that will enable the Pacific NorthWest LNG agreement, alongside future agreements.

The largest capital investment in the BC province’s history

Michael de Jong, BC’s Minister of Finance, commented: “There are significant benefits for BC’s economy associated with the development of LNG activity. At approximately US$36 billion at total build-out and operation, this project represents the largest capital investment in the province’s history. And with this project come jobs for British Columbians and a new revenue stream from taxes and royalties that will provide benefits for British Columbians well into the future.”

Creating jobs and stimulating economic growth

Rich Coleman, BC’s Minister of Natural Gas Development, stated: “We are creating jobs and stimulating economic growth through the development of a new export industry. This project development agreement with Pacific NorthWest LNG is a way to secure those benefits.”

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