Tanking Asia Gas Prices Makes BC LNG ‘Not Viable,’ Expert Says
A liquified natural gas industry, as currently promoted by British Columbia’s Liberal government, is not viable at current natural gas prices, and the proposed industry tax regime actually “gives a subsidy to the LNG industry,” according to a royalty expert.
Jim Roy, a former royalty advisor to the Alberta government of Peter Lougheed and now a private Edmonton-based consultant, said the profitability of any liquefied natural gas industry in the province in truth depends on artificially high natural gas prices in China.
The natural gas price in B.C. needs to be less than half the price of natural gas in China for the nearly 24 proposed LNG projects in the province to be economic, but that differential is rapidly narrowing, Roy said.
Not one proposed LNG project in B.C. has made a final investment decision yet.
Since the advent of falling oil prices, the spot price for natural gas — the so-called Japanese Korea Marker — has plummeted. Global LNG prices are tied to oil prices.
When the B.C. government announced its liquefied natural gas push in 2012, the volatile Asian gas price was as high as $16 per million British Thermal Units (MMBtu), or more than triple North American prices.
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