The LNG Industry Figured It Had This Election in the Bag

British Columbians awaiting a final vote count that will determine who governs their province are understandably anxious. After all, in many ways, the agendas of the NDP and Conservatives are starkly different.

Both parties are supportive of the construction of nearly $100 billion worth of LNG terminals, though the BC NDP has set more conditions.

Only the BC Green Party has opposed the economic gamble. As Green Leader Sonia Furstenau stated before she was defeated in her attempt to win the riding of Victoria-Beacon Hill, “neither David Eby nor John Rustad have an economic plan that is rooted in reality.”

“They both want to prop up a sunset industry using billions in taxpayer subsidies. Not only is this industry quickly reaching its peak, the more scientists look into LNG, the more harmful we discover it is to our climate and to people’s health and safety.”

Citing a recent World Energy Outlook report by the International Energy Agency, Furstenau said, “Declining global LNG prices are also hitting our provincial budget and driving up our deficit, underscoring the riskiness of an economic strategy based on harvesting raw commodities.”

Meanwhile, regulators have granted 40-year export licences to four projects and 25-year licences to two more projects. In addition, another two projects are seeking licences for export approval. All are dependent on the drilling and fracking of thousands of methane wells in the Montney basin that stretches between northeastern B.C. and northwestern Alberta in the heart of Treaty 8 territory.

Proponents in government, industry and some First Nations vow that the LNG industry will deliver a steady stream of economic and ecological miracles. The projects, they argue, will provide a lower-carbon fuel for Asian markets and fight climate change. They say LNG will build a bridge to the so-called “global energy transition.” Revenues will enrich First Nations and advance the prospect of reconciliation.

Moreover, drilling and fracking in the Montney basin for methane will foster jobs and prosperity throughout the north. Without resources like LNG, adds the advocacy group Resource Works, “we’d all be naked.”

But when the Greens and other critics of LNG call all this just so much propaganda, they have well-researched facts on their side.

Yes, there will be revenue — but it will be volatile and delivered unequally if the experience of other jurisdictions is any proper measure.

And no, it is not clean or green. Due to chronic methane leaks, the product is dirtier than coal and accelerates climate change. Nor does it offer an extended job fiesta because the industry remains capital and energy intensive and highly automated. (Prefabricated terminal modules for LNG Canada arrived not from Canada but from Korea and China.)

Nor are LNG terminals anything other than complex industrial behemoths. Because of their noisy and polluting character, such projects routinely get located in economically disadvantaged communities where First Nations or people of colour live. No terminals, for example, have been proposed for Vancouver’s Point Grey.

At the same time, LNG projects now on the books will cannibalize existing electrical supplies and increase energy prices for all British Columbians. The industry will industrialize the northeast of the province with a network of wells, roads, pipelines and compressors. Fracking will not only impoverish water resources but diminish public health. It has already changed earthquake patterns in the northeast.

As for reconciliation, from one vantage LNG can look a lot like colonialism with a modern twist. First Nations receive financial benefits but from industrialization that causes the destruction of Treaty 8 lands.

LNG will make money for the big five fracking companies (Ovintiv, ARC, Tourmaline, Canadian Natural Resources and Petronas) and the largely foreign owners of the LNG terminals, but will create more economic and environmental problems for British Columbians than it promises to solve.

That’s not the message BC NDP or BC Conservative politicians have delivered. So here’s a breakdown of nine negative consequences of LNG development.

1. LNG is not cleaner than coal and will accelerate the climate crisis.

A recent study by North America’s premier methane expert, Robert Howarth, concluded that “the greenhouse gas footprint for LNG as a fuel source is 33 per cent greater than that for coal.” The fracking of shale gas, as well as liquefaction to make LNG and the transport of chilled gas by tanker, requires high volumes of energy, which then “contributes significantly to the LNG greenhouse gas footprint.” The fracking of shale and the transport of methane also result in significant methane leaks — a greenhouse gas much more powerful than carbon dioxide in the short term.

Howarth also found that the most modern tankers propelled have higher total greenhouse gas emissions than steam-powered tankers “due to methane slippage in their exhaust.”

David Hughes, an energy analyst who spent many years with the federal government studying Canada’s energy resources, has done similar calculations on emissions from Canada’s LNG industry. He says Howarth’s paper is applicable to B.C. LNG, particularly for downstream emissions.

“So the B.C. government claims of saving the world from coal are bogus,” said Hughes. “Building new infrastructure allowing an increase of oil and gas production is exactly the wrong way to achieve emissions reduction commitments.”

2. LNG will raise energy prices for domestic consumers. That’s you, British Columbians.

Both the NDP and the Conservatives avoid this topic. Yet the whole point of LNG is to end a supply glut for a relatively cheap resource (methane) and win higher prices in global markets.

The United States tells the story. In 2016 it ended its export ban and began exporting LNG as a way to raise low prices due to the overproduction of shale gas. In short order it became the world’s No. 1 LNG exporter. But by 2023 domestic methane prices for U.S. consumers rose by nine per cent.

By approving one project after another, the federal government failed to warn consumers about the inflationary impact of LNG development. Yet the U.S. Department of Energy under the Trump administration, no less, clearly warned this would be a major downside of LNG in 2018.

“On the negative side, producing incremental natural gas volumes to support natural gas exports will increase the marginal cost of supplying natural gas and therefore raise domestic natural gas prices and increase the value of natural gas in general.”

The same scenario unfolded in Australia, the world’s No. 3 LNG exporter. Australians call it the “gas paradox.” As exports increased, so did domestic prices and shortages. The inflationary increases led to a major inquiry in 2017 and eventually a capping of prices at Australian $12 per gigajoule in 2023.

3. LNG industrialization will further strain water supplies in northern B.C.

Earlier this year Hughes detailed the environmental costs of fracking the Montney formation in northern B.C. in order to supply all six LNG projects now on the books. To fill those terminals with methane would require drilling more than 32,000 wells over the 2024-50 period. It would increase water consumption by 62 per cent to 35 billion litres annually.

Hydraulic fracturing blasts high volumes of water and imported sand deep in the earth to open up small fractures in shale formations to release trapped methane.

On average a fracked Montney well now consumes about 23.1 million litres, a 10-fold increase since the industry first started applying hydraulic fracturing nearly 20 years ago.

Based on detailed industry drilling data, Hughes recently calculated that the Montney now consumes 21.7 billion litres of water a year in a region already hit by drought and wildfires accelerated by climate change.

That amount of water is enough to quench the thirst of seven billion humans for one day at three litres per person.

4. Like any megaproject, LNG versions promise more than they deliver.

In 2008 ExxonMobil, a corporate entity with more power than most countries, promised the people of Papua New Guinea, a Pacific nation at high risk to the ravages of climate change, that LNG exports would solve all their economic woes. With gaudy PowerPoints the developers argued that the industry would double GDP, increase exports, create lasting employment and generate huge cash flows to the government.

In 2014 the project came on stream and the methane flowed. But the projected benefits were slow to materialize. In a sobering analysis of what went wrong, a 2018 study tabulated all the broken promises and why prosperity did not prevail. It found that Exxon’s economic models were “overly optimistic” and that the promise of easy revenues led to bad public policies that weakened government.

As a result, Papua New Guinea’s economy did not double in size as forecast. Household income fell instead of rising, as did employment. A surge in government revenues to support education and health did not happen. In fact, government revenues fell by 32 per cent. Concluded the report: “Currently on almost every measure of economic welfare in 2016, PNG would have been better off without the PNG LNG project.”

Since 2018 revenue streams from LNG have improved, but most of the hype remains unrealized. About 40 per cent of the country’s nine million people live in poverty. A sovereign wealth fund, promised in 2014, has never materialized. Meanwhile the local media still ask a fair question: How has the country benefited from LNG?

5. LNG imposes a substantial public health burden.

Pollution from oil and gas facilities takes a significant toll on local communities over time. Most of these LNG communities, such as those in southern Louisiana, are poor, Black or Indigenous.

A recent U.S. study found air pollution from the oil and gas sector in the United States resulted in 410,000 “asthma exacerbations,” 2,200 new cases of childhood asthma, 7,500 excess deaths and a total health bill of $77 billion. The health stealers include methane, nitrogen oxides, hydrogen sulphide, ozone, particulate matter, sulphur dioxide and ammonia. States with shale gas and LNG terminals, including Texas, Louisiana and western Pennsylvania, reported the highest impacts.

More than 300 physicians and nurses signed an open letter asking Premier Eby why the government continues to approve more gas wells and LNG terminals given the public health burden generated by shale gas fracking and climate dysfunction on health-care delivery.

6. LNG depends on government subsidies.

Thanks to intense lobbying by former politicians, heavy subsidies have greased the province’s LNG gravy train from the beginning. LNG Canada, a joint venture between Shell, Petronas, PetroChina, Mitsubishi Corp. and Korea Gas Corp., for example, has received nearly $6 billion in tax deferrals, tax exemptions, power lines and reduced electricity rates.

If all the hype about LNG were true, why aren’t foreign investors footing these bills instead of Canadian taxpayers?

7. LNG development could imperil Canada’s energy security.

If all of B.C.’s six LNG projects currently on the books are built, they would require a gas supply of 6.7 billion cubic feet per day to make their shipments. That is equivalent to all of B.C.’s current production or one-third of Canada’s.

The Montney would supply most of this methane because of proximity to the coast. Hughes calls the Montney “a strategic non-renewable resource” that should be treated as an essential bank for the country’s energy security. According to the Canada Energy Regulator, the basin will provide between 58 per cent and 63 per cent of all Canadian gas production over the 2024-50 period and will be the primary source for LNG exports.

“Selling it off as fast as possible to foreign markets for short-term gain compromises Canada’s ability to meet climate targets and future energy security and is therefore extremely unwise,” Hughes said.

8. LNG is a tale of diminishing energy returns.

The LNG industry represents an intensification in the amount of energy deployed to extract more fossil fuels. Modern civilization requires energy sources with high energy returns, but the returns from methane are steadily declining. One recent paper estimated that the amount of energy needed to extract and pipe methane corresponds to nearly seven per cent of gross energy produced at the moment.

Due to the unconventional nature of shale gas formations, the energy intensity of fracking and the complexity of LNG, methane extraction will gobble up nearly 24 per cent of the energy produced by 2050. These energy demands mean there will be less energy available for other societal needs such as home heating or industrial production of glass.

9. LNG could cannibalize the province’s electrical supplies.

The Site C dam was built not to light up and heat 450,000 homes but to serve the global LNG industry by lowering its emissions — by electrifying operations normally powered by methane. But LNG operations are so energy hungry they could quickly monopolize demand for much of the electricity generated by the $16-billion dam.

A 2023 report by the Pembina Institute looked at two possible electrical demand scenarios. In one scenario the terminals run off electricity, and in the second scenario electricity is used to reduce emissions both at the liquefaction terminals and for upstream production in the fracking fields. In Scenario 1, if only LNG Canada and Woodfibre LNG terminals proceed, they will consume the equivalent of 37 per cent of the dam’s capacity. In Scenario 2, full upstream electrification for just LNG Canada Phase 1 and Woodfibre would need power from the equivalent of 2.5 Site C dams.

In other words, more LNG development could make the province vulnerable to power shortages by 2030.

If that comes to pass, the words of Sonia Furstenau on the 2024 campaign trail may come back to haunt:

“B.C. has so many exciting industries that aren’t massive contributors to climate change. From tech to film to agriculture to small business, B.C. has no shortage of opportunities to invest in a stable, clean economy,” she said. “It’s a tragedy that we have two major parties who fail to recognize this.” 

[Top photo: LNG Canada, a joint venture by Shell, PetroChina and other foreign firms, has nearly completed its terminal in Kitimat, BC. Photo via LNG Canada.]