ARCHIVED - Fuelling the Future: Global Opportunities for LNG in B.C.

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Remarks by the Honourable Joe Oliver

Minister of Natural Resources

to the Inaugural British Columbia LNG International Conference:

Vancouver, British Columbia

February 26, 2013


Thanks very much, Tim [Tim Wall of Apache Canada]. It's a pleasure to be here and to congratulate the Province of British Columbia on the occasion of this inaugural LNG International Conference. It's also my pleasure to welcome our international visitors to Canada, to beautiful British Columbia and to the great city of Vancouver.

We are here, of course, to discuss the global opportunities for liquefied natural gas, or LNG, in British Columbia. If I could sum up those opportunities in one word, it would be “outstanding.”

The Conference Board of Canada estimates that B.C.'s natural gas sector could attract more than $180 billion in investment between 2012 and 2035 — an average of more than $7.5 billion in new investment each year. The Conference Board also estimates this investment will support an average of 54,000 jobs annually.

That level of investment would translate into more than $46 billion in tax revenues generated in the province. Royalty payments would bring still more revenue: tens of billions of dollars to support investment in hospitals, schools, roads, bridges, water treatment and many other programs that are so vital to our quality of life.

These benefits extend across Canada. Tax revenues and royalties from natural resources are contributing to social programs that are part of the fabric of Canada — they’re part of the reason why the OECD’s Better Life Index consistently ranks Canada in the top five countries in which to live. It’s imperative, therefore, that we capitalize on our natural resource potential in order to maintain these programs — including health care and education — that help define and support our enviable quality of life.  

In 2011, the energy industry alone provided more than 21,000 high-quality jobs right here in B.C. Oil and gas extraction, related support services and natural gas distribution made up almost half of that number, while natural gas distribution accounted for another 1,700 jobs.

And the potential is enormous. As Minister Coleman [the Honourable Rich Coleman, B.C. Minister of Energy, Mines and Natural Gas] has told us, if the five major LNG projects now under consideration are completed, together they would generate more than $1 trillion in economic activity in B.C. alone over the next 30 years. This would mean that B.C.’s upstream natural gas sector and related employment would grow dramatically. For decades to come, these projects would create high-paying jobs for drillers, completion engineers, service crews and for young people looking for a career in the natural resource sector. 

Each LNG facility supports significant employment. Shell's proposed terminal is expected to employ between 7,000 to 10,000 people during peak construction and 400 jobs during operation. Similarly, the proposed pipelines offer skilled employment opportunities for pipeline engineers, welders and heavy equipment operators.

Last year, more than 31,000 Aboriginal people — or 8.3 percent of the working Aboriginal population — were employed in the natural resource sectors. And equally important, innovative partnerships are being formed between First Nation communities, government and the private sector to capitalize on the potential social and economic benefits offered by natural resource development. 

Yesterday, I met with Ellis Ross, Chief Councillor of the Haisla Nation, which is a partner in the Douglas Channel LNG Project. The Haisla have been extremely successful in developing commercial opportunities for their members on the Douglas Channel and other projects. 

Indeed, there is a growing number of First Nations who are establishing commercial relationships, including the First Nation-owned Kitselas Forest Products Limited, which managed the logging work on the Pacific Trail natural gas pipeline. What’s more, communities are working together to share knowledge and best practices. The First Nations Energy and Mining Council in B.C. has done just that, by developing innovative tools to share knowledge across communities, including templates for agreements on exploration, impact and developments.

Opportunities — Supply

B.C. and Canada are ready to realize the benefits of resource development. This country and this province are already major players in natural gas production and distribution.

Canada, in fact, is the world's third-largest producer of natural gas. Our recoverable resources are currently estimated at as much as 1,300 trillion cubic feet, or 37 trillion cubic metres. At our current rate of production, that represents over 200 years of natural gas supply. That's the gas we know about. As new shale deposits are discovered and quantified and offshore exploration continues, that number is expected to grow significantly.

Here in B.C., the extensive Horn River and Montney shale gas fields are well known. New discoveries continue, such as the recent Liard Basin discoveries in the northeastern part of the province. It's been estimated the total gas in place in B.C. alone could be as much as 1,200 trillion cubic feet. In other words, we have the resources and the supply to be a major exporter of natural gas for many years into the future.

Opportunities — Demand

It is undeniable that global demand for energy will grow significantly in the decades ahead. In its latest World Energy Outlook, the International Energy Agency projects that by 2035, the world's need for energy will be more than a third higher than it is today.

Also significant is where the demand will be: 93 percent of the expected increase in energy demand is projected to be in non-OECD countries, and China accounts for the largest share of the projected growth in global energy use, followed by India. We need to compete, and to compete aggressively, to obtain a share of the Asian market for Canada.

At the same time, U.S. domestic production of both oil and natural gas is increasing at a dramatic rate. Now, the U.S. market is not going to disappear anytime soon, but the U.S. will be buying less oil and gas from us than in the past. So market diversification for Canada’s hydrocarbons remains a top priority for our Government.

The logical market for natural gas from B.C. and elsewhere in western Canada is across the Pacific, where Japan and Korea currently represent 50 percent of global demand. According to the IEA's projections (under the IEA’s New Policies Scenario), between 2010 and 2035, natural gas consumption in China alone is expected to grow by five times and India’s by almost three times.

In fact, in every Asia–Pacific country I visited in the past year — India, China, Japan, South Korea, the Philippines — energy security is a primary concern: where to find, over the long term, the energy needed to fuel economic growth and meet the demands of an expanding middle class.

South Korea is the tenth-largest energy consumer in the world, and it is the world’s second largest importer of LNG. It relies on imports for 97 percent of its energy supply. Japan, the world’s largest importer of LNG, relies on imports for close to 85 percent of its energy supply. It is no coincidence that partners in the LNG projects proposed here in B.C. include major energy companies from Asia: Mitsubishi of Japan, PetroChina, the Korea Gas Corporation (KOGAS) and Petronas of Malaysia, through its recent acquisition of Progress Energy.

Canada advantage

These and other investors see the Canada advantage.  First, unlike some of the world's major energy producers, Canada is a strong, stable democracy. We believe in the efficiency of the free market. The rule of law prevails. Second, we have a highly skilled workforce ready and able to meet any challenge. Third, our Government has reduced taxes for families and businesses to make Canada an attractive destination to live and to invest. Fourth, our Government reformed our regulatory system to make it more efficient and timely by streamlining the review process for major projects and eliminating wasteful duplication. Proximity is another positive. A fully laden LNG tanker departing from Canada's Pacific Northwest can reach Pacific basin LNG markets in 11 days — faster than from some traditional suppliers including the Middle East or Africa.

Yesterday, I announced that our Government approved last Friday an export licence for LNG Canada to export LNG from the terminal proposed by the Shell consortium in Kitimat. This will be the third long-term licence to be issued since 2011, and it’s a clear example of Canada's commitment to diversify our energy export markets and strengthen our trading partnership with the Asia–Pacific region.

Opportunity for investors

The number and size of the projects proposed here in B.C. and across the country demonstrate the high level of confidence that investors have in this province and in Canada.

We estimate there are well over 600 major natural resource projects underway or planned in Canada over the next 10 years, representing a total investment of some $650 billion. And, we’re determined to see that Canadians enjoy the benefit of those dollars — to make Canada the most attractive destination for investment in the world, because investment means jobs, growth and prosperity and that must be and is our first priority as a government.

From the beginning, our Government has focused on the fundamentals: the economic basics that promote stability and predictability. It's the right strategy. Canada's credit rating is Triple-A. For the fifth year in a row, the World Economic Forum has ranked Canada's banks the soundest in the world. Canada is the only country in the G7 to have recovered all of the jobs lost during the last recession. More than that, we've added over 924,000 net new jobs since July 2009. Real GDP is now significantly higher than pre-recession levels — again, the best performance in the G7.

A great deal of Canada's resilience during the recession, as well as our relatively strong performance since then, can be attributed to our Government's conservative approach to fiscal management.

This approach, and the solid economic performance that has accompanied it, have not gone unnoticed. Both the OECD and the International Monetary Fund picked Canada to be among the leaders in economic growth in the industrialized world over the next two years. Forbes Magazine picked Canada as one of the best countries in the world in which to do business.

Responsible Resource Development

We know that the LNG industry in Canada is facing significant global competition and a narrow window of opportunity to bring these B.C. projects online. That’s why expeditious and predictable regulatory processes and certainty around project review timelines are critical.

For the past two years, federal, provincial and territorial energy and mines ministers have singled out regulatory reform as the key to realizing the full potential of Canada’s natural resources. Last year, the Government streamlined the review process for major economic projects, while continuing to protect the environment with our plan for Responsible Resource Development.

Key outcomes of our changes include firm, beginning-to-end timelines for project environmental assessments. Where equivalent processes exist, provincial reviews can be substituted for federal processes — if the provincial process is as tough as the federal one. This will eliminate unnecessary duplication that has often led to project delays. In fact, I am pleased to say that collaborative work is underway between Canada and British Columbia regarding regulatory cooperation for LNG projects. This collaboration is founded on a shared sense of opportunity and is consistent with the objectives of our plan.

While we’re making significant progress to streamline the review process, we are also going further than any other government to ensure that the development of Canada’s natural resources is done in an environmentally responsible way.

We’ve already taken a number of significant actions. For example, to improve pipeline safety across Canada, National Energy Board annual inspections of oil and gas pipelines will increase from 100 to 150. We are doubling the number of annual comprehensive audits of oil and gas pipelines from three to six to identify potential safety issues before they occur. Earlier this month, the Government of Canada proposed regulations for tough new financial penalties for individuals and companies that violate the National Energy Board Act. All these measures will further strengthen public safety and environmental protection.  And we are committed to doing more, because our objective is to have world-class safety standards.

Now is the time to demonstrate that economic prosperity and environmental responsibility are not a question of either/or and that industry will call upon its great history of innovation to ensure Canada's position as a stable and reliable energy supplier of global importance and exceptional environmental responsibility.

Taken together, these changes are producing results. In the past year, we’ve seen more major resource projects enter the regulatory review process, such as the Pacific Northwest LNG project in Prince Rupert, another multi-billion dollar initiative.

Engagement of Aboriginal Groups

Responsible Resource Development permits Canada to capitalize on jobs and growth and ensure strong environmental protection. It also helps Canada develop its tremendous natural resources to the advantage of all Canadians, including Aboriginals. 

Engagement with Aboriginal communities is key to ensuring that the lines of communication are open and that potential issues can be addressed early.

Our plan has an entire component dedicated to Aboriginal consultations that are accountable, meaningful and early. This includes the Economic Action Plan 2012 investment of more than $690 million to support skills development, education and infrastructure so that more Aboriginal peoples are prepared to take advantage of the significant opportunities.


There is no question that natural resource development benefits all Canadians. Directly and indirectly, the natural resource sector accounts for one-fifth of all the economic activity in this country. Here in British Colombia, the sector provides direct employment for more than 100,000 people and 80 percent of the province's exports.

The opportunity to grow those benefits and secure them for generations to come has never been greater. To seize this opportunity, we must build the infrastructure to transport our energy to countries that need it, and we must do so in a way that reflects Canada's commitment to environmental responsibility.

Our Government will keep taxes low, maintain a conservative approach to fiscal management and open new markets for Canadian natural resources around the world.

Our goal is also to make Canada the North American platform for LNG exports. The interest in seizing opportunities for LNG in British Columbia gives me every confidence that our goal is well within reach.

Thank you.