While Enbridge Inc. and other companies are facing significant obstacles to their plans to ship Albertan oil across Canada and the United States, a parallel effort to bring British Columbia’s vast natural gas resources to market is having much better luck. At least 11 multibillion-dollar projects to build gas pipelines and facilities have either been announced or filed, most in the past two years. These ventures all propose to pipe gas from B.C.’s northeast to the Pacific coast, where it would be cooled to liquid form in vast, high-tech refrigeration facilities and shipped to Asian markets, where the price of liquid natural gas (LNG) is higher. But these projects, unlike the oil pipelines, have generally won the support of local communities and the B.C. government. Supporters say the gas projects will bring more and better jobs and provide greater tax benefits to B.C. They also say that the potential environmental risks associated with LNG, a clean-burning, quickly evaporating fuel, are far lower than Alberta’s diluted bitumen. Native Canadians, known as First Nations, are striking higher-value equity stakes and economic benefit agreements in the proposed LNG projects than those currently offered by Enbridge in the proposed Northern Gateway oil pipeline project.
LNG projects are big, costing as much as $16 billion at the front end. The capital cost means that deep-pocketed investors are a must—usually between three and six, according to Thomas Valentine, an oil and gas partner at Norton Rose Fulbright’s Calgary office. Valentine helped the first such proposed project, Kitimat LNG, get off the ground in the mid-2000s, and his firm currently represents investors in two LNG projects. Among the major downstream investors of B.C.’s LNG projects are several Asian state-owned enterprises that stand to get a share of the output.
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