Canadian natural gas closer to being a global energy source with new B.C. fiscal framework: CAPP

March 22, 2018 - Calgary, Alberta

Today’s fiscal framework for natural gas development in British Columbia is a critical step to create a global and competitive liquefied natural gas (LNG) industry on the West Coast, essential to attracting investment and creating jobs, the Canadian Association of Petroleum Producers said today.

The changes are designed to provide a fair return for B.C.’s natural resources; ensure jobs and training opportunities for British Columbians; respect and make partners of First Nations; and protect B.C.’s air, land and water.

The new framework forms the basis for the B.C. government’s discussions with LNG Canada, which is moving toward a final investment decision on a project that, if approved, would be the largest private sector investment in B.C. history. The government estimates that the project would create 10,000 construction and up to 950 full-time jobs. Direct government revenues under the framework are estimated to be $22 billion over 40 years.

The new fiscal framework will help put natural gas development in the province on a level playing field with other industrial sectors, removing certain discriminatory elements that would have placed an unfair cost burden on the industry. Key elements of the new fiscal framework include:

  • The elimination of the LNG income tax that had required LNG-specific tax rates that other industries do not have to pay;
  • Relief from provincial sales tax (PST), in line with the policy for manufacturing sectors: this relief is subject to repayment in the form of an equivalent operational payment;
  • The removal of a discriminatory electricity tariff that was 40 per cent higher than rates paid by other industrial users in B.C.;
  • New GHG emission standards under the Clean Growth Incentive Program, announced in Budget 2018.

Canadian Association of Petroleum Producers quotes: Tim McMillan – president and CEO, CAPP

“This is a step in the right direction to build a robust and competitive LNG industry that will create jobs for British Columbians.”

“The global window to build LNG is closing – but these changes will help get Canada into the game. These changes will help ensure a level playing field for LNG proponents competing against other jurisdictions around the world.”

“The creation of a LNG export capacity along Canada’s West Coast will create significant jobs, economic growth and government revenues for the people of British Columbia and Canada.”

“Canada’s natural gas can help meet world demand – in China, India and Europe – for clean, reliable, affordable energy.”

“If Canada cannot sell its abundant natural gas to the world, other countries will. This means creating jobs in Iran, not in British Columbia.”

“Right now LNG is operating in a highly competitive environment so there are many contributing factors that go towards deciding whether or not a project proceeds or not.”

About the Canadian Association of Petroleum Producers

The Canadian Association of Petroleum Producers (CAPP) represents companies, large and small, that explore for, develop and produce natural gas and crude oil throughout Canada. CAPP’s member companies produce about 80 per cent of Canada’s natural gas and crude oil. CAPP's associate members provide a wide range of services that support the upstream crude oil and natural gas industry. Together CAPP's members and associate members are an important part of a national industry with revenues from crude oil and natural gas production of about $110 billion a year. CAPP’s mission, on behalf of the Canadian upstream crude oil and natural gas industry, is to advocate for and enable economic competitiveness and safe, environmentally and socially responsible performance.