Natural gas producers welcome tax reclassification for LNG facilities

February 20, 2015 - Calgary, Alberta

The federal government’s tax reclassification for potential liquefied natural gas (LNG) export facilities enhances Canadian competitiveness and supports the continued success of the country’s  upstream natural gas industry, the Canadian Association of Petroleum Producers (CAPP) said today.

“LNG development presents a tremendous economic opportunity for British Columbia and Canada, and is vital to the long-term viability of the Canadian upstream natural gas industry and the substantial benefits that flow from it,” said CAPP president and chief executive officer Tim McMillan. “The tax reclassification recognizes the need for a globally competitive business environment and will help create a more level playing field. It will also enhance our ability to attract the significant investment capital needed to establish a Canadian LNG industry and grow upstream production.”

Canadian natural gas continues to be displaced in our traditional markets in Eastern Canada and the United States because of supplies closer to these markets and without access to new global markets, could constrain Canadian natural gas production by about 40 per cent by 2030. Conversely, the International Energy Agency (IEA) forecasts global natural gas demand to increase about 60 per cent by 2040.

“The IEA forecast also underscores the heavy competition for LNG development – the United States and Australia are projected to become major players – and notes the relatively high production cost of Canadian natural gas that’s needed to supply proposed LNG facilities,” McMillan said. “This makes the federal government’s announcement all the more important for our industry and creates opportunities to access new markets for Canadian resources.”