British Columbia s LNG Advantage Steve Carr. Deputy Minister Ministry of Natural Gas Development 2014 CAPP SCOTIABANK Investment Symposium West Coast LNG Panel Plenary Panel
Our Competitive Position Short transport times to Asian markets Competitive fiscal policies Secure, stable government World leading environmental standards Ongoing First Nations engagement Large gas reserves Labour availability Strong regulatory regime 2
Short transport times to Asian markets Canada 7,300 km 10 days US Gulf Coast 17,145 km 23.5 days Mozambique 13,000 km 17 days Australia West 6,855 km 9.5 days Australia East 7,000 km 9.5 days Source: IHS CERA 3
Fiscal and Policy Framework Elements of B.C. s Competitive Framework for LNG development: Tax regime Environmental policies First Nations Upstream development Labour supply Regulatory 4
Competitive Framework: Tax B.C. is committed to providing certainty on tax Designed to keep B.C. competitive with other jurisdiction Ensure proponents get capital out early Based on four core principles for fair and balanced approach:: 5
LNG Income Tax: Creating certainty for LNG development Applies to income from liquefaction process at LNG facility and applies to LNG for both domestic and export markets 6
Application of LNG Income Tax (Plant Producing 12 MTPA) 7
Is B.C. a competitive jurisdiction? 8
International Competitiveness: EY Study EY analysis & report: review of tax and royalty regimes of key competitor jurisdictions Australia Alaska, Georgia, Louisiana, Oregon and Texas Concluded B.C. is competitive Low overall tax burden and competitive royalty regime 9
Competitive Tax Regime for LNG: EY Study 10
Low Risk Jurisdiction 11
Policy Framework: Environmental Policies World-class environmental policies: Strong regulatory regime Legislated aggressive GHG reduction targets Revenue neutral carbon tax Carbon neutral government Legislated requirement for 93% clean energy Committed to maintaining leadership on climate change and clean energy by ensuring the cleanest LNG operations in the world 12
GHG Emissions and LNG As cleanest burning fossil fuel, natural gas is part of a global climate solution When replacing coal, LNG can be up to 20% lower GHG emissions for the full fuel cycle GHG Policy We are considering a single, world-leading GHG benchmark for LNG facilities We exploring flexible compliance options to meet GHG benchmark B.C. will look to mitigate costs 13
Policy Framework: First Nations First Nations are generally supportive of LNG development as a low risk resource B.C. is involved in LNG-related negotiations with approximately 34 First Nations First Nation opportunities in agreements include: Financial benefits from B.C. Environmental initiatives Skills training and jobs LNG opportunities throughout B.C. value chain: upstream, midstream and downstream 14
First Nations: Agreements Upstream Several upstream agreements in place with First Nations near gas fields and negotiating new agreements with remaining First Nations Midstream Precedent with Pacific Trails Pipeline agreement with First Nations Limited Partnership and pursuing agreements for new pipelines with about 30 First Nations along pipeline routes Downstream Some agreements with Haisla First Nation and revenue sharing negotiations underway for new LNG development on provincial lands 15
Policy Framework: Upstream Development (B.C. s resource base) 2,933 trillion cubic feet (tcf) of natural gas from tight and shale Montney play has 1,965 tcf of gas 271 tcf is expected to be recoverable for market Horn River play has 448 tcf of gas 78 tcf is expected to be recoverable for market 16
Upstream Development: Competitiveness Upstream competitiveness key element of LNG overall competitiveness New Royalty Program New royalty program ( Tier 1 ) to incent drilling activity in shallower areas Opens up 32 trillion cubic feet of natural gas to development in the Montney Other upstream initiatives being considered 3-year Infrastructure Royalty Credit Program Pilot new royalty credit program targeted to innovative, clean technologybased joint infrastructure projects (e.g. water recycling, GHG emission reduction projects, etc.) New OGRRIP capital triggered by positive Final Investment Decisions 17
Access to Labour Invest with Confidence LNG projects need Sufficient supply of skilled workers A stable labour environment that supports business Collaborative government B.C. s Highly Skilled Workforce 2.4 million workers largest workforce in western Canada Canada has the highest rate of post-secondary education in the world World-class education and training system 18
Labour Supply Plan Priorities K-12 System Public and Private Post-Secondary Institutions Apprenticeship Systems Labour Market Programs Web and Marketing Promotion and Attraction Labour Mobility Credential Harmonization Federal and Provincial Immigration Streams Temporary Foreign Workers Foreign Qualifications Recognition 19
Strong Regulatory Regime Community Planning Permitting Environmental 20
B.C. is an attractive place to invest Continue to work to ensure that B.C. remains competitive Global and economic conditions will continue to be considered as B.C. finalizes the key components of the LNG Income tax and environmental policies to ensure B.C. remains competitive 21
2014 INTERNATIONAL LNG IN BC CONFERENCE MAY 21 23 2014 VANCOUVER CONVENTION CENTER https://www.lnginbcregister.ca/register 22