British Columbia is behind schedule on Premier Christy Clark's much-ballyhooed liquefied natural gas plans, says one industry expert.
The Liberal government released the first details in this week's budget about how it will cash in on the LNG boom, but Zoher Meratla says the province is already lagging.
"It is way behind schedule," said Meratla, a B.C.-based expert in the LNG industry. "I don't see why it has taken so long."
Clark won last year's provincial election in large part on a promise to foster an LNG industry that she said will create tens of thousands of jobs and wipe out B.C.'s debt. The province would start collecting LNG revenues, Clark told voters, by 2017.
LNG revenues 'not possible' in 3 years
Some details were revealed in Tuesday's budget but the plan to tax and regulate the industry, originally expected last year, has yet to be finalized and Finance Minister Mike de Jong appears to be tempering expectations. He now says he doesn't expect LNG revenues for at least three to five years.
Meratla, who was quoted in the B.C. Liberals' official campaign platform last year, said there is no chance the province will see any LNG revenues three years from now.
"It's not possible, because none of the LNG plants has any financial investment," he said. "It takes at least four years to build an LNG plant, and none of the plants is at a financial investment decision."
The Liberal government's publicly stated goal is to have at least three LNG terminals up and running by 2020.
On budget day, de Jong admitted the goal was "lofty" but he insisted it was still within reach.
"I think those were optimistic numbers," said Meratla.
"I'm not criticizing the government, because there was a lot of interest in British Columbia by proponents to set anchor. But now the dust has settled. ... I see probably by 2020, maybe two — possibly — but we'll have to move soon."
LNG tax plan is a two-tier structure
The LNG tax plan released Tuesday contemplates a two-tier tax structure that would begin at 1.5 per cent as LNG terminals begin production. That would be followed by second-tier tax, which could increase to seven per cent once a plant is running and capital costs have been deducted.
However, de Jong said even those details could change before legislation to tax and regulate the industry is released this fall.
This week's budget also included $29 million to support development of the liquefied natural gas industry, as well as $9 million for environmental assessments for LNG plants, pipelines and other major resource projects.
The 2014/2015 budget is projected to be balanced, with a surplus of $184 million but few new spending announcements.