This article originally appeared in the Financial Post. Below is an excerpt from the article.
By Philip Cross, June 7, 2024
After years of planning and construction, the first major liquified natural gas (LNG) project in British Columbia — LNG Canada’s export terminal in Kitimat — is about to be completed. The $18-billion investment is supplied by a pipeline from northeastern B.C. The terminal’s imminent completion is already stoking interest in other LNG projects, including the Cedar LNG project also at Kitimat (a joint venture of the Haisla Nation and Pembina Pipeline Corp.), the Woodfibre LNG terminal near Squamish, Ksi Lisims LNG on Pearse Island, a floating export facility, as well as a possible Phase 2 of the LNG Canada project.
To help understand the benefits of more LNG projects, a study I’ve just completed for Resource Works documents the impact on the B.C. and Canadian economies of a $4.1-billion LNG project. The $4.1-billion figure is an estimate of the annual investment made by a large LNG project that ultimately may total tens of billions of dollars over the decade such undertakings typically take to complete. Conversely, if nothing does take the place of the LNG Canada investment now winding down, the estimates can be used to approximate the loss of GDP and jobs that will occur as LNG investment dries up.
The $4.1-billion investment directly boosts GDP by $4.5 billion, according to a simulation using Statistics Canada’s Input/Output model. The multiplier effect of 1.09 reflects both purchases of inputs from other industries and higher consumer spending as incomes rise. The higher output generated requires the employment of 35,336 more people. Governments also benefit from the development of natural gas. In B.C., royalties have grown from just $169 million in fiscal 2012-13 to $684 million in 2023-24, and are projected to generate $23 billion of government revenue over the estimated 40-year life of the LNG Canada project alone.
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