He says the industry favorable LNG taxation system recently announced by Finance Minister Mike De Jong has provided the confidence developers require to pull the trigger on major projects.
Last month’s announcement, which cut in half what the government had proposed last year, also came just two weeks prior to the biggest monthly sale this year of natural gas and crown petroleum land rights.
In fact the November Sale totaled over $209 million in bonus bids and was nearly $75 million more than the previous ten monthly sales combined.
“I think we’re going to see continued growth, and I think the price of some of these sales are going to be increased,” Peace River North MLA Pat Pimm said. “As we get more properties that are proven out – obviously if there’s proven reserves underneath the surface – these advanced sales are going to bring higher than normal returns to the province.”
As reported earlier in the month, the November sale was largely driven by the purchase of two drilling licenses, which accounted for 90 percent of the aforementioned total tender bonus.
“Basically there were lands that were in the half-way area, kind of north of Hudson’s Hope and through that area,” MLA Pimm goes on to say. “So these are two parcels, and I think they were about $190 million for the two of them, so that’s certainly a staggering amount for those properties.”
MLA Pimm adds, “But again, that’s in an area that – there’s been good activity out in that area – and it’s an area definitely that reserves have been proven out.”
Relating this back to Petronas, that LNG plants need a lot of gas and the Malaysian company is projecting two billion cubic feet per day just to start.
Since its proposal is one of four such facilities expected in the Northwest, one may signify it with a major drilling increase in the Montney and Horn River gas fields, which are among the largest in the world.
However, Mayor Streeper says that in turn means a major infrastructure challenge in the Northeast, starting with immediate road improvement projects totaling at least $100 million.