Liquefied natural gas export in Nova Scotia: one project follows another While the LNG Qubec project in Saguenay is awaiting a decision from the Quebec government, another liquefied natural gas export project has recently made headlines. The Goldboro project involves the expansion of an existing pipeline in Quebec to supply natural gas to a liquefaction terminal to be built in Nova Scotia. This project initiated in 2013 is designed on the same model as the one started in 2014 in Saguenay, in that it relies on, among other things, the use of tax havens, massive public funds, high production costs, and "greenwashing" rhetoric.
Tax havens are the rule
In a fall 2019 fact sheet, we revealed that the limited partners' capital for the Quebec LNG project would be channeled through tax havens, thereby lowering the company's dividend taxes. Pieriadae's Goldboro project has chosen to set up a subsidiary in Ireland, a notorious tax haven where Pieriadae claims to have no particular activity. Setting a subsidiary in tax havens consists in a widely used strategy among multinational energy companies to transfer their profits where tax rates are very low. One might thus wonder if the Pieridae’s Irish subsidiary was designed for such purpose.
An industry dependent on public funds...and embarrassed to be so
Companies that circumvent state tax frameworks are not afraid of paradoxes. While they do everything possible to reduce their tax contribution to national treasuries, they do not hesitate to beg for financial assistance from the governments of the countries where they operate.
It is an embarrassing open secret that many large private fortunes are built on state support for a class that claims to stand on its own two feet. Pieridae, the promoter of the Goldboro project, was so embarrassed that he sent a demand letter to opponents of the project who publicly revealed that Pieridae had requested a $925 million loan from the federal government.
The dependence of the liquefied natural gas industry on public funds is well documented. These projects require public funds in the form of tax breaks or subsidies to get off the ground. LNG Qubec is well aware of this, which is why the mandate of its lobbyists registered in the Quebec Lobbyists Registry includes the task of obtaining support through public funds. Despite this evidence, LNG Qubec persists in publicly claiming that its project is viable without public funds.
A shaky business model
Like the LNG Quebec project, the Goldboro project would face the highest production costs in North America. Two factors work against projects located on the Northeast Coast of North America. First, they would need to transport natural gas by pipeline over 4,000 kilometers, unlike their direct competitors in the Gulf of Mexico who export natural gas from nearby wells. This additional transportation cost represents 30 to 40% of total production costs. The second adverse factor is the cost of infrastructure: five of the six operational export terminals in the U.S. are conversions of LNG import terminals to export terminals, which has the effect of lowering the required infrastructure investments by about 40%, according to calculations by researchers at the University of Calgary.
In the context of uncertain global demand for liquefied natural gas, these high production costs make them risky projects and help explain why both the Goldboro and Quebec LNG projects are struggling to secure private financing.
The rhetoric of the energy transition
In order to convince civil society that the construction of liquefied natural gas infrastructures is in the public interest, the industry is not sparing any lies about the alleged virtues of this natural gas. Both LNG Qubec and Pieridae claim that their liquefied natural gas would contribute to the substitution of more GHG-emitting hydrocarbons. However, not only is natural gas from the fracking process no less polluting than coal, but the export of liquefied natural gas to Europe would slow down the development of renewable energy.
Putting an end to this industry
The construction of liquefied natural gas export terminals is vital to the Canadian gas industry. Without these terminals, Canada's annual natural gas production will stagnate, while domestic liquefaction capacity will allow the industry to increase production by 50% by 2040, according to a projection by Canada's Energy Regulator.
While the climate clock is ticking, our societies are struggling with the burden of resisting the onslaught of an industry eager to build new fossil fuel infrastructure that will lock us into this fuel for decades to come. While this industry defends its deadly private interest tooth and nail, the Trudeau and Legault governments, who are supposed to represent the public interest, are complicit in these climate-damaging projects.