British Columbia’s return of a minority Liberal government earlier this month, could spell trouble for planned resource projects.
Those that are already advanced, like Kinder Morgan’s Trans Mountain pipeline expansion and some liquefied natural gas proposals, may try to get going. A lot of money has been spent and such projects are designed to withstand electoral change over decades.
B.C. was shaky when it had a majority Liberal government, due to its unique combination of an aggressive environmental lobby and a powerful aboriginal population. But now that Christy Clark's Liberals have been reduced to a minority and will need the support of the Greens to stay in power — or that the left-leaning New Democratic Party and the Greens could get together to form a government of their own — the political risk has skyrocketed.
To be sure, B.C. is known as a place of wacky politics. The difference this time is that the world is watching, since much of the cash on the line comes from abroad.
The inclusion of absentee ballots this week after a tight May 9 election result confirmed that the Liberals won 43 seats in the 87-seat provincial legislature. The NDP has 41 seats and the Greens have three.
The vote for change gives oversized influence to Green Leader Andrew Weaver. He’s been in talks with both parties about forming a coalition in exchange for adoption of his own priorities, such as official party status, banning corporate and union donations to political parties, and changing the electoral system.
But environmental organizations that backed the NDP and the Greens during the campaign have their own concerns and want those concerns acted on.
One of the first indications of investor concern is the weak pricing of the Kinder Morgan Canada Ltd. initial public offering to help fund construction of the $7.4-billion Trans Mountain expansion. It’s now expected to sell at around $17.00 a share, rather than the targeted $19.00 to $22.00 range, an indication that demand from investors is not as strong as previously expected
More reactions to B.C.’s new political landscape will come soon enough from LNG front runners – projects like Woodfibre LNG, the Shell-led LNG Canada and the Petronas-led Pacific North West LNG. They are currently restructuring to reduce costs so they are competitive with other regions like the U.S. Gulf. As demand for LNG increases, they’ll have to decide whether to take the next step and begin construction — or put their projects on ice, perhaps until government becomes more supportive, perhaps for good.
They could count on the provincial Liberals because they were big LNG boosters. Now it’s a different story. The Greens are against fossil fuels altogether, while the NDP could give a hard time to already challenged LNG investments in B.C., such as increasing carbon taxes, reviewing hydraulic fracturing and demanding higher provincial rent.
