Rick Koechl and Mike Kroecher make an interesting financial case for using natural gas to generate electricity, but I fear they are too close to the thing they are looking at to get it in perspective. Back to that in a moment.
They do make a couple of interesting points: one being that the provincial government forced BC Hydro to acquire so much electricity from IPPs that for a period this year it was only buying IPP power at painfully costly contract prices, and not generating anything at some of our heritage generating plants which can produce power for pennies. How stupid is that?
It's not BC Hydro's fault, the government has a jurisdictional gun at Hydro's back, and it flicked off a number of CEO's and Board members to get the team of yes men and gofers they have in place now. Trouble with this is, they won't stand up to for what's good for British Columbians.
The second point made by Mr. Koechl and Mr. Kroecher is that government can set royalty rates to drive whatever revenue and financial outcomes it wants. That sounds so easy - I've said it myself - but we have seen repeatedly in North America, and even closer to home, between BC and Alberta, that gas producers are actually a highly mobile bunch, and don't hesitate to pack up their rigs and drive across whatever borders they need to maximize their own revenues and to register their objections to grabs from governments. The consequence of a royalty hike in BC at today's gas prices will not be increased revenues to the province, but a downing of tools in Mr. Koechl's and Mr. Kroecher's backyard.
On the climate change front, that's all for the best - leave the stuff in the ground. The gas industry lives in a largely unregulated market, and it frequently does exactly what free-market fundamentalists say won't happen. The so-called wisdom of the marketplace, in the case of natural gas, has resulted in such a piling-on of activity in northeastern BC that there's far too much gas being produced, at a cost that exceeds today's price for gas, and no customers at all in North America who want to buy it. Government could fix that pretty fast by jacking up royalty rates. The wisdom of the marketplace will kick in then, for sure, and they'll just stop producing. So much for increased revenues for government, for us.
But here's the big problem, and why Mr. Koechl and Mr. Kroecher, and the Liberal government and the next government in BC need to step back from the situation: Site C and gas-fired generation are all being contemplated not to provide electricity for British Columbians, not to foster jobs or manufacturing in the province, not to serve any useful purpose other than to provide energy for the energy industry itself.
Before LNG exports became the magic dust that would bail the province out of its terrible revenue crisis, half or more of the electricity produced at Site C was intended for the gas producers around Fort Nelson, the Horne River Basin, and the far northeast of BC. Pre-LNG, much of that gas was destined for the tar sands, to produce more bitumen.
Now we're talking about whacking great amounts of electricity from Site C and from gas-fired generation to provide power to liquify natural gas. Again, using all this new energy to process even more new energy resources.
We've become energy dogs chasing our own tails, and failing to recognize that it is a losing game, economically and ecologically. The harder we bite, the more we bleed.