Cost-benefit analysis of Kitimat Liquified Natural Gas project of British Columbia

The Kitimat Liquid Natural Gas project (KMLNG) represents a substantial opportunity for several major players in the BC Natural gas sector and many are excited at the possibilities of the proposed KMLNG and possible economic activity to follow. Recently the companies Apache, EnCana, and EOG resources cleared final government environmental approval to move to the final stage of application to make the KMLNG a reality. The KMLNG will include the construction of a 463 km pipeline project between Summit Lake BC and Kitimat as well involved the construction of the LNG plant itself. The natural gas resource that these companies are extracting comes with many consequences both positive and of management concern for the province. Considerations regarding green-house gas emissions, ecological impacts, water consumption from hydraulic fracturing, and long-term site degradation are all considerations that are not accounted for in financial calculations for the KMLNG. This project will examine the Net Present Value of KMLNG from the social perspective for British Columbia and compare this to the value expected for the companies Apache, EnCana and EOG resources on a go forward basis. This project will examine both the financial aspects of KMLNG for industry and contrast this with the value of KMLNG from the social perspective. This project will contrast the positive economic benefits with the cost of the ongoing gas industry developments in British Columbia. The problem with the current economic condition is that the price of natural gas is low due to excess supply in North America. With Canada's first LNG export project completed, access to energy-hungry Asian markets could change the economic equation dramatically. --P. ii.