The federal Liberals took a step in the right direction for Canadian natural resources development yesterday with their approval of the Pacific Northwest LNG export facility in Northern British Columbia. The government recognized that the project, as well as the associated upstream natural gas development, could lead to substantial economic investments of up to $36 billion. The results will be jobs and salaries for Canadian families, and revenues for governments to fund important services such as health care and education.

While Pacific Northwest LNG has yet to make its final decision on whether to move forward with the project, this does move the project and its economic benefits one step closer to to fruition.

Should liquefied natural gas (LNG) facilities not be built in B.C., the costs could be substantial. A 2015 Fraser Institute study found that the cost of regulatory delay imposed upon LNG investments in B.C., defined as export revenues forgone, is substantial, starting at C$22.5 billion per year in 2020, rising to C$24.8 billion per year in 2025. This means that the delays have already likely resulted in foregone revenues.

The development of LNG export facilities will also be essential for growing Canadian natural gas production. The National Energy Board’s (NEB) Canada’s Energy Future 2016 report found that in a scenario where no LNG exports occur from now until 2040, Canadian natural gas production will only reach 437 million cubic metres per day, a two per cent growth over 2015 levels. In the reference (baseline) scenario, which has LNG exports, natural gas production grows by 19 per cent from 2015 to 2040. The high LNG export scenario sees the most growth in natural gas production, which would be projected to move from 427 million cubic metres per day in 2015 to 614 million cubic metres per day in 2040, a growth of 44 per cent.

The economic opportunities exporting LNG and Canadian natural gas to Asian markets could also be considerable. The International Energy Agency recently forecasted that natural gas demand in Asia is expected to increase from 461 billion cubic metres (bcm) in 2013 to 1,202 bcm in 2040, or almost 25 per cent of global demand. Canada has a lot to lose if we can’t get full access to these markets.

To be clear there’s still a long way to go until an LNG export terminal is actually built in B.C. and Pacific Northwest LNG faces a long road ahead, with the government placing 190 legally binding conditions on their approval, including a cap on the amount of emissions from the facility. Pacific Northwest LNG will also likely face a number of legal challenges in the coming future. All that being said, this approval is a step in the right direction, and it could help Canadians achieve greater public and private economic gains from developing our resources.