CAPP President David Collyer says LNG plants should be classified as manufacturing facilities
Canadian oil and gas developers are seeking tax breaks worth up to $2 billion for liquefied natural gas (LNG) plants in British Columbia, the Vancouver Sun reports.
David Collyer, president of the Canadian Association of Petroleum Producers (CAPP), said the industry wants LNG plants to be reclassified as manufacturing plants rather than part of the gas transmission process, which would allow them to write off 90 percent of their capital investments over seven years, rather than over 27 years.
Collyer said the change would "positively influence near-term final investment decisions for LNG liquefaction facilities."
The industry says the tax concession would help the plants compete with other nations including the U.S. and Australia to take advantage of favourable market conditions for LNG exports.
Travis Davies, spokesman, CAPP
It would certainly make us more competitive
"Our position is that liquefied natural gas is more like a manufacturing process than an exploration production process, and given some of the stiff competition we are facing, it would certainly make us more competitive in terms of making a market window and getting some of these projects underway," said CAPP spokesman Travis Davies.
Manufacturing plants receive the higher capital cost allowances because they are understood to stimulate investment and create jobs.
Based on figures developed by Kin Lo, an associate professor at the University of British Columbia's Sauder School of Business, the Vancouver Sun estimates the change for LNG plants would amount to a tax break between $1.5 billion and $2 billion for the creation of 800 permanent jobs.
A number of LNG projects designed to export natural gas from Canada are planned in the province's Kitimat area on the west coast.