The stampede of would-be energy exporters to Canada’s west coast is potentially a headlong rush into folly, if the economics are considered. Never mind the ecological risks. There is an as-yet unmeasured cost to the robust eco-tourism, sport fisheries, and recreational travel industries that has not been adequately addressed in media or by the government of British Columbia.

Whereas Canada’s eagerness to build LNG export facilities using other people’s money seems like a good idea, what are the risks to Canada and British Columbia if the financial ability of the foreign National Oil Companies and Supermajors who are the driving forces behind these projects run into difficulty?

Chevron, Shell, BP ExxonMobil and Apache are all under pressure to reduce spending.

The Globe and Mail reported in February this year that Apache Corp was already ‘sweating’ trying to find partners after Rich Coleman, Natural Gas Development minister for British Columbia stated that they should be prepared to spend “at least $1 billion just to get to a final investment decision”.

And there are indications from LNG projects around the world that the costs are routinely underestimated by a large degree, which has resulted in many project cancellations in Australia and the Middle East. Add to that mix the fact that future supply is already set to exceed future demand, and you have a recipe for financial disaster.

Rising Costs are Forcing Projects to Be Cancelled Around the World

Woodside Petroleum Ltd. (ASX:WPL), according to a story in the Wall Street Journal on April 14, 2014, “has shelved an onshore gas-export project in Australia estimated to cost over US$40 billion to build, the strongest sign yet that the country’s energy construction boom may be peaking.”

So after spending $2 billion investigating the plant site, it has elected not to proceed. The company said “it “doesn’t meet the company’s commercial requirements for a positive final investment decision.”

According to the same article, that’s not the only LNG plant being rethought. Royal Dutch Shell (NYSE:RDS.A) has also raised doubts about the viability of its Arrow LNG joint venture with PetroChina Co. 601857.SH -0.80% in Queensland state, citing cost pressures.

But is that factoring into the public discourse in British Columbia?

On the contrary, BC Premier Chirsty Clark, having reversed her electoral platform opposing the Northern Gateway pipeline, is now the head cheerleader for the energy sector, and is wearing blinders when it comes to negative economic logic. In this Globe and Mail video, she makes sweeping and unsubstantiated grandiose claims such as “the LNG industry in BC will create 100,000 jobs” and be worth “$1 trillion in economic activity”, Ms. Clark’s promotional hubris would embarrass the most aggressive Howe Street shill.

And this is emblematic of the whole rush to build the LNG machine.

A thorough analysis of the economics of the various LNG export infrastructure plans, in fact, suggest that the whole complex is economically very risky on many fronts.

World NatGas Demand is Rising, but Supply is Rising Faster

According to the Energy Information Association’s International Energy Outlook 2013, world natural gas consumption is poised to increase from 113.0 trillion cubic feet in 2010 to 185.0 trillion cubic feet in 2040. Production of natural gas globally is expected to reach 187 trillion cubic feet by 2014, indicating a more or less match between supply and demand.

That suggests, in pure supply and demand terms, a flatline price in that timeframe, even though the EIA predicts a rise in price to almost $8 be mbtu in that time frame. Historically, the EIA’s price forecasts, however, err toward the excessively bullish.

China’s Potential Shale Gas, and Japan’s Imminent Methane Hydrates Not Considered

Japan, China, and South Korea are the world’s largest importers of LNG. In fact, if you look at the projected sales channels in almost every economic assessment of proposed LNG plants, they uniformly anticipate the bulk if not all of their sales going to these regions.

However, in the case of China and Japan, there is much that is not being factored into the EIA’s projections, nor into the argument for building LNG export infrastructure in Canada.

For example, Japan announced last year that it had successfully produced commercial quantities of methane – the principal component of NatGas – for the first time in its territorial waters. That event’s significance has been uniformly discounted by the EIA and the hydrocarbon media.

Mitsui Engineering and Shipbuilding Co. (MES), who is driving the charge to identify offshore methane hydrate deposits, says that it could begin commercial production of natural gas from methane hydrates as early as 2018, according to a story in the Daily Telegraph.

“With studies estimating that as much as 39 trillion cubic ft of methane hydrate may exist in Japan’s offshore deposits, the government hopes to tap into such resources with production technologies in place by 2018.”

China’s Shale Gas Revolution

The EIA’s forecast states that “China held its first auction for shale gas exploration blocks in June 2011, awarding contracts for four blocks, and in December 2012 it awarded another 19 shale gas blocks in a second auction In addition, China is considering offering a subsidy of around $2 per million Btu for shale gas produced before 2015.”

China has more recoverable shale gas than the United States, but it is deeper and in far more challenging geology than the U.S. However, the EIA forecast discounts China’s ability to ramp up shale gas production, in view of the subsidies. There are technologies in development, such as by Cold Bore Technologies, for example, who is “designing communications & telemetry solutions to revolutionize drilling accuracy and speed in the oil and gas industry”.

Translation: Deeper and problematic geologies are being addressed by technologies.

What is important to note, that with every trillion cubic feet produced by Japan or China, that amount will not be sold in Japan or China, and both those nations will ultimately seek to add to the global export supply, should development of their resources succeed sufficiently.

New Supplies from Australia and East Africa Will Keep NatGas Prices Low

In Australia, nearly $200 billion worth of gas projects are nearing completion with seven LNG projects due to start exporting gas between late 2014 and 2017, set to push Australia ahead of Qatar as the world’s largest LNG producer.

The Middle East is ramping up and expanding new and existing LNG export capacity, and Russia, is adding to it’s inventory through exploitation of its vast Arctic resources.

And the recent discovery of the massive Rovuma Basin offshore Mozambique could make that country a new entrant into the LNG export game, with better proximity to China. According to Rigzone, “Mozambique could become the world’s third largest exporter of liquefied natural gas (LNG), an Anadarko Petroleum Corp. executive told attendees at the Mayer Brown Seventh Annual Global Energy Conference in Houston”. The field is suspected to contain over 100 trillion cubic feet.

Industrializing the Northern Coast of B.C. is Inconsistent with BC Residents’ Values

The people making the decisions for British Columbia’s future, for the most part, do not live in B.C. British Columbia’s coastline, in particular is arguably the world’s most wild and rich in wildlife stretches of coastline anywhere in the world.

The Harper and Clarke governments’ permission of pre-construction activities in BC’s northern coastal communities is a transgression against the citizens of northern BC, and all British Columbians.

If the clumsy lunge toward LNG exports turns into an economic disaster, what will the northern BC Coastline look like, after all of the roads, towns, camps and infrastructure pre-development is abandoned? Who will be on the hook to clean it all up? What will the fisheries and tourism industries look like, with a coastline dotted with rusting hulks of failed LNG plants sloughing off contaminants into the Pacific Ocean year after year?

These are questions, that, in my opinion, need to be answered before the industrial development rush now underway moves another step forward. Future generations will be unlikely to forgive the current one if we destroy the natural and pristine coastline that is arguably every British Columbian’s birthright, and why those of us who emigrated here, stay.

At the very least, this LNG infrastructure build out will forever change the character of British Columbia’s north coast. And at the very least, Premier Christy Clark should be submitting the question of such a change to a referendum by the citizens of British Columbia.