Spinmasters in Overdrive on Misleading $20B LNG Ad

Yesterday’s post got quite a bit of attention from journalists, government spinners, and the Advertising Standards Council.. Here’s what you should know.

Questions about the truth of the government’s claim that $20Billion has already been invested in LNG in BC are not new. Bob Mackin, writing for Business in Vancouver, asked questions with less success than an ordinary citizen had.

Bob asked for justification of the figure down to the nearest million (not dollar for dollar) and got very little of substance , but conceptually it mirrored what I wrote last week… Read his piece here.. https://www.biv.com/article/2016/11/bc-liberals-claim-lng-and-site-c-are-green-new-ad-/

The government is piecing together industry press releases, adding them up to a very big number without verification of any of the claims. My other objections remain.  .. 1) arbitrary assignment of a percentage of activity to LNG versus other industry activity… 2)  inclusion of large buys of stakes in projects by O&G companies from each other.

Again, to evaluate the BC government’s own justification for the figure, see my first post here.. http://www.bcveritas.com/index.php/2016/12/11/about-that-20billion-lng-investment/   It’s my opinion that the government ad doesn’t meet the standards of public usefulness and truthfulness we have a right to expect, but I want you to judge for yourself. Read the government’s own document.

Andrew MacLeod, on December 22nd, published a Tyee article linked here which has most of the new stuff that needs to be addressed today: https://thetyee.ca/News/2016/12/22/Govt-Pulls-LNG-Ad/

After yesterday’s post , either because of Andrew’s poke into the matter or coincidentally, there was some action between the BCGovernment,  the Advertising Standards Council, and the good man who made a complaint to the ASC.

The government line is that the ASC got it wrong. First of all, the offending ad was due to be pulled out of rotation anyway, and that had nothing to do with my complaint or my reader’s…. Secondly, it was decided the ad should be pulled a little early rather than going through a meeting with the ASC. The meeting was scheduled roughly the same time as the end of the ad run, so government decided to pull it early and avoid the hassle….. Oh, and one more bit..Government decided to pull the ad early because it was generating complaints! Imagine that.

Another curious thing happened: My reader got a second letter from the ASC yesterday.. The first letter, the day before, clearly linked the advertiser’s corrective action to its decision not to pursue the matter. They’re pulling the ad, so let’s not bother.

The second letter, from someone higher up the organizational flowchart, said the first letter contained inaccuracies.  Further, it said the ASC had communicated with government, received some supporting materials and proposed a meeting to discuss the issues based on an earlier complaint. But again, since the ad run was winding down, it didn’t seem necessary to pursue the matter further.

Now what has my conspiracy-theorist-blogger senses all a-tingle is this:  Andrew MacLeod wasn’t able to reach anyone for comment yesterday at the Advertising Standard’s Council.. It was the government that told MacLeod about the second letter. I can back that up because no one else had the opportunity to inform MacLeod before the article was published. Why on earth would an agency in charge of independently “self-regulating” the advertising profession be sharing details of its communication with media spinners in government?

In my opinion it’s clear the PAB-bots leaned on the ASC to “correct the record”. As Ian Jessop said to me regarding the Premier’s Haida Gwaii trip last year, “When stories keep changing, it means somebody is lying. We just have to find out who and why”.  What surprises me is that the government’s bluster aside, it’s the ASC who have changed their story under pressure…

I’m sure the ASC is surprised by the fuss this has generated, and I’d ask them the following question.  “Isn’t it true that damage to the public interest has been done because the ads ran, even if they are now pulled?”. And to the government: “Wouldn’t it be nice to have some laws to save the political operatives from embarrassing themselves by stretching the truth for partisan gain? Shouldn’t government be, you know, separate from the “Party”?

(For the record, there’s a misperception out there that the ASC did a full investigation and found the ad violated standards. That’s not the case, and it isn’t what I wrote, though I’m convinced the ads would not survive any serious analysis by a sober judge of the matter.)

STILL.. If the $20 billion figure is no longer used in tax-funded advertising, I’ll count that as a win. 

RossK just put up a great post, and asked a great question.. If Christy’s spinners had got to the ASC before the citizen who launched this complaint, how might the story have evolved differently? Read his piece here, http://pacificgazette.blogspot.ca/2016/12/this-day-in-clarkland-20-billion-dollar.html

And Merry Christmas to everyone. Thanks so much for reading my tripe this year!

 

$20 Billion Gone Missing ?

Score one for a citizen activist. I take no credit . Here’s the short version..”rather than respond to the complaint… the BC Government has decided to withdraw the misleading $20Billion figure from all its advertising.”

An honest man sees a BCGovernment ad on CTV (I’ve seen the ads elsewhere) which includes a number of blue circles. The ad voiceover explains what the benevolent BCLiberal Government is doing for you. You understand the absolute necessity of paying your tax money to be told these things.

The light blue circles provide highlights, one of which claims that $20 Billion has already been invested in “Clean LNG” development in BC.  It’s a big number..It’s a lot of money, which the forces of no (Opposition NDP and a Green) would presumably incinerate should they win the next election (thereby raising our GHG emissions with all that cash burning).

(Disregard whether or not LNG can be considered “clean”. Christy Clark said it was clean four years ago, and it’s been true ever since. “The $20 Billion already invested” has been a talking point of Christy Clark and Rich Coleman for quite a while. It’s been used, I would bet, at every BOT lunch and every private big dollar donor soiree for well over a year.)

Our honest man questions the government on the $20B dollar figure and gets an explanation full of holes.. (More detail in my last post here: http://www.bcveritas.com/index.php/2016/12/11/about-that-20billion-lng-investment/ )

It turns out the figure is derived from a combination of ..

a: Rights sales between competing oil and gas interests (not money in the local economy – not new money at all).

b: A percentage of capital expensed the last four years in Natural Gas Development in the Northeast of BC over the past 4 years or so. That percentage of normal activity assigned to “LNG development” appears pretty arbitrary.

Our honest man submits a complaint to the Advertising Standards Council of Canada, because these tax-funded ads are plainly misleading.

Who knew that the ASC worked so fast? Eleven days later, at the height of the Christmas season no less, our guy is informed that rather than respond to the complaint… the BC Government has decided to withdraw the misleading $20Billion figure from all its advertising. The ASC now considers the matter closed, though a case summary with no names attached will appear on the ASC’s quarterly report.

So here are the things I think matter because of this story.

The $20B figure was and is a partisan political talking point. We can’t stop Rich Coleman or Christy Clark saying it over and over. There is no law against politicians stretching the truth beyond recognition at campaign stops.

We can insist that whenever they say it, they are asked why the government they lead chose not to support the claim. We do that by making sure all the journalists know what happened when one honest man fact-checked bullshit.

We expect government advertising to be informative, reasonably accurate, and necessary communication, because we pay for it.  Party advertisements during campaigns aren’t (sadly) held to the same standard. We can’t stop the BCLiberal party from making stuff up. But we can work to stop taxpayer funds being abused in the service of partisan ends.

We can make it embarrassing to make stuff up. We do that individually and together. We do it case-by-case. We can do it by thinking critically and asking questions when something doesn’t smell right. We do it the way our honest man did.. If you see a BC or Fed government ad that’s neither truthful nor in the public interest, you can make a complaint to the ASC here: http://www.adstandards.com/code

You might be surprised how effective raising your voice can be…

And btw.. Go read Laila’s latest on the subject of raising your voices.. https://lailayuile.com/2016/12/21/musings-from-the-notrealworld/

 

About That $20billion LNG Investment

We are blanketed with feel-good ads from the  Clark government which include a shiny figure of $20 billion already invested in LNG in BC. What are we to make of it? How was this figure arrived at and how has the money been spent since mostly we see no sign of it? I have some answers, thanks to an engaged reader.. What I hope to show below is the case for the Advertising Standards Council of Canada to shut down these ads, because they are manifestly misleading. Specifically, a reader of mine is looking into complaining to the Ad Council based on Clause 1 of the Canadian Advertising Standards Code, which follows below.

1. Accuracy and Clarity

In assessing the truthfulness and accuracy of a message, advertising claim or representation under Clause 1 of the Code the concern is not with the intent of the sender or precise legality of the presentation. Rather the focus is on the message, claim or representation as received or perceived, i.e. the general impression conveyed by the advertisement.

(a) Advertisements must not contain inaccurate, deceptive or otherwise misleading claims, statements, illustrations or representations, either direct or implied, with regard to any identified or identifiable product(s) or service(s).

(b) Advertisements must not omit relevant information in a manner that, in the result, is deceptive.

(c) All pertinent details of an advertised offer must be clearly and understandably stated.

(d) Disclaimers and asterisked or footnoted information must not contradict more prominent aspects of the message and should be located and presented in such a manner as to be clearly visible and/or audible.

(e) Both in principle and practice, all advertising claims and representations must be supportable. If the support on which an advertised claim or representation depends is test or survey data, such data must be reasonably competent and reliable, reflecting accepted principles of research design and execution that characterize the current state of the art. At the same time, however, such research should be economically and technically feasible, with due recognition of the various costs of doing business.

(f) The advertiser must be clearly identified in an advocacy advertisement.

A few months ago I noticed a tweet from Kathy Tomlinson of the Globe and Mail which said government, when asked, had declined to elaborate on or justify the figure. Now it has, to a point. What follows has been provided by a reader in correspondence with a civil servant from Government Communications and Public Engagement (the propaganda arm of government):

Below is a table that highlights the companies and their investments to date:

 

COMPANY INVESTMENT $ DETAILS DATE
Acquisition
Mitsubishi Corp.

 

(EnCana)

$2.9 billion Joint-venture deal. Mitsubishi 40% interest in EnCana’s Cutbank Ridge (Montney) assets. EnCana remains operator February 2012
PetroChina (Shell Canada) $1 billion Joint-venture deal with PetroChina purchasing 20% interest in Shell’s Groundbirch assets (Montney) February 2012
INPEX

 

(Nexen)

$1.14 billion 40% participating interest in the shale gas projects in the Horn River, Cordova and Liard basins from Nexen Inc. August 2012
Chevron $1.3 billion Acquired a 50% operating interest in Kitimat LNG, the proposed Pacific Trail Pipeline, and a 50% in natural gas rights in the Horn River and Liard Basins December 2012
Progress Energy $1.5 billion An agreement to acquire interest in two partnerships from Talisman Energy Inc. November 2013
JAPEX $0.54 billion 10% interest in North Montney area April 2013
Woodside $1.07 billion Acquired a 50% operating interest in Kitimat LNG, the proposed Pacific Trail Pipeline, and a 50% in natural gas rights in the Horn River and Liard Basins April 2015
Expansion
FortisBC $0.06 More than $60 million in committed local spending June 2016
Upstream
Various (upstream) $3 billion Total capital investments in upstream = $5.2 billion1 57%2 of $5.2 billion = $3 billion estimated for LNG 2012 year
Various (upstream) $3.4 billion Total capital investments in upstream = $5.7 billion1 60%2 of $5.7 billion = $3.4 billion estimated for LNG 2013 year
Various (upstream) $3.2 billion Total capital investments in upstream = $7.3 billion1 44%2 of $7.3 billion = $3.2 billion estimated for LNG 2014 year
Various (upstream) $2.4 billion Total capital investments in upstream = $5.0 billion1 48%2 of $5.0 billion = $2.4 billion estimated for LNG 2015 year
TOTAL $21.5 BILLION+

Here are the things that stand out and pretty much scream for further analysis with my simple blogger questions at the end:

1- 9.32B of the $21 billion investment listed here is for acquisitions of stakes in projects. Companies are buying future interests in essence from each other. Notice the acquisitions of stakes in Kitimat LNG, a project which is on indefinite hold due to the world-wide supply glut and low prices. All approvals have been issued, but no building is happening, no final investment decision has been made, no workers are being employed on the ground, and there are no customers for the product anxiously awaiting delivery.

Most of the money under acquisitions is from 2012.. Comparatively little has been happening since.

We were promised a plant up and running well before 2017. Now the timeline seems to be 2024 at the earliest, though there is a slim chance that Woodfibre’s small project at Squamish may get built earlier.

2- $60m has been invested by Fortis in local spending. Excellent. Fortis supplies the natural gas that heats my living room fireplace in a snow storm. Fortis, I believe, will supply the new ferries currently lumbering this way from Poland.

3- Upstream capital investment, a total of $12B , is pro-rated somehow. A percentage of activity in the northeast of the province has been assigned as “LNG export” related for the years 2012-2015.

The dollar figure assigned ranges from a high of 3.4 billion in 2013, to a low of 2.4 billion in 2015.  The percentage assigned? High of 60% in 2013 down to 44% the year after.

Questions:

1- With companies buying stakes in each others future projects, how can this be considered investment in BC? Are they not placing bets and hedging bets? This is not money that is circulating through the economy, and it’s not creating very many jobs here. It’s money being traded between corporate offices, most of them offshore,  to share risk and bide time.

2- With no LNG projects currently being built, and only one (Woodfibre) having reached anything like an FID stage, how is it that we can estimate a percentage as high as 40-60% of capital investment being LNG export related? The only export facility that currently exists is decades old (Tilbury).  All the rest are in a buy and hold pattern… any push to build them awaits a rise in the market price and the end of this worldwide glut… In other words, this is all indefinitely in the future.

Surely government must justify this calculation somehow. Here is where the figures came from according to GCPE ..

”  Annual capital investments in upstream sourced from CAPP’s Statistical Handbook and only includes expenditures for exploration and development (excludes operating expenditures and royalties)

  • Estimated from B.C. Oil and Gas Commission’s drilling statistics and considers rigs released by companies involved in the development of the LNG industry in British Columbia”

Pretty clearly,  the figures on drilling statistics and rigs being operated today bear no relevance whatsoever to dream projects which are at least 5-7 years in the future. The companies doing the drilling today are not doing it for LNG export.

Expenditures for exploration and development may have some use, even looking at a ten year timeline, but those are not separated in any useful way.

My reader had follow up questions as well, which so far have gone unanswered :

Please provide further details and breakdowns of sources of the estimates in the est $12bn upstream benefits and how they directly relate to investment in BC LNG. This upstream section alone accounts for over half of the advertised commitment and is suspect and misleading without further details.

– Please advise if the 2 noted acquisitions by Chevron and Woodside for 50% operating interest of Kitimat LNG are for separate percentages or include any transfer of assets between them that is being accounted for twice.
– Please provide further details of FortisBC expansion and how it directly related to LNG alone vs other local spending
– Please provide confirmation that Progress Energy’s agreement to acquire interests from Talisman actually resulted in a confirmed acquisition, and that those partnerships are directly related to LNG in BC.

Government advertising is meant to be informative to the public and serves a useful role when it is. These $20 billion LNG ads perform the opposite function.