(Adds industry comments, recasts first paragraph and updatesthroughout)
By David Ljunggren and Julie Gordon
OTTAWA/VANCOUVER, Feb 19 (Reuters) - Canada unveiled taxmeasures on Thursday that will allow investors in new liquefiednatural gas plants to recover costs more quickly, improving thecompetitiveness of projects proposed for the Pacific coastprovince of British Columbia.
Industry groups said the new measures would encourageinvestment in LNG projects in Canada, some of which have stalledin recent months as companies cut spending in response toplummeting oil prices.
"It certainly helps move the ball forward," said DavidKeane, president of the B.C. LNG Alliance, which representsseven of 19 projects proposed in British Columbia.
Under the rules, companies building new LNG export terminalswill be able to deduct capital costs at a faster rate, allowingthem to defer tax payments and recoup investment more quickly.
Ottawa will establish a capital cost allowance rate of 30percent for equipment used in natural gas liquefaction, up froma current rate of 8 percent rate, and 10 percent for buildingsat a facility that liquefies natural gas.
The tax relief will be available for capital assets acquiredafter Feb 19 this year and before 2025.
The Canadian Association of Petroleum Producers (CAPP),which lobbied for the changes, said the tax breaks will allowCanadian projects to better compete with rival developments inthe United States and Australia.
"This tax classification change actually puts Canadian LNGfacilities on a more level playing field with our internationalcompetitors," said Ben Brunnen, manager for fiscal and economicpolicy with CAPP. "And that's going to improve ourcompetitiveness for those scarce dollars."
Canadian Prime Minister Stephen Harper, who introduced thechanges in a televised news conference from a Vancouver suburbon Thursday, said the measures would encourage investment thatotherwise would not occur.
"The business of shipping natural gas is capital intensive.The bar for entry is high," he said.
Last week, Reuters revealed that the government was againstudying the idea of new tax breaks in the upcoming budget forcompanies that build LNG plants.
Roughly two dozen LNG terminals have been proposed inCanada, with the majority planned for the West Coast province ofBritish Columbia. Backed by energy giants such as Malaysia'sPetronas as well as Royal Dutch Shell and Chevron Corp, the projects would ship North American gas to Asianmarkets. (Reporting by Julie Gordon; Editing by Ken Wills)