CALGARY and OTTAWA — The Globe and Mail
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Malaysia’s Petronas has cancelled plans for an $11.4-billion liquefied natural gas terminal on the B.C. coast, a major blow to Canada’s efforts to become a global LNG supplier.
The move to scrap the Pacific NorthWest LNG plant, which had been slated for Lelu Island near Prince Rupert, comes after five years of study, a period in which LNG prices fell as other countries such as Australia and the United States started up multibillion-dollar facilities.
“The decision was made by the project partners following a total review of the project amid changes in market conditions,” the company said in a statement.
Former premier Christy Clark had held up LNG as a big part of the province’s economic future, at one time promising three operating plants by 2020 and the creation of 100,000 jobs. Cancelling the Pacific Northwest project all but kills that dream, at least on that timeline.
Of the 14 LNG proposals that have been floated in B.C., only one, the small Woodfibre LNG project, has said it plans to proceed.
The Royal Dutch Shell PLC-led Shell-led LNG Canada postponed a final investment decision on its $40-billion Kitimat plant and has gone back to the engineering and construction contractors in an effort to drive down costs. The company is a consortium of Royal Dutch Shell PLC, Korea’s Kogas, PetroChina and Japan’s Mitsubishi.
Last September, federal cabinet approved Pacific NorthWest LNG’s proposal, subject to meeting a wide range of environmental conditions. But court challenges, shaky economics and opposition in some First Nations communities had complicated matters for the consortium led by Malaysia’s state-owned Petronas.
The other partners are Sinopec, JAPEX, Indian Oil Corp. and PetroleumBRUNEI .
A spokesman for federal Natural Resources Minister Jim Carr noted the federal government approved the project based on the evidence, consultations with Indigenous people and the views of the affected communities.
“Once a project is approved, it is then up to the proponent to decide how to proceed,” Alexandre Deslongschamps said in an emailed statement. “Today’s announcement concerning the Pacific NorthWest LNG project was a business decision made by the proponent.”
He said the government continues to support projects that will allow resource producers to access new markets.
British Columbia’s new energy minister Michelle Mungall said Tuesday that Petronas called her earlier on in the morning to say they would not proceed with the project.
“The company was very clear. This was a decision they are making because of the economic challenges in the global energy marketplace,” Ms. Mungall told a news conference in Victoria. ”The Pacific Northwest LNG project as proposed in its current state was uneconomical to move forward.”
Ms. Mungall said the new NDP government respects the company’s decision, and will pivot to encouraging other LNG prospects in British Columbia. The New Democrats had previously criticized the previous BC Liberal government’s enthusiasm for the sector.
Pacific NorthWest said it would close its offices in Prince Rupert and Port Edward in late August.
With a report from Ian Bailey