Frustrated over Canadian Prime Minister Justin Trudeau’s delaying tactics slowing federal approval of its Pacific NorthWest Liquified Natural Gas (LNG) project, Malaysia’s Petronas is threatening to walk away if it doesn’t get federal approval by March 31.
The project, slated to be sited federal lands on Lelu Island near Prince Rupert, received favorable assessment from the Canadian Environmental Assessment Agency (CEAA) in February and was greenlit by the British Columbia government in November, 2014. But the new federal Liberal government is toughening environmental reviews of major energy projects in an effort to its meet international commitments to reduce greenhouse gas emissions.
In January, the Liberal government announced major projects like the LNG project would now be subject to additional assessments concerning “direct and upstream greenhouse gas emissions.” A spokeswoman for CEAA said the agency have to see determine how new federal requirements would impact Pacific NorthWest LNG.
Canada’s Financial Post reports, Petronas has already spent $12 billion to get the project to this stage, in part as a result of multiple delays and setbacks, including aboriginal and environmental movement opposition. The new review and possible new conditions being placed upon the LNG project could be the final straw for Petronas which has informed federal cabinet ministers it won’t accept additional delays.
“They have given Trudeau to March 31 to either approve it as it stands now or they are going to leave,” the CEAA source told the Financial Post. “They started off with the Conservatives, and the (environmental) standards are very high. They said OK we will meet those standards and they did in all the engineering and design of the project. This last greenhouse gas thing that Trudeau came up with really threw them for a loop.”
LNG Project Hurdles Multiply
This new hurdle for the Pacific NorthWest project comes as market conditions for LNG are deteriorating amidst continuing low natural gas prices. None two-dozen groups that have proposed building LNG export terminals in Canada have gone forward due to a combination of regulatory delays, rising competition from United States LNG exporters, plummeting prices, and aboriginal and environmental group opposition.
With Petronas and its partners, including China’s Sinopec, Japan Petroleum Exploration Co., India Oil Corp. and Petroleum Brunei, now considering cutting their losses and looking at other opportunities for natural gas and oil production, it presents a significant hurdle for the project to come to fruition as the Petronas assembled group, were the most likely to move forward with LNG exports from Canada’s West Coast because they have customers and don’t have the same profit expectations as privately owned companies.
According to the CEAA’s draft report on the Pacific NorthWest project, while the project would likely cause significant adverse effects on “harbor porpoise and as a result of greenhouse gas emissions … with respect to all other valued components, the agency concludes that the project is not likely to cause significant adverse environmental effects taking into account the implementation of key mitigation measures.”
‘Voice Your Support’
Petronas’ Canadian partner is fighting for the terminal. Michael Culbert, president of Pacific NorthWest LNG, issued a emailed statement obtained by the Financial Post, urging supporters to get family and friends to send letters to the CEAA by March 11, when the public comment period ends.
“Now is the time to voice your support,” Culbert writes. “Our opponents have been sending their thoughts to CEAA. Have you told Ottawa why you support the LNG business in Canada?”
LNG exporters in the U.S., both those currently in operation and those soon to come online, could benefit if the Canadian Government’s greenhouse gas policies shelve the Pacific NorthWest project. With less competition, the LNG from their terminals becomes more valuable.
H. Sterling Burnett, Ph.D., ([email protected]) is the managing editor of Environment & Climate News.