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Pacific NorthWest LNG stalled again Regulator, government, need another 3 months to get through public comments, emission documents before recommendation GARY PARK For Petroleum News
The shaky hope of an imminent final approval for British Columbia’s Pacific NorthWest LNG project has been dealt another setback by the Canadian government.
Environment Minister Catherine McKenna and the Canadian Environmental Assessment Agency added another three months to the targeted March 22 deadline for a regulatory verdict because they need more time to examine the potential greenhouse gas emissions from the entire project.
McKenna said the operator Petronas provided “significant new information” regarding the project that “must be analyzed and included in the final assessment report.”
She said it would be premature to speculate on whether she will even refer the application to the federal cabinet for approval.
Change of direction That is a sharp change of direction from a draft report by the CEAA in February that concluded the liquefaction plant and tanker terminal near Prince Rupert could be built without major environmental impacts.
However, the CEAA said it is now reviewing 34,000 public comments and 11,000 pages of technical data in addition to the new information from Petronas that estimates total GHGs, including upstream emission estimates from gas extraction and pipelines.
The CEAA said it “recognizes the importance of timely decisions, while balancing the need for a fair and thorough process that is grounded in science.”
It promised to work “diligently with the technical working group for the project, including indigenous groups and federal experts, to review the information and finalize the environmental assessment report and conditions.”
The company said its updated projection is for less than 5 million metric tons per year of carbon dioxide.
British Columbia Natural Gas Development Minister Rich Coleman said he is confident a recommendation can be made to the federal cabinet sometime in April and suggested the government’s final decision should be swayed by the project’s huge economic benefits for Canada.
“All in all, it’s C$36 billion,” he said. “That’s about two percentage points of the entire Gross Domestic Product of Canada. It’s probably 7,000 to 8,000 construction jobs and another 3,000 to 4,000 on the pipeline.”
John Stephenson, chief executive officer of the Toronto-based investment firm of Stephenson & Co., said the final ruling on Pacific NorthWest “is going to be widely watched as a barometer of the government’s interest in supporting what is the driver of the Canadian economy, which is energy.”
He said if there is any “hiccup” on the government’s part he would not be surprised to see Petronas and its Asian partners abandoning the scheme.
To date, there have been six delays in the regulatory process, adding more than one year to the two years that industry officials originally anticipated.
Conditional Lax Kw’alaams support There was one shred of positive news for the proponent when the Lax Kw’alaams First Nation said in a letter to the CEAA that it would conditionally support the project subject to certain conditions, notably the creation of an environmental performance committee.
The community’s stand, if implemented, would remove a key obstacle to what could be British Columbia’s first large-scale LNG export operation.
It represents a complete turnaround by the Lax community from a year ago, although it does insist that an environmental committee would have the authority to monitor compliance with conditions and recommend enforcement measures to the government.
However, some hereditary leaders of the First Nation say they have been “betrayed” by their elected council and “will fight this to the end, whether the council is on our side, or not.”
If the project gets a green light, the Lax people stand to collect an initial payment of C$28 million and annual payments starting at C$13 million, rising to C$50 million in 40 years.
Coleman said the Lax “have been clear any development must not harm the environment, especially fish and fish habitat, which is also a core priority of the government of British Columbia and we look forward to working together on this should the federal government reach a positive decision.”
On the downside, Katherine Spector, a commodities strategist with CIBC World Markets, raised questions about how competitive Canada can be in the global LNG marketplace as supply gluts form and demand slows in Asia at a time when Australia and the United States make an aggressive push to secure buyers.
For now, Prime Minister Justin Trudeau is coming under pressure from British Columbia Premier Christy Clark who told him in February that “LNG can be the biggest contribution Canada can make to global climate change if we can help displace coal in China.”
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