Pacific NorthWest LNG stalls; Petronas cites depressed prices

Petronas said July 26 that it and its partners have decided not to proceed with the Pacific NorthWest LNG project. The project, proposed for Lelu Island in the Port Edward district in British Columbia, received a permit from Canada’s National Energy Board in December to export some 3.35 billion cubic feet per day of natural gas, as liquefied natural gas, for a 40-year term.

In announcing the decision, Petronas cited changes in market conditions.

“We are disappointed that the extremely challenging environment brought about by the prolonged depressed prices and shifts in the energy industry have led us to this decision,” Petronas Executive Vice President and CEO Upstream Anuar Taib said in a statement.

Pacific NorthWest is majority owned by Petronas, Japan Petroleum Export Corp., PetroleumBrunei, Indian Oil Corp. and Sinopec-China Huadian.

Natural gas was to come from the North Montney Joint Venture between Progress Energy Canada Ltd., Japan Petroleum Export Corp., PetroleumBrunei, Indian Oil Corp. and Sinopec-China Huadian to develop resources in the North Montney formation in northeast British Columbia.

Progress Energy is a wholly owned subsidiary of Petronas, and the operator of the North Montney JV, which has some 800,000 acres of largely contiguous mineral rights with more than 52 trillion cubic feet of reserves and contingent reserves and more than 15,000 identified drilling locations.

The companies said total gas initially in place is more than 200 trillion cubic feet of unconventional gas and liquids.

A related transportation system was also affected.

TransCanada said it was reviewing its options for the proposed Prince Rupert Gas Transmission project, and said that as part of its agreement with Progress Energy, TransCanada would be reimbursed for costs incurred to advance the Prince Rupert Gas Transmission project, a planned 540-mile, C$5 billion pipeline to Lelu Island.

- KRISTEN NELSON