Global energy retreat continues with Asian firms scrapping Aurora LNG study
CALGARY – The Canadian arm of a Chinese state-owned oil company cancelled plans for a multibillion-dollar liquefied natural gas project on Canada’s West Coast on Thursday.
CNOOC Nexen Energy, the Calgary-based division of Beijingbased CNOOC Ltd., and its Tokyo-based joint-venture partner INPEX Corp. cancelled a feasibility study “and will cease all investigation activity” on their proposed Aurora LNG project near Prince Rupert, B.C.
A press release from the partners blamed “the current macro-economic environment” for the cancellation, saying it does not support the development of a large LNG business on the West Coast.
The venture’s proposed timeline had pegged 2020 as a planned start date for construction on the project, which would have exported 24 million tonnes of super-cooled gas per year to Asian markets.
“We are disappointed in this outcome, Aurora LNG is proud of its work in northwest British Columbia over the past three years and the relationships it has built with local community members, indigenous groups, stakeholders and government,” a release from Nexen said. The company said it will continue to invest in its upstream natural gas production in northeastern B.C.
Nexen spokesperson Brittney Price said in an e-mail there would be “some impacts to our workforce over the coming months” but said the number of people affected would be “minimal.” She declined to provide a specific number.
The announcement is the latest in a string of project deferrals and cancellations and another setback to Canada’s once-promising LNG export industry.
Malaysia’s state-owned oil company Petronas announced in July it would not proceed with its $36 billion Pacific Northwest LNG project, which had also been sited near Prince Rupert. That project would have exported 19.2 million tonnes of LNG per year from Canada to Asian markets.
“I think Canada and regulatory authorities, we need to reflect very hard on what these decisions, one after another, tell us about our competitiveness,” Explorers and Producers Association of Canada Gary Leach said, adding the announcement “is not good for overall investors views of Canada.”
“For Western Canadian gas producers, who are a key part of our membership, market diversification and Pacific coast export opportunities is an important part of the future of this industry otherwise we remain tied to backfilling natural gas supply in North America,” Leach said.
He added that U.S. based LNG projects have been commissioned while Canadian proposals have idled.