LNG project approved with 190 conditions
$36-billion project planned near Prince Rupert
RICHMOND — The federal government gave conditional approval Tuesday to the massive Pacific NorthWest LNG project planned for British Columbia’s northwest coast.
Environment Minister Catherine McKenna, Natural Resources Minister Jim Carr and Fisheries Minister Dominic LeBlanc travelled to Richmond to announce the government’s acceptance of what is expected to be one of the largest infrastructure investments in Canadian history.
There are 190 legally binding conditions attached to the approval, including for the first time the imposition of a condition placing a maximum cap on greenhouse gas emissions, McKenna said. “This project was subject to a rigorous environmental assessment, and today’s announcement reflects this commitment,” she told a news conference, which was interrupted by three hecklers from the Lax Kw’alaams First Nations band as the ministers spoke outdoors on the waterfront near Vancouver’s airport.
The Petronas-led $36-billion project on Lelu Island near Prince Rupert would ship 19 million tonnes a year of liquefied natural gas to markets in Asia while pumping more than five million tonnes of carbon dioxide annually into the atmosphere. That would make it one of the largest greenhouse gas emitters in Canada, according to the Canadian Environmental Assessment Agency.
The government’s conditional approval sets the table for an autumn of crucial decisions on a national climate change plan and energy sector infrastructure.
But it doesn’t necessarily mean the LNG project will ever get underway.
Low global oil prices and an increasing supply of natural gas have depressed international prices for LNG, making the economics of the project less certain than they were when it was announced in 2013.
Pacific NorthWest LNG said in a statement that it was pleased with the government’s announcement.
“Moving forward, Pacific NorthWest LNG and our shareholders will conduct a total project review over the coming months prior to announcing next steps for the project,” said Adnan Zainal Abidin, president of Pacific NorthWest LNG.
Despite the market uncertainty, the decision by the cabinet of Prime Minister Justin Trudeau signals the course the federal government will navigate among competing interests on the energy and environment files. “The only way to get resources to market in the 21st century is if they can be done in a responsible and sustainable manner,” McKenna said in a statement. “This decision reflects this objective.”
The government said the conditions it is placing on the project are aimed at minimizing effects on fish, fish habitat, marine mammals, wetlands, migratory birds and human health.
Environmental groups see a contradiction in the government’s approach.
“Approving this project is inconsistent with the federal government’s commitments to lead on climate change and clean innovation,” said Merran Smith, executive director of Clean Energy Canada. “The conditions that come with this approval set the bar too low.”
Carr said the facility will add nearly $2.4 billion per year to Canada’s GDP. “This project further plants the Canadian flag on the world stage of natural gas exporters, [and] positions us to supply dynamic emerging economies while contributing to the fight against climate change.”
He said environmental monitoring committees will watch over the project in partnership with indigenous communities to share information on compliance and enforcement.
First Nations affected by the project have been invited to be part of the committee, he said.
Environmentalists and First Nations have denounced the Pacific NorthWest LNG project due to concerns over salmon habitat, while pro-development advocates, including the B.C. government of Christy Clark, have called it a key economic driver for the country.
RICHMOND — The federal cabinet has conditionally approved the $36-billion Pacific NorthWest liquefied natural gas project. Here are five things to know about the proposed project:
THE PLAYERS
Petronas, the Malaysian stateowned oil and gas giant, is leading the development. It has a 62 per cent stake in both the LNG processing facility on Lelu Island and the natural gas reserves in northeastern B.C. that would feed into it.
Other partners include Sinopec with a 15 per cent stake, JAPEX and the Indian Oil Corp. with 10 per cent each, and PetroleumBRUNEI with three per cent.
THE PRODUCT
Liquefied natural gas is produced by cooling natural gas (consisting mostly of methane) to -162 Celsius in order to make it a liquid.
Liquefied natural gas takes up 1/600th of the space that it takes up in its gaseous state.
The export facility would take in up to 3.2 billion cubic feet of natural gas per day and produce up to 19.2 million tonnes of liquefied natural gas a year.
ENVIRONMENTAL IMPACT
The draft environmental report released in February estimated that the liquefied natural gas facility would result in the equivalent of 5.3 million tonnes of carbon dioxide being released a year.
That would add 8.5 per cent to B.C.’s total emissions.
Upstream emissions, including the gathering of the natural gas, are estimated to add the equivalent of 6.5 million to 8.7 million more tonnes of carbon dioxide.
STATE OF THE INDUSTRY
A glut of global liquefied natural gas projects have led to a drop in prices and prospects for liquefied natural gas as well.
The Shell-led LNG Canada project, which would have been built near Kitimat was indefinitely delayed in July. AltaGas Ltd. also shelved its smaller Douglas Channel LNG project in February. The entire Pacific NorthWest LNG project is estimated to cost $36 billion.
That includes about $11 billion for the export terminal, $6.5 billion in pipelines, the $5.5 billion Petronas spent buying Progress Energy, and the roughly $2 billion a year the consortium would spend on drilling and production of natural gas to get the project fully operational.