Massive B.C. energy project cancelled

Liquefied natural gas prices mean Pacific NorthWest LNG not viable, Petronas CEO says

Malaysian national energy giant Petronas and its partners scrapped the Pacific NorthWest LNG megaproject Tuesday, ending months of anticipation on the fate of what would have been one of Canada’s largest private infrastructure investments.

The decision to cancel the development boiled down to simple economics — a world market awash in liquefied natural gas, which has driven down prices, making Pacific NorthWest LNG no longer financially viable, said Anuar Taib, CEO of Petronas’s oil and gas production division.

“Unfortunately for us, we don’t believe we have that mix of where the sweet spot can be hit,” Taib said. While Pacific NorthWest LNG worked its way through regulatory channels over the last several years, numerous LNG projects have come online around the world.

The overall project would have cost $36 billion in total, including a 900-kilometre pipeline proposed by TransCanada to a natural gas export terminal on the province’s Lelu Island, as well as the production of gas to supply it.

TransCanada later said it was reviewing its options on the $5-billion Prince Rupert Gas Transmission project, which hit a setback last week after the Federal Court of Appeal ruled that the National Energy Board will need to reconsider whether it requires federal approval.

The export facility, with an estimated cost of $11.4 billion, would have compressed the natural gas into liquid form before it would be shipped to markets in Asia. The announcement Tuesday came after Prime Minister Justin Trudeau met with British Columbia Premier John Horgan in Ottawa.

The federal government gave its conditional approval to the project last September. Horgan voiced opposition to it, though said his position may be swayed if the concerns of First Nations were taken into consideration. Both the federal and provincial governments emphasized that the decision was a private sector one.

“The company was very clear: this was a decision they are making because of the economic challenges in the global energy market place,” B.C. Energy Minister Michelle Mungall said.

Numerous liquefied natural gas projects have come online since Pacific NorthWest first proposed