BG Group pressing pause button on Prince Rupert LNG, citing market conditions
“So, as a result of this, coupled with weakness in gas pricing generally, there is a risk that the market will be very well supplied post 2020,” he said. “We’re pausing on Prince Rupert to see how the market evolves, particularly in function of total supply that will come out of the U.S.”
BG’s proposed project, if it goes ahead, would be developed in two phases, eventually reaching a production capacity of up to 21 million tonnes per year. On its website, it says it aims to make a final investment decision by “mid-decade.”
BG is a major player in global LNG, with liquefaction plants in Egypt and Trinidad and Tobago. A new LNG project is expected to start up soon in Australia and another is being developed in Louisiana.
BG’s proposal is one of 18 planned for Canada’s west coast that would chill natural gas into a liquid state, enabling it to be shipped across the Pacific by tanker. No company has made an official decision yet on whether to go ahead with building their multibillion-dollar projects.
Last week, the British Columbia government announced a tax regime for its nascent LNG industry. The net income tax rate will be 3.5 per cent — half of what was proposed earlier. The rate will rise to five per cent in 2037 once the industry is established.
Malaysia’s Petronas, which is spearheading another LNG project in the Prince Rupert area, said it’s weighing the announcement.
Its CEO had warned previously that it might have to delay its investment in the Pacific Northwest LNG project by at least a decade because the economics of its proposal were being squeezed. Factors it cited included provincial and federal taxes and the sluggish pace of the regulatory process.