Petronas cancels $11.4-billion LNG project near Prince Rupert

Lelu Island 1

The site of the proposed Pacific Northwest LNG plant, Lelu Island, near Port Edward, Photograph by: http://www.lonniewishart.com , Vancouver Sun

by Scott Brown and Gordon Hoekstra, Vancouver sun, July 25, 2017

Malaysian state-controlled energy giant Petronas has pulled the plug on the proposed $11.4-billion Pacific NorthWest LNG project near Prince Rupert.

Petronas planned to build a LNG processing plant on Lelu Island that would have shipped 19 million tonnes a year of liquefied gas to markets in Asia, while pumping more than five million tonnes of carbon dioxide annually into the atmosphere.

The project received federal government approval last September.

In a statement, Petronas said it cancelled the project “after a careful and total review of the project amid 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,” said Anuar Taib, Petronas executive vice-president and chief executive officer.

“We, along with our North Montney Joint Venture partners, remain committed to developing our significant natural gas assets in Canada and will continue to explore all options as part of our long-term investment strategy moving forward.”

The former Liberal government, led by Christy Clark, had promoted LNG as an economic boon to the province, but it failed to materialize under her watch.

Other jurisdictions, including the U.S., jumped in ahead of B.C. and then major energy companies dialed back spending when oil prices plummeted.

However, there are other leading LNG projects that continue to say they remain interested in B.C.

Lelu Island pacific-northwest-lng mapLNG Canada, backed by a consortium led by Royal Dutch Shell plc, and Kitimat LNG, a joint venture between Chevron and Australian-based Woodside, are trying to position themselves to be ready to make a decision on building billions-of-dollars of mega-projects to coincide with increased demand they forecast could kick in by the middle of next decade.

LNG Canada is an up-to-$40-billion project and Kitimat LNG is pegged at $3.5 billion.

A much smaller project, at $1.6 billion, Woodfibre LNG, near Squamish, has already said it will go ahead. No construction date has been set.

B.C. Energy Minister Michelle Mungall said the decision was one of pure economics.

“The company was very clear: this was a decision they are making because of the economic challenges in the global energy market place. The Pacific Northwest LNG project as proposed in its current state was uneconomical to move forward,” she said.

Mungall said Petronas will continue its natural gas operations in northwest B.C., while the B.C. NDP government is committed to working with the LNG industry to ensure that the province is competitive.

The environmental group Wilderness Committee called the cancellation of the project a “massive win” for communities on the Skeena River and the global climate.

“We’re absolutely thrilled that the Malaysian backers of this liquefied natural gas terminal have backed down from their reckless plan to jeopardize BC’s second largest salmon run and blow our provincial climate targets,” said Peter McCartney, climate campaigner for the Wilderness Committee.

McCartney said the project would have produced 11 mega-tonnes of carbon a year, more than all the vehicles, buildings and landfills in Metro Vancouver produce.

http://vancouversun.com/news/local-news/petronas-cancels-11-4-billion-lng-project-near-prince-rupert

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Posted on July 25, 2017, in Oil & Gas and tagged , , , , , . Bookmark the permalink. 1 Comment.

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