POLITICS

Petronas LNG go-ahead seen as a good sign for other West Coast projects: experts

06/12/2015 02:58 EDT | Updated 06/12/2016 05:59 EDT
CALGARY - A tentative green light for a multibillion-dollar liquefied natural gas project in British Columbia sets the stage for other players to follow suit, say energy industry experts.

Pacific NorthWest LNG "breaks some ground" for its peers by being the first B.C. LNG player to officially decide to go ahead, said ARC Financial vice-president Jackie Forrest.

"I view this as a good thing for the industry as a whole," she said.

"The first project is often the most difficult one. Just establishing that we can get a project up and running and what it costs and potentially build some of the infrastructure — that will help others."

Pacific NorthWest LNG, led by Malaysia's Petronas, aims to invest some $36 billion to develop shale gas in northeastern British Columbia, ship it to the coast by pipeline, chill the gas into a liquid state and export it across the Pacific by tanker.

The consortium said Thursday it has determined the business case for moving forward is sound.

But its positive final investment decision hinges on an agreement with the B.C. government passing in the provincial legislature and Ottawa issuing an environmental approval.

"What we would hope for is that we could have construction commencing by the fourth quarter of 2015 and move the project forward from there," said Pacific NorthWest president Michael Culbert.

Construction would take around four or five years, meaning first cargoes of LNG would depart from the proposed terminal near Prince Rupert, B.C., around 2019 or 2020.

Bill Gwozd, senior vice-president at consulting firm Solomon Associates, agreed the Pacific NorthWest move sends an encouraging signal.

"From an industry point of view, I think it would raise more than a glimmer of hope. It would raise a shining beacon," he said.

There are 19 West Coast LNG projects currently proposed. Gwozd said he expects that ultimately five of them — three big projects and two smaller ones — will be built.

He said other Canadian players are likely thinking to themselves: "'If somebody else is already at the starting line, can we get there too?'"

It's not all smooth sailing, though.

Last month, the Lax Kw'alaams First Nation rejected a natural gas benefit offer worth $1.15 billion, citing environmental threats to the salmon-rich Skeena River.

B.C. Natural Gas Development Minister Rich Coleman said he's not concerned First Nations opposition will stymie the project.

"There's been a lot of work done with the Lax Kw'alaams since that vote. I think there's been significant progress and we'll continue to progress with them," he told reporters on a conference call.

Culbert said Pacific NorthWest is also working to allay the community's concerns over fish habitat.

"I think it's fair to say we were disappointed from the outcome of the community meetings," he said.

"I think we've got a positive dialogue underway at this point in time and we'll continue that."

Culbert and Coleman both said they're not expecting this year's federal election to conflict with the environmental review. But the timing of a decision at the cabinet level may be affected.

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