Petronas has officially pulled the plug on its $36 billion Pacific NorthWest LNG project in Prince Rupert.
The company announced this morning, July 25, it is cancelling its Canadian LNG project.
“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,” Anuar Taib, chairman of the PNW LNG board of directors, said in a press release.
“Petronas and its North Montney Joint Venture partners remain committed to developing their significant natural gas assets in Canada and will continue to explore all options as part of its long-term investment strategy moving forward.”
The significant gas assets Taib referred to are its holdings in the Montney of northeastern B.C., which were acquired when Petronas acquired Alberta’s Progress Energy.
New provincial Energy Minister Michelle Mungall said the government respects the company's decision, and that the new NDP government is committed to working with LNG proponents in the province.
She emphasized the global energy market played a role in the company's decision and deflected questions about her government's past opposition and criticism of the industry.
"B.C. remains a player in the LNG sector," she told reporters in a brief press conference Tuesday morning.
Mungall said she was going to be hitting the phone lines immediately after the press conference to speak with other LNG players with interest in the province.
"I'll be talking to other LNG stakeholders to ensure we are ready to work with them moving forward, that we have a road map to get them to a full realization of their projects," she said.
Peace River North MLA Dan Davies called that action an “absolutely must.”
“They (the NDP) need to be, now more than ever, reaching out these proponents and working to get a deal, period,” he said.
“We need to be showing the world that we are open for business. We’re a fantastic province. All these great things are already in place, we just need to show them that we’re willing to work with these proponents. That is key on what needs to happen right away.”
While the news is disappointing and shocking, Davies is looking at the positives. While Pacific NorthWest LNG was considered the frontrunner of roughly 20 proposed LNG projects for B.C.’s coast, there are still many projects on the books, he noted.
“I’m a little hopeful that things will still move forward in a positive direction. We need to stay positive,” he said.
The PNW LNG project included a planned $11-billion export terminal along the cost, along with billions of associated infrastructure, including new major pipelines across northern B.C. All told, the potential investment value was worth $36 billion, which would have made it the largest private investment in provincial and national history.
Earlier this year, former natural gas minister Rich Coleman noted Petronas, through Progress Energy, had been spending roughly $2 billion a year in B.C.
Fort St. John Mayor Lori Ackerman noted Petronas has committed to developing its natural gas assets in Canada.
“As well they will continue to explore all options as part of its long-term investment strategy moving forward. That does provide some comfort,” she said.
“What is important to note is the significant length of time that it took for Canada and BC to get these projects approved. If that continues, we will see a lot more investments not moving forward."
Fort St. John resident Alan Yu, who launched Fort St. John for LNG and co-ordinated a 600-vehicle truck rally that made national headlines in 2016, said he was heart broken by the decision.
“After all the hard work that FSJ for LNG has done working towards a federal approval, this happens,” Yu said.
“The timing of this statement gives us a hint of the reason behind this decision. Coming after an NDP takeover of the province, PNW sees the NDP as not the ideal partners to risk a multi-billion investment in.”
This is a developing story and will be updated as more information becomes available.
—with Business in Vancouver files