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Final investment decision for LNG Canada delayed

A final investment decision has been pushed back for a Shell-led liquefied natural gas (LNG) export facility planned for the B.C. coast near Kitimat. LNG Canada officials aren't saying when the decision will be revisited.
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A final investment decision has been pushed back for a Shell-led liquefied natural gas (LNG) export facility planned for the B.C. coast near Kitimat.

LNG Canada officials aren't saying when the decision will be revisited. 

An announcement on whether the project would receive funding was originally planned for the end of 2016. The partners—who include PetroChina, Mitsubishi Corporation and Kogas, the South Korean national gas company—said it would need more time to make the choice on whether it would fund the estimated $40 billion project.

“Our project has benefitted from the overwhelming support of the BC Government, First Nations–in particular the Haisla, and the Kitimat community," LNG Canada CEO Andy Calitz said in a statement.

"We could not have advanced the project thus far without it. I can’t say enough about how valuable this support has been and how important it will be as we look at a range of options to move the project forward towards a positive FID by the Joint Venture participants."

The Shell-led project would process natural gas from Encana's Cutbank Ridge Partnership in the South Peace for export to Asia. It would employ 7,500 people during peak construction. 

In January, the proposed plant was the first LNG project in the province to receive permits from the B.C. Oil and Gas Commission.

"LNG Canada remains a promising opportunity," the partners said in a release, noting that the company has "important commercial and engineering contracts in place to design and build the project."

Still, it cited the low price of oil tied to natural gas and capital budget restraints as reasons for postponing the decision. 

Key site preparation activities will continue in the next few weeks, the company says. 

Kathleen Connolly, executive director of the Dawson Creek & District Chamber of Commerce, said the news didn't come completely as a surprise to her. 

But, she said "it's very disappointing that we're seeing another project go into a pause mode. It's very concerning in the bigger picture that we see these projects face such a tough uphill battle and then when they do get approval, the market has changed."

Connolly blamed Canada's lengthy regulatory process for the province "losing its spot in line" for LNG exports.

‪"Everyone in our region understands the importance of the energy sector," Dawson Creek Mayor Dale Bumstead said. "It's so important to the development of the area around Dawson Creek so to hear (this project) has been delayed is just disappointing to me."‬

‪Bumstead said it was hard to predict what the impact of this decision would be on the local community, but feared that it could mean less investment in the area. ‬

‪'It's a real biggy for (the area) — the drilling and the exploration and all that stuff drives the investment in the community, businesses and people coming here for opportunities to work. So, (losing that) is the worry."‬

dcreporter@dcdn.ca