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In first major energy decision, Trudeau gov. approves Pacific NorthWest LNG

After years in regulatory limbo, liquefied natural gas project clears major hurdle with federal approval

Justin Trudeau's government gave a tentative “yes” to Pacific NorthWest LNG today in its first major energy policy decision—one which will have far-reaching impacts for Northeast B.C.  

At a news conference in Richmond B.C., Environment Minister Catherine McKenna, Natural Resources Minister Jim Carr and Dominic LeBlanc, minister of fisheries and oceans, announced the Petronas-led project could move forward with strict conditions to mitigate its environmental impacts.

The $11.4 billion export facility, slated for Lelu Island just outside Prince Rupert, would process natural gas from the Montney gas fields in Northeast B.C. for shipment to Asia. 

It would include 900-km natural gas pipeline from Progress Energy holdings in the northeast to the province’s North Coast. 

There are nearly 20 proposals to refine and ship B.C.’s natural gas to Asia, but Pacific NorthWest is widely considered the most-likely to be built. 

While the project has cleared a major hurdle, it remains to be seen whether Petronas will actually invest in the project. 

Environmental groups and some First Nations criticized the government’s decision to approve the project, claiming the plant would disrupt the Skeena River salmon fishery and make it impossible for Canada to meet its climate change commitments. 

The decision is a historic one for Northeast B.C. because it will allow the province to sell its gas on the world market, where it commands higher prices. 

Source: CEAA

The news comes at a time when the region's oilpatch, which would be the source of the gas, is struggling with high unemployment and surging employment insurance claims

Kristi Leer, who runs a company that provides traffic control services in the oilpatch, said she was "jumping up and down for joy" after hearing the government green-lighted the project. 

Leer lives in Fort Nelson, a community that's been among the hardest hit by the oil and gas downturn. Fort Nelson has lost nearly a fifth of its population during the latest downturn, according to estimates from the regional municipality.  

An LNG export industry would stabilize the local economy, Leer said. 

"It gives them something to start working towards," Leer said of what the decision means for unemployed people in her community. "Who would work on an LNG career if LNG isn't even possible for Canada? That alone will give a lot of people great hope." 

Alan Yu, a campaigner with Fort St. John for LNG who programmed radios for the oilpatch before being laid off, said the government's "yes" gave him reason for hope. 

"The reason I moved to Fort St. John a little over a year ago was because of LNG," he said. "My family is here, we decided to settle here. Without LNG, we might have to move out.”

At the same time, Tuesday's tentative "yes" does not guarantee the project will be built. 

The Petronas-led consortium is expected to make a final investment decision sometime next year after reviewing the project. When upstream drilling investments are taken into account, Petronas plans to spend as much as $36 billion on Pacific NorthWest. 

While the company says it's committed to its B.C. investments, there remains a glut of natural gas on the world market, which could make the project a money-loser—especially if environmental mitigation measures are stringent. 

However, it will take at least four years to build the project, and the market for LNG could improve by the time it begins exporting in the 2020s. 

Whether Pacific NorthWest LNG will make its decision before the next provincial election, set for May 2017, remains to be seen. 

If the project does not move forward, Dawson Creek Chamber of Commerce Executive Director Kathleen Connolly said producers would have to find other outlets for B.C. gas. 

"The devil really will be in the details and what those conditions look like," she said. 

"If you've been paying attention to (Enbridge) buying pipe in the ground or TransCanada looking at buying a pipe from New York to Mexico, that tells me that they're not looking at the West Coast as a viable option in the next two to five years. They're going to push all that natural gas down to the Gulf." 

It’s likely the project will see pushback from environmental and some First Nations groups. 

The 812-member Lax Kw’alaams First Nations band initially opposed Pacific NorthWest LNG, but voted 65 per cent in favour of the project in late summer.

Some have occupied Lelu Island to prevent work on the project, saying it would damage salmon habitat in nearby Flora Bank. 

Others say the project, which would not be connected to the largely-renewable BC Hydro grid, would make it nearly impossible for Canada to meet its Paris climate change commitments

Christy Clark’s B.C. Liberal government says LNG would help Asian countries, in particular China, transition from dirtier coal-fired electricity. 

Electrifying Progress Energy’s upstream gas drilling operations north of Fort St. John could also drive up demand for the controversial Site C dam 

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