Time is running out for the federal government to decide on whether to approve the Pacific NorthWest LNG project, which could open the way for one of the largest infrastructure investments in Canadian history.
The legislated deadline for a decision on the Petronas-led, $36-billion liquefied natural gas project on British Columbia’s North Coast is Oct. 2, following numerous delays in the review process, including a three-month extension earlier this year.
The project has drawn intense scrutiny, both for the carbon emissions it would cause, and for the potential impact the $11.4-billion export terminal on Lelu Island, south of Prince Rupert, B.C., would have on the fertile wild salmon habitat.
The Canadian Environmental Assessment Agency released a draft environmental report in February that found the project would not result in serious harm to fish habitat.
However, its report also stated carbon dioxide emissions totalling 5.3-million tonnes a year from the LNG facility, and another 6.5-million to 8.7-million tonnes from collection and transportation of the natural gas, would pose a significant ecological threat.
Since then, the CEAA has been working to produce a final report with attached conditions, taking into account information provided by Petronas and over 34,000 comments from the public on the draft report, CEAA spokeswoman Karen Fish said in an email.
Once a final report is complete, it will be up to federal cabinet ministers to decide whether the project will cause significant adverse environmental effects, and if it does, whether those effects are justified.
Fish said the government of Canada intends to make a final decision within the legislated time frame of Oct. 2, though because that falls on a Sunday, the deadline is actually pushed to Oct. 3.
Climate change considerations
The pending decision comes as the Trudeau government tries to balance the competing pressures of meeting climate change goals and allowing major energy projects to move forward.
Petronas, meanwhile, has to balance its own interests to decide whether to go ahead with the project.
Last year the Malaysian state-owned energy company said it would move forward with a positive final investment decision if the federal government approves the project — but in August it stated that it would have to reassess the project once approval is given.
“Upon the finalization of the report, we need to conduct a total review of the proposed project prior to tabling it to the project’s partners for a final investment decision,” Petronas said.
The potential investment decision comes as the global LNG market continues to be weighed down by a glut of supplies from new projects, and the low prices that have come as a result.
Signs of market recovery
But AltaCorp Capital analyst Dirk Lever said he’s starting to see the first signs of a recovery, or at least that a bottom of the market might have been reached, which would be good for Canadian projects.
“If the overall market is looking better, then Canadian prospects could be improving,” said Lever.
He added, however, that Petronas would have to be quite confident about the Pacific NorthWest LNG project before committing the billions of dollars required to make it happen.
“A decision is going to be delayed and delayed until as such time as they have much greater clarity, and they feel a lot more confident,” said Lever.
Besides the financial uncertainty, the company still has to finalize agreements with the Lax Kw’alaams First Nations on whose traditional territory the export terminal will sit.
Members of the community have been vocal critics of the project in the past. However, in a community poll in August, two-thirds of the 812 Lax Kw’alaams members who voted were in favour of continuing to pursue LNG development in their traditional territory.
In a letter to the community, Mayor John Helin said the vote was only part of the process, and the community was still determined to protect Lelu Island and the salmon habitat.
“We have not moved on our position about the environment. It is still our number one concern,” said Helin.