Pacific NorthWest LNG announced Tuesday that its $11.4-billion LNG project near Prince Rupert will not proceed as planned.
The decision was made by the project’s majority owner, Petronas, and its partners “after a careful review of the project amid changes in market conditions,” the Malaysia-based company said in a statement.
Anuar Taib, executive vice president of Petronas, called it a “difficult day” for the company.
“We are disappointed that the extremely challenging environment brought about by the prolonged depressed prices and shifts in the energy industry have led to this decision,” he said in a conference call with reporters.
Taib said that there was no connection between the company’s decision and the rise to power last week of an NDP government led by Premier John Horgan.
“We don’t take that into consideration,” he said, adding that the company looks forward to working with the NDP as it develops its vast gas assets in B.C.
“I think [for] the review for projects as complex as our Pacific NorthWest LNG project — every factor has to be considered.
“We took time, but at the end of the day, it really boils down to whether or not the project could be competitive in the market conditions of the day. That is how we arrived at the decision we took.”
He said the decision to cancel the project will affect 44 people in the organization.
Michelle Mungall, B.C. Minister for Energy, Mines and Petroleum Resources, said the government was notified of the decision shortly before the public announcement. She said she planned to contact stakeholders in other LNG projects and proposals across the province.
"Our government is committed to working with the LNG industry to ensure that we are competitive,” she said.
Mungall said the NDP supports LNG projects that guarantee jobs for British Columbians, offer a fair rate of return on resources, respect and partner with First Nations and are compatible with the party’s climate change commitments.
As of July 18, there were 18 LNG projects planned along the B.C. coast, according to the National Energy Board.
Pacific Northwest LNG was the largest project planned in Canada. It was expected to create about 4,500 construction jobs and 300 to 400 operational jobs. It also would have been one of the largest carbon polluters in the country and threatened wild salmon habitats, environmentalists said.
The project had received conditional federal approval and a 40-year licence from the National Energy Board, but it was in limbo without a final investment decision from the company.
The Liberal Opposition issued a statement saying the decision signals the impact of a “Closed for Business agenda” put forward by the NDP government.
They pointed to examples like a 2016 letter to the Lax Kw’alaams First Nation signed by three NDP MLAs Jennifer Rice, Doug Donaldson and Robin Austin saying the project posed an “unnecessary risk.”
“This attitude, as well as additional costs the NDP plan to impose on job creators with measures such as a higher, non-revenue neutral carbon tax, send a clear signal that under the NDP, British Columbia is not a friendly market to invest in,” the Opposition said.
Skeena Liberal MLA Ellis Ross said in a statement that the decision represents a “generational opportunity that’s been lost.”
“The First Nations who were looking to LNG to support economic growth and a sustainable future in their communities are facing some tough decisions now that resource benefits are being pulled off the table,” said Ross, who is a former chief councillor with the Haisla First Nation, which embraced LNG as a poverty-reduction strategy.
B.C. Green Party Leader Andrew Weaver, whose support helped the NDP form government, said it’s been clear for years that Liberal plans for an LNG industry lacked support in the global marketplace.
“Rather than doing the hard work required to strengthen and secure the economic opportunities already available in other sectors, the B.C. Liberals recklessly went all in on a single industry,” he said in a statement. “They let opportunities for innovation and economic development in clean technology, the resource sector, and other major B.C. industries fall by the wayside.”
Skeena Wild Conservation Trust said it planned to continue pursuing its legal challenge of Pacific Northwest LNG, claiming the federal approval process was flawed.
When she was premier, Christy Clark had promoted LNG as a potential cash cow and job creator for the province, and vowed to develop the industry. But the industry has failed to mature, as global competitors saturated the market and prices dropped.
Woodfibre LNG, a $1.6 billion project based near Squamish, is the only Canadian project that has issued a final investment decision.
Petronas had invested about $1 billion in the environmental and technical process for Pacific Northwest LNG, plus about $5.5 billion to purchase Progress Energy, which has shale gas assets in northern B.C.
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