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CALGARY ? Malaysia’s Petronas is frustrated that Prime Minister Justin Trudeau’s climate-change priorities are introducing new uncertainty because of its proposed $36 billion Pacific NorthWest LNG project in northern Bc and it has threatened to walk away whether it does not get federal approval by March 31, according to a source close to the project.
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The project, to become found on federal arrives at Lelu Island near Prince Rupert, received a largely favourable assessment in the Canadian Environmental Assessment Agency (CEAA) recently, was greenlighted by the British Columbia government in November, 2014, and received conditional corporate support – or a final financial commitment – from Malaysia’s state-owned company and its partners in June of last year.
But the new federal Liberal government is toughening up environmental reviews of major energy projects to regain “public trust” so that as it strives to satisfy international commitments to lessen greenhouse gas emissions.
It said in January they’d be subject to additional assessment on “direct and upstream greenhouse gas emissions.” A spokeswoman for CEAA said she’d consider how the new requirements will impact Pacific NorthWest LNG.
After spending approximately $12 billion to obtain the project to this stage, and achieving suffered multiple delays and setbacks, including aboriginal and environmental movement opposition, Petronas has conveyed to federal cabinet ministers it won’t accept additional hurdles.
“They’ve given Trudeau to March 31 either to approve it as being it stands now or they will leave,” the source told the Financial Post. “They started out using the Conservatives, and also the (environmental) standards are very high. They said OK we will meet those standards and they did out of all engineering and style from the project. This last greenhouse gas thing that Trudeau came up with really threw them for any loop.”
The big worry would be that the cabinet, which has final say, will keep stalling instead of handing down a decision as the project continues to burn cash, the origin said.
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Meanwhile, market conditions for LNG are deteriorating, proponents want to cut their losses and are taking a look at other opportunities, the source said.
Petronas and its partners (China’s Sinopec, Japan Petroleum Exploration Co., India Oil Corp. and Petroleum Brunei) were widely seen as probably the most likely to proceed with LNG exports from Canada’s West Coast simply because they have customers and don’t have the same profit expectations as shareholder-owned companies.
Not one of the two-dozen groups that proposed LNG export projects has gone ahead because of regulatory delays, rising competition from Usa LNG exporters, plummeting prices, and aboriginal and environmental group opposition.
The AltaGas-led group proposing the Douglas Channel LNG project stopped development recently and Royal Dutch Shell has delayed its final investment decision on its proposed terminal near Kitimat ’till the end of this year.
Michael Culbert, president of Pacific NorthWest LNG, said in an emailed statement Monday he was in Kuala Lumpur, where Petronas is headquartered, and unable to provide comment.
A spokesman for the company said it was business as usual and highlighted remarks made on Feb. 29 by Petronas president and group CEO Datuk Wan Zulkiflee Wan Ariffin: “As far as the North american LNG project in Canada is concerned, we continue to work towards achieving full FID,” he said. “We are reviewing the draft report (of the CEAA) including the conditions.”
In its draft set of the Pacific NorthWest project, the CEAA concluded it would likely cause significant adverse effects on “harbor porpoise and as a result of greenhouse gas emissions” but “with respect to all other valued components, the company concludes the project isn’t likely to result in significant adverse environmental effects considering the implementation of key mitigation measures.”
The CEAA is now conducting consultations and can create a recommendation to federal environment and global warming minister Catherine McKenna.
“The government environmental assessment from the project fulfills the federal government of Canada’s interim approach and principles, which includes a overview of the direct and upstream greenhouse gas emissions from the project,” spokesman Christian Vezeau said in a statement.
“Public comments received is going to be taken into consideration as the report is finalized. This information will get offers for towards the Minister of Environment and Climate Change to help inform her determination as to whether the work will probably cause significant adverse environmental effects.”
The consultation process has turned into another platform for organized opposition to push for that project’s defeat, the source said.
The LNG project is conducting its very own campaign. Within an emailed statement obtained through the Financial Post, Culbert urges supporters to obtain family and friends to send letters to the CEAA by March 11, once the public comment period ends.
“Now is the time to voice your support,” Culbert writes. “Our opponents have been sending their thoughts to CEAA. Have you told Ottawa why you support the LNG business in Canada?”
ccattaneo@nationalpost.com
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