CALGARY ? Malaysia’s Petronas is frustrated that Prime Minister Justin Trudeau’s climate-change priorities are introducing new uncertainty for its proposed $36 billion Pacific NorthWest LNG project in northern British Columbia and has threatened just to walk away if it doesn’t get federal approval by March 31, according to a source close to the project.
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The project, to be located on federal arrives at Lelu Island near Prince Rupert, received a largely favourable assessment in the Canadian Environmental Assessment Agency (CEAA) last month, was greenlighted through the British Columbia government in November, 2014, and received conditional corporate support – or perhaps a final financial commitment – from Malaysia’s state-owned company and its partners in June of this past year.
But the new federal Liberal government is toughening up environmental reviews of major energy projects to regain “public trust” and as it strives to meet international commitments to lessen greenhouse gas emissions.
It said in January they would be susceptible to additional assessment on “direct and upstream greenhouse gas emissions.” A spokeswoman for CEAA said she would look into how the new requirements will impact Pacific NorthWest LNG.
After spending an estimated $12 billion to obtain the project for this stage, and having suffered multiple delays and setbacks, including aboriginal and environmental movement opposition, Petronas has conveyed to federal cabinet ministers it’s not going to accept additional hurdles.
“They’ve given Trudeau to March 31 to either approve it as being it stands now or they will leave,” the origin told the Financial Post. “They started out using the Conservatives, and the (environmental) standards are very high. I was told that OK we will meet those standards and they did in all the engineering and style from the project. This last greenhouse gas thing that Trudeau came up with really threw them for a loop.”
The big worry is that the cabinet, which has final say, will keep stalling rather than handing down a decision while the project is constantly on the burn cash, the source said.
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Meanwhile, market conditions for LNG are deteriorating, proponents wish to cut their losses and therefore are taking a look at other opportunities, the origin said.
Petronas and it is partners (China’s Sinopec, Japan Petroleum Exploration Co., India Oil Corp. and Petroleum Brunei) were widely viewed as probably the most prone to move forward with LNG exports from Canada’s West Coast 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 went ahead because of regulatory delays, rising competition from United States 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 until the end of this year.
Michael Culbert, president of Pacific NorthWest LNG, said within an emailed statement Monday that he was at Kuala Lumpur, where Petronas is headquartered, and not able to provide comment.
A spokesman for that company said hello 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 (from the CEAA) such as the conditions.”
In its draft set of the North american project, the CEAA concluded it would likely cause significant negative effects on “harbor porpoise and for that reason of greenhouse gas emissions” but “with respect to all other valued components, the agency concludes that the project isn’t likely to result in significant adverse environmental effects considering the implementation of key mitigation measures.”
The CEAA has become conducting consultations and will make a recommendation to federal environment and climate change minister Catherine McKenna.
“The federal environmental assessment of the project fulfills the federal government of Canada’s interim approach and principles, which includes a review of the direct and upstream greenhouse gas emissions from the project,” spokesman Christian Vezeau said inside a statement.
“Public comments received is going to be taken into account because 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 converted into yet another platform for organized opposition to push for the project’s defeat, the origin said.
The LNG project is conducting its own campaign. In an emailed statement obtained by the Financial Post, Culbert urges supporters to obtain friends and family to transmit letters to the CEAA by March 11, when the public comment period ends.
“Now is the time to voice your support,” Culbert writes. “Our opponents happen to be sending their thoughts to CEAA. Have you told Ottawa why you offer the LNG business in Canada?”
ccattaneo@nationalpost.com
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