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Petronas pulls the plug on Canada’s Pacific Northwest LNG megaproject

Geoffrey Morgan, Financial Post, Jul 26 2017 - 06:30

CALGARY – Pacific NorthWest LNG, a $36-billion export project once touted as the largest potential investment in British Columbia’s history, will not be built amid an “extremely challenging environment,” according to its key investor.

Malaysia’s state-owned oil company Petronas announced Tuesday that it would not proceed with the Pacific NorthWest export facility and related pipeline near Prince Rupert, B.C., that was being proposed to connect Canadian gas to markets in Asia. The company faced entrenched opposition from environmental and aboriginal groups because of the project’s proximity to juvenile salmon habitat at the mouth of the Skeena River in northern B.C., and was also hamstrung by stringent government regulations in the backdrop of a fast-changing environment for the global LNG market.

“Today is a very difficult day for Pacific NorthWest LNG and Petronas,” Anuar Taib, executive vice-president and CEO for upstream at Petronas, said during a conference call announcing the project cancellation, which will affect 44 jobs.

There have been roughly 20 LNG projects proposed for the B.C. coastline but many analysts considered the Pacific NorthWest LNG project among the frontrunners and one of the most likely to be built. Only the smaller $1.6-billion Woodfibre LNG project near Squamish, B.C. is currently progressing.

“We are disappointed that the extremely challenging environment brought about by the prolonged depressed prices and shifts in the energy industry has led to this decision,” Anuar said. He said the decision to cancel the project was not related to the change in government in B.C., where a coalition between the NDP and Green Party recently unseated Christy Clark’s Liberals.

“We respect the company’s decision and will now move on to support the prospects of British Columbia’s natural gas sector to create good-paying jobs right here in British Columbia,” recently appointed B.C. Minister of Energy, Mines and Petroleum Resources Michelle Mungall told reporters. She added that B.C. would continue to be “a player in the LNG market.”

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