Canadian Agency Extends Application For Petronas LNG Project

(Bloomberg) -- Canadian regulators extended by three months Petroliam Nasional Bhd.’s application to build a liquefied natural gas terminal on the nation’s Pacific coast so the Malaysian company can provide more information about the project’s environmental impacts.

The Canadian Environmental Assessment Agency announced the extension Saturday in a filing after Pacific NorthWest LNG, as the project is known, detailed changes to its construction methods and schedule. Regulators need more information to review and analyze the project, the agency said.

“Pacific NorthWest LNG will work to assess this latest information request and continue to work constructively with federal agencies through this rigorous process,” said Michael Culbert, president of Pacific NorthWest LNG, in an e-mail. Culbert said the extension came 750 days after the project’s original submission and four days before the deadline for a ministerial decision on the environmental impacts.

The project has been held up by opposition from an aboriginal group near the site of its proposed shipping terminal on Lelu Island in northern British Columbia, not far from the border with the U.S. state of Alaska.

Canada is playing catch-up with global LNG competitors such as Australia and the U.S., and proponents of Canadian projects are struggling after the oil-market collapse brought down LNG prices and caused companies to crimp spending on mega-projects. 

‘Not Unreasonable’

The delay for Pacific NorthWest LNG is “probably not unreasonable” because it’s part of the regulatory process, said Alex Ferguson, vice president of policy and performance at the Canadian Association of Petroleum Producers. Still, each delay becomes an issue for Canada and whether the country can get large energy infrastructure projects approved and built, he said.

“Capital has a lot of opportunities and Canada’s reputation is at stake,” Ferguson said in an interview. “We hope the government can take action so that these projects can get done.”

Pacific NorthWest LNG is a C$36 billion ($28 billion) project being proposed by Petronas, as  Petroliam Nasional is known, along with partners Indian Oil Corp. Ltd., Japan Petroleum Exploration Co., China Petroleum & Chemical Corp. and Brunei National Petroleum Co.

The regulator’s move comes after Catherine McKenna, Canada’s environment and climate change minister, on Friday approved the smaller Woodfibre LNG project near Squamish, British Columbia, just north of Vancouver. Approval of the project, which according to the environment ministry won’t cause “significant adverse environmental effects,” came with binding conditions including mitigation, the minister said in a statement.

“We should take some solace when projects get through the process,” said CAPP’s Ferguson. “It was a good decision by the government. In the face of a lot of opposition, it’s easy to say ‘no’ and be against things.”

Indonesian Billionaire

Woodfibre LNG is backed by Indonesian billionaire Sukanto Tanoto’s RGE Group. It uses electricity from hydropower instead of burning natural gas for chilling and compressing LNG, and has no significant environmental effects, said Chris McCluskey, a senior consultant with Environics Communications in Ottawa. 

“The Pacific NorthWest decision is a better standard by which markets will evaluate their investment in Canadian resource proposals moving forward,” he said.

Prime Minister Justin Trudeau’s government in January overhauled the environmental-review process to consider greenhouse-gas emissions from proposals and to boost the role of the federal cabinet in approvals. The government intends to make a final decision on the Pacific NorthWest LNG project within the “legislated timeline” following the three month extension, the NEB said.

--With assistance from Josh Wingrove and Rebecca Penty. To contact the reporter on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Ros Krasny, Elizabeth Wollman

Copyright 2016 Bloomberg News.

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