A liquefied natural gas project planned for Vancouver Island has been halted, the latest setback for LNG proponents in British Columbia.
“We’re talking about a pause,” said Nigel Kuzemko, chief executive at Steelhead LNG, which oversees the Vancouver Island project, called Kwispaa LNG. “Certainly for us, it’s a timeout.”
Mr. Kuzemko said in an interview that a final investment decision for Kwispaa had been scheduled for next year, but the timing for such a decision will be delayed indefinitely.
Huu-ay-aht First Nations leaders, who back plans to build the Kwispaa export terminal on their traditional territory on Vancouver Island, said they are “deeply disappointed” to learn that the project has been suspended.
The halting of work on the Kwispaa venture is the latest in a series of decisions by energy companies abandoning LNG plans in British Columbia.
Mr. Kuzemko said he has shifted his attention away from plans for an LNG terminal and is now devoting his efforts instead on developing plans to build a natural gas pipeline from northeast British Columbia to Vancouver Island. The LNG terminal and pipeline are estimated to cost a total of $18-billion.
“When you refocus, you have to do things that are tough. We’ve ceased some operations immediately,” Mr. Kuzemko said.
He said he is holding out hope that the Kwispaa terminal plans could eventually be revived, if the pipeline gains support from First Nations along the route. “The ability to build and get approval for pipelines in British Columbia is challenging,” he said.
Huu-ay-aht elected chief councillor Robert Dennis Sr. and head hereditary chief Derek Peters were looking forward to having a major LNG terminal built on the Huu-ay-aht’s traditional territory at Sarita Bay, 75 kilometres southwest of Port Alberni.
“Huu-ay-aht First Nations was notified by Steelhead LNG that it has ceased current project work on the Kwispaa LNG project,” Mr. Dennis and Mr. Peters wrote in their joint letter to Huu-ay-aht members. “We are saddened by the decision of Steelhead LNG.”
The Huu-ay-aht are part of the 2011 Maa-nulth First Nations Final Agreement, one of a handful of treaty and land claim pacts in British Columbia.
The majority owner of Steelhead LNG is Azimuth Capital Management, a private equity firm based in Calgary. In a regulatory filing last year, Calgary-based natural gas producer Seven Generations Energy Ltd. said it had invested $25.8-million and made other commitments for a 24.4-per-cent stake in Steelhead LNG, but wrote down $14.4-million of its investment.
Only one LNG project is under construction in British Columbia. Five years ago, there were more than 20 B.C. LNG proposals touted by the previous BC Liberal government.
The BC NDP government supports LNG Canada, led by Royal Dutch Shell PLC, which has started work on a terminal in Kitimat to export the fuel to Asia. The Shell-led consortium is aiming to begin shipments by early 2025.
LNG Canada’s budget totals $40-billion, including $18-billion for the Kitimat terminal and $6.2-billion for TransCanada Corp.’s Coastal GasLink pipeline, which is slated to transport natural gas from northeastern B.C. to Kitimat.
All 20 elected Indigenous band councils along Coastal GasLink’s route have signed project agreements with TransCanada, but a group backed by five prominent Wet’suwet’en Nation hereditary chiefs remains opposed.
With work halted on Kwispaa, that leaves only one major LNG terminal on the drawing board in B.C.: Chevron Corp. and Woodside Petroleum Ltd. are continuing with preliminary work on their Kitimat LNG joint venture at Bish Cove.
One small-scale B.C. proposal, Woodfibre LNG near Squamish, is considered by industry experts to be viable in the short term.
Last year, Australia’s Woodside walked away from its plans to build Grassy Point LNG on a site near Prince Rupert. In 2017, cancelled B.C. projects included: Shell’s Prince Rupert LNG plans on Ridley Island; the Malaysian-led Pacific NorthWest LNG joint venture on Lelu Island; the Aurora LNG consortium led by China on Digby Island; and Steelhead LNG’s Malahat proposal on Vancouver Island.