Skip to main content

A $40-billion energy megaproject on the West Coast has been approved in a decision expected to revitalize the economy of northern British Columbia.

LNG Canada says it will create thousands of temporary jobs and hundreds of permanent ones in a region that has been an economic laggard as the Royal Dutch Shell PLC-led liquefied natural gas project in Kitimat, B.C., forges ahead with construction.

“This is a generational opportunity for northern British Columbia, one that could not be passed up,” B.C. Premier John Horgan said.

Story continues below advertisement

While Canada’s energy industry has been hoping for LNG Canada to go ahead, environmentalists have cautioned that the project will be a setback in the fight against global warming.

The decision comes just one month after the Federal Court of Appeal quashed the approval of the Trans Mountain oil pipeline, a decision that cast doubt on Canada’s ability to build energy megaprojects.

The federal Liberal government has been on the defensive as industry and opposition critics attack it over delays to Trans Mountain’s expansion plans and new environmental assessment legislation that has been faulted as overly burdensome. Ottawa recently bought the Trans Mountain pipeline and West Coast terminal, and inherited the troubled plans to expand the line from Alberta to Burnaby, B.C.

Prime Minister Justin Trudeau hailed LNG Canada’s announcement – coming on the heels of the United States-Mexico-Canada Agreement on trade – as a sign of confidence in the Canadian economy.

Read about the impact of LNG Canada project on B.C. climate targets

“It is proof that that our country’s rich natural resources and talented workforce can make Canada an attractive place for investors to do business and support a clean-growth economy,” he said during a news conference on Tuesday in Vancouver.

CIBC World Markets Inc. praised the project’s approval, following a series of setbacks for Canada’s energy industry. “We see the sanctioning of this project as a major milestone for the Canadian oil and gas sector, particularly during a year that has been mired with negative macro headlines,” CIBC analysts said in a research note.

Story continues below advertisement

While there were more than 20 LNG proposals in B.C. in 2014, some industry analysts say only four serious plans remain today.

Exports from the LNG Canada terminal will be shipped to Asia, which is a coveted export market, said the Canadian Association of Petroleum Producers.

Maarten Wetselaar, integrated gas director at Royal Dutch Shell, said LNG Canada will be globally competitive in costs while still primarily employing Canadian workers for the five-year construction phase.

“Sixty per cent of the money will be spent in Canada and 10,000 construction jobs will be created,” Mr. Wetselaar said in an interview after Shell and the four other co-owners of LNG Canada announced their final investment decision to press ahead. “It will be a big injection into the Canadian economy.”

Huge LNG modules, including some that are 10 storeys tall, will need to be ordered from fabrication yards in China because no Canadian manufacturers exist to construct the gigantic components, he said.

But Mr. Wetselaar said the specialized, high-tech modules will be assembled in Kitimat on B.C.'s northern coast, creating thousands of Canadian jobs during construction at the terminal site, and there will also be thousands of more jobs created to build TransCanada Corp.'s pipeline that will run from northeast B.C. to Kitimat. “You either do it this way, or you don’t have a project. Canadians will have a lot of work to do at LNG Canada,” he said.

Story continues below advertisement

TransCanada has been tapped to build a $6.2-billion natural gas pipeline, called Coastal GasLink, part of total spending of up to $40-billion related to LNG Canada. TransCanada, which has already spent $470-million on the route, revised its cost estimate upwards on Tuesday, due to inflation and other changes in the scope of the pipeline plans. The previous cost estimate for Coastal GasLink was $4.8-billion.

Besides thousands of construction jobs at the Kitimat terminal and along the pipeline route, up to 950 permanent employees will be needed to operate the West Coast plant once it’s built. Construction of the terminal will be on the traditional territory of the Haisla Nation.

Mr. Trudeau, Mr. Horgan, LNG Canada chief executive officer Andy Calitz, Haisla chief councillor Crystal Smith and Kitimat Mayor Phil Germuth attended Tuesday’s signing ceremony in Vancouver.

Shell is the largest partner in the project, with a 40-per-cent stake. The other co-owners are Malaysia’s state-owned Petronas (25 per cent), PetroChina (15 per cent), Japan’s Mitsubishi Corp. (15 per cent) and South Korea’s Kogas (5 per cent).

The federal government will provide $275-million to support infrastructure improvements and increase marine protection to mitigate impacts of increased ship traffic. Ottawa also cleared the path for a positive final investment decision by agreeing with the consortium that fabrication of modules could not be undertaken in Canada, and that import modules from China should not be hit with tariffs on fabricated industrial steel components.

Mr. Horgan defended his government’s tax package for the industry, saying it only levels the playing field with other sectors of the economy by eliminating a special LNG income tax, and providing the same industrial power rates and provincial sales tax breaks that other industries qualify for.

Story continues below advertisement

“There is going to be $23-billion in revenue coming to the province that we can put toward the things that all of us want to see in our communities – child care, education, health care,” Mr. Horgan said. "I’m over the moon about it because a whole bunch of people over a long, long time worked to get this done.”

Former BC Liberal premier Christy Clark has been a long-time advocate for B.C.'s fledgling LNG industry. “This approval sends a message to the world that you can do business in British Columbia and Canada as a private-sector enterprise. The Trans Mountain fight has really shaken confidence,” Ms. Clark said in an interview on Tuesday. The minority BC NDP government relies on the support of the BC Green Party to hold on to power. Although the Greens oppose the LNG project, there is little prospect of the government falling in the near term over LNG.

lng canada supply route

Fort St. John

Coastal Gaslink Pipeline project

TransCanada’s NOVA Gas Trans.

Ltd. (NGTL) Existing System

Dawson

Creek

Smithers

Prince

Rupert

Fort St. James

Kitimat

Prince George

Fraser

Lake

BRITISH COLUMBIA

lng canada project site

0

75

U.S.

KM

Prince

CANADA

Terrace

Rupert

Kitimat

Douglas

Channel

Browning

Entrance

Haida

Gwaii

Banks

Island

BRITISH

COLUMBIA

Hecate

Strait

Klemtu

Pacific

Ocean

Queen

Charlotte

Sound

DETAIL

Kitimat River

Existing site

Minette Bay

Rio Tinto

plant

LNG Canada

proposed site

BRITISH

COLUMBIA

Douglas

Channel

(Kitimat

Arm)

Proposed

marine

terminal

THE GLOBE AND MAIL, SOURCE: lng canada;

royal dutch shell; gaslink.com

lng canada supply route

Fort St. John

Coastal Gaslink Pipeline project

TransCanada’s NOVA Gas Trans.

Ltd. (NGTL) Existing System

Dawson

Creek

Mackenzie

Smithers

Prince

Rupert

Fort St. James

Kitimat

Prince George

Fraser

Lake

BRITISH COLUMBIA

lng canada project site

0

75

U.S.

KM

CANADA

Prince

Terrace

Rupert

Skeena

Kitimat

Douglas

Channel

Browning

Entrance

Haida

Gwaii

Banks

Island

BRITISH

COLUMBIA

Hecate

Strait

Klemtu

Pacific

Ocean

Queen

Charlotte

Sound

DETAIL

Kitimat River

Minette Bay

Existing site

Rio Tinto

plant

LNG Canada

proposed site

BRITISH

COLUMBIA

Douglas

Channel

(Kitimat

Arm)

Proposed

marine

terminal

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: lng

canada; royal dutch shell; gaslink.com

lng canada supply route

Fort St. John

Coastal Gaslink Pipeline project

TransCanada’s NOVA Gas Transmission

Ltd. (NGTL) Existing System

Dawson

Creek

Mackenzie

Smithers

Prince

Rupert

Fort St. James

Kitimat

Prince George

Fraser

Lake

BRITISH COLUMBIA

lng canada project site

0

75

U.S.

KM

CANADA

Prince

Terrace

Rupert

Skeena

Kitimat

Kitkatla

Douglas

Channel

Browning

Entrance

Haida

Gwaii

Hartley

Bay

Banks

Island

BRITISH

COLUMBIA

Hecate

Strait

Klemtu

Pacific

Ocean

Queen

Charlotte

Sound

DETAIL

Kitimat River

Existing site

Minette Bay

Rio Tinto

plant

LNG Canada

proposed site

BRITISH

COLUMBIA

Douglas

Channel

(Kitimat Arm)

Proposed

marine

terminal

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: lng canada;

royal dutch shell; gaslink.com

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies