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Pacific NorthWest LNG is proposing to build an LNG export terminal on Lelu

Rich Coleman expects a liquefied natural gas project led by Malaysia's Petronas to forge ahead, but cautions that any final investment decision will be delayed by a lengthy federal environmental review.

B.C.'s Natural Gas Development Minister recently visited Malaysia, where he met the new chief executive of state-owned Petronas, Wan Zulkiflee Wan Ariffin. "I came out of Malaysia as optimistic, if not more optimistic, than I've ever been," he said in an interview from Victoria.

Shamsul Azhar Abbas, the former CEO at Kuala Lumpur-based Petronas, introduced Mr. Wan Zulkiflee to Mr. Coleman, who also serves as B.C. Deputy Premier. Mr. Shamsul and Mr. Wan Zulkiflee are scheduled to visit Vancouver by the end of June to meet with Mr. Coleman and Premier Christy Clark.

The Canadian Environmental Assessment Agency (CEAA) launched its review of the Petronas-led Pacific NorthWest LNG joint venture in 2013. Since then, there have been delays as a result of the regulator seeking more information related to the project's impact on salmon habitat at Flora Bank. Pacific NorthWest LNG is proposing to build an LNG export terminal on Lelu Island, located near Prince Rupert.

The latest delay stems from Pacific NorthWest LNG taking time to prepare 3-D modelling. That modelling is designed to predict changes that might occur to the environment after the construction of the export terminal, with an emphasis on the impact to Flora Bank.

The Petronas-led venture already has a provincial environmental certificate and now requires one federally. The project originally planned to render a decision on going ahead at the end of 2014, but subsequently set a June target. On Feb. 23, CEAA halted the regulatory clock at Day 240 of the one-year review process, meaning a federal ruling on Pacific NorthWest LNG could stretch into August or even September.

"The Canadian environmental assessment needs to be completed and signed off. You wouldn't go to a final, final investment decision until you had your ability to proceed, which includes that certificate," Mr. Coleman said.

There are 19 B.C. LNG proposals, though experts say there is only room for a handful of projects provincially in a global industry where Canada lags countries such as Australia and the United States. "There's a lot of competition out there," Katherine Chance, a director in Navigant Consulting Inc.'s global energy practice, said Wednesday at Canadian Business Conferences' LNG gathering in Vancouver.

The B.C. NDP claims that the Liberal government is ham-fisted in its handling of the LNG file. Bruce Ralston, the NDP's LNG critic, argues that the government is negotiating with LNG players in private and keeping the tax details secret. Mr. Ralston added that the province is proposing to give itself greater taxation flexibility to attract LNG investments.

First Nations also have concerns. A report in January prepared for the Lax Kw'alaams by Patrick McLaren, president of SedTrend Analysis Ltd., raised environmental alarm bells. Pacific NorthWest LNG's proposed suspension bridge over Flora Bank would extend southwest for 1.6 kilometres away from Lelu Island. That span would connect with a 1.1-kilometre-long trestle/jetty to a deep-berth location in Chatham Sound. The trestle/jetty threatens to disrupt a complex system that effectively holds Flora Bank in place, Mr. McLaren said.

But Spencer Sproule, Pacific NorthWest LNG's senior adviser of corporate affairs, said the project is committed to providing information requested by CEAA. "Our interim findings, conducted by world-class experts in the field of 3-D sediment dispersion modelling, indicate that our proposed marine infrastructure will not have significant adverse effects to fish or fish habitat," Mr. Sproule said in a statement.

Pacific NorthWest LNG received clearance five months ago from the B.C. Environmental Assessment Office, though CEAA is the lead regulator on the file. The federal agency's review of Pacific NorthWest LNG had been expected to be completed by the end of June, but the process has been in a holding pattern for more than seven weeks, pending the 3-D modelling submission.