LNG Canada project ‘still alive’ as group assesses site

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Former Haisla Nation chief councillor Ellis Ross has high hopes for a liquefied natural gas project, saying an international consortium is scrutinizing the B.C. proposal despite gloomy market conditions.

Mr. Ross, who represents the provincial Skeena riding and served briefly as a BC Liberal cabinet minister, said the consortium led by Royal Dutch Shell PLC is committed to crunching numbers to determine the economic viability of the LNG Canada project in Kitimat. "It's still alive," he said in an interview. "The project is fighting to stick around."

Last month's cancellation of Pacific NorthWest LNG's venture near Prince Rupert has prompted industry speculation that other LNG plans in British Columbia are now doomed due to a global glut of the fuel and weak LNG prices.

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But Mr. Ross said LNG Canada hired about 45 people last month to begin dismantling infrastructure such as storage tanks left on the Kitimat site by the previous occupant, Methanex Corp. Another 100 people in Kitimat, Vancouver and Calgary remain assigned to the project.

The industrial-site clearing is expected to be finished by the end of 2017. The work is being done in partnership with the Haisla Nation, whose traditional home is on the east side of Douglas Channel in Kitamaat Village, located near Kitimat.

The proposed LNG export terminal would be built on the former site of Methanex's methanol plant that was closed in 2006, while the planned dock for LNG tankers is a wharf that formerly belonged to the Eurocan pulp and paper mill that West Fraser Timber Co. Ltd. shut down in 2010.

The Shell-led group had been expected to announce its final investment decision by the end of 2016, but in July last year, the joint venture announced an indefinite delay for determining whether to proceed.

LNG Canada forecasts that it would need to invest up to $40-billion on construction for the project, though it has yet to appoint a prime contractor for plans in Kitimat – located in the Skeena riding.

Shell holds 50 per cent of LNG Canada. PetroChina Co. Ltd. owns 20 per cent of the project, while Japan's Mitsubishi Corp. and South Korea's Kogas each have a 15-per-cent stake.

Mr. Ross said he is puzzled by the NDP government's cancellation of an international LNG conference that had been scheduled for Nov. 28-30 at the Vancouver Convention Centre. It had been slated to be the fourth major LNG meeting in Vancouver since 2013, if the BC Liberals had stayed in power, he said.

Instead, the NDP and BC Greens signed a four-year pact in late May to oust Christy Clark's Liberals in favour of an NDP minority government under John Horgan, who was sworn in as Premier on July 18.

One industry official reported learning in mid-July about the LNG conference's uncertain status, saying a hotel employee inquired about whether a petroleum firm wanted to keep room reservations. Another delegate who signed up said he wasn't informed until early August and an official involved with the convention centre's logistics didn't receive formal notification until after the Aug. 7 B.C. Day holiday.

The B.C. Ministry of Energy, Mines and Petroleum Resources said last week that "the cancellation of the LNG conference, originally scheduled for this November, was initiated on June 13. The process started before the new government was in a position to determine the conference's future."

A spokesman for the BC Liberals, however, said plans for key government-sponsored events were placed on hold in June because of political uncertainty. Mr. Ross added that he and his party maintained their support for November's LNG gathering after his appointment on June 12 as Natural Gas Development Minister. The NDP's Michelle Mungall replaced him on July 18 under a streamlined ministry structure.

"As far as I'm concerned, the conference would have been a mainstay," Mr. Ross said. "The LNG conference would have been huge. I was actually a speaker in the past."

The most recent such event, held in October, 2015, attracted more than 3,000 participants and 300 exhibitors.

Last week, the Energy Ministry reiterated the NDP's stand on LNG, stipulating four conditions: "LNG projects must offer jobs and training for British Columbians, especially jobs for local people; the people of B.C. must get a fair return for the province's resources; LNG projects must secure full partnerships with local First Nations; LNG projects must complete a made-in-B.C. environmental assessment and respect provincial commitments to combatting climate change."