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Nexen group kick-starts LNG project by paying B.C. $24-million to secure Prince Rupert land

B.C. Premier Christy Clark at a press conference in Vancouver on Nov. 12, 2013, announcing an agreement to build an LNG facility at Grassy Point, B.C., near Prince Rupert.

John Lehmann/The Globe and Mail

The B.C. government has reached a deal with Chinese-owned Nexen and two Japanese partners that will clear the way for the companies to pursue a liquefied natural gas project near Prince Rupert.

The private venture, called Aurora LNG, won the right to acquire land at Grassy Point, north of Prince Rupert.

CNOOC Ltd. of China acquired Calgary-based Nexen last year for $15.1-billion. Nexen owns 60 per cent of Aurora, while the remaining 40 per cent is held by Inpex Corp. and JGC Corp., both of Japan.

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"LNG export is the most attractive option for maximizing the value of our Canadian shale gas business," CNOOC chief executive officer Li Fanrong said in a statement Tuesday.

The Nexen-led joint venture agreed to pay the province $24-million for the Grassy Point property as a potential down payment, should the energy firms decide ultimately to build an export terminal, where ships would dock before transporting LNG to Asia.

"We have a long process ahead that includes a site viability review, a comprehensive environmental impact assessment and stakeholder consultation," Nexen CEO Kevin Reinhart said in a release.

At a news conference in Vancouver, Premier Christy Clark and Natural Gas Development Minister Rich Coleman said LNG has the potential to transform the province's economy and create thousands of jobs.

"The agreement between the province of British Columbia and Aurora LNG is a sole proponent agreement, which provides the companies involved with the exclusive right to move forward with the planning necessary to build LNG export infrastructure at Grassy Point," the government said in a statement.

The Aurora LNG proposal is one of at least 10 plans being pitched to develop the fledgling LNG industry in British Columbia. The B.C. government is continuing to hold discussions with three remaining LNG proponents for a nearby parcel of Grassy Point property.

Government officials say they will be working First Nations to ensure lasting benefits. Aurora LNG's project is near the Lax Kw'alaams First Nation.

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