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A 12-storey LNG storage tank at the Mt. Hayes Natural Gas Storage Facility in Mt. Hayes, B.C.

chad hipolito The Globe and Mail

Woodside Petroleum Ltd. of Australia has won the right to acquire land in northwestern British Columbia for a liquefied natural gas project after reaching a deal with the provincial government.

The B.C. government had been holding discussions with Woodside and two other LNG proponents for the property at the south site of Grassy Point, near Prince Rupert.

On Thursday, Woodside emerged as the victor for exclusive rights to sign a long-term tenure for a planned LNG terminal, beating out South Korea's SK E&S Co. and a proposal from Irving, Tex.-based Exxon Mobil Corp. and its Canadian unit, Imperial Oil Ltd.

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"Grassy Point is an ideal site for LNG development, and this is the second agreement we've signed," B.C. Premier Christy Clark said in a statement.

A joint venture led by CNOOC Ltd. of China, called Aurora LNG, won the right in November to develop an LNG terminal at a nearby location at Grassy Point.

The National Energy Board has already granted export licences for seven fledgling B.C. LNG projects and is reviewing applications from another five. None of the approved projects, however, are in the terminal construction stage because the proponents say they first need to learn details of the B.C. government's plans for taxation of the LNG industry and internal assessments still must be conducted on the economics of proceeding.

The NEB's LNG export licence application schedule does not yet list Woodside as an applicant, but the B.C. government said the Australian company has a year to obtain the licence.

Rich Coleman, B.C Minister of Natural Gas Development, said Woodside's project is the latest LNG plan to show promise.

Woodside managing director and chief executive officer Peter Coleman said he is optimistic. "Woodside looks forward to working with the government of British Columbia, the First Nations and the community as we assess the feasibility of an LNG development at Grassy Point," he said in a release.

The south site of Grassy Point covers more than 693 hectares of land. Woodside agreed to pay the province $17-million as a potential down payment, should it decide to build an export terminal, where ships would dock before transporting LNG to Asia.

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Nexen and its two Japanese partners, Inpex Corp. and JGC Corp., said in November that they would pay $24-million as their planned down payment.

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