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A man walks past the headquarters of the state-owned China National Offshore Oil Corp. (CNOOC) in Beijing, China Saturday, Dec. 8, 2012.

Andy Wong/AP

China's CNOOC Ltd. has selected a B.C. island location near the community of Prince Rupert for its liquefied natural gas project.

The goal is to locate an LNG terminal on up to 400 hectares of provincial Crown land on Digby Island, only 3.5 kilometres away from Prince Rupert Airport, according to a new filing this week by CNOOC-led Aurora LNG to the B.C. Environmental Assessment Office.

"The proponent is proposing to construct and operate the project, an LNG facility and marine terminal on the southeast corner of Digby Island," CNOOC-led Aurora LNG said in a 101-page report this week. The airport, located on the island's northwest corner, is serviced by Air Canada and Hawkair.

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Beijing-based CNOOC, through its Canadian unit Nexen Energy ULC, had been examining Digby Island and Grassy Point, located north of Prince Rupert, on its shortlist of two sites, but dropped Grassy Point last week.

Aurora LNG has now pinpointed the Digby Island property as the site for an export project costing up to $20-billion. Nearly 5,000 construction workers would be required at the peak.

In an internal newsletter, Aurora LNG said field work on Digby Island will start in January to "map locations of important habitat, which may support plant and wildlife species at risk." The consortium added that its employees have been "working with First Nations, local communities and other stakeholders to understand concerns and views regarding the project."

A public comment period is slated for March, when an open house will be held in the Prince Rupert region to listen to the public, including Dodge Cove residents on Digby Island who are worried that the project will ruin their laid-back lifestyle.

The National Energy Board approved an export licence for Aurora LNG last May. Company officials then filed an initial "project description" report in June with the B.C. Environmental Assessment Office, saying they would choose either Digby Island or Grassy Point for the LNG site.

In this week's revised report, Aurora LNG sets its sights on provincial land on Digby Island and waters under the jurisdiction of the Prince Rupert Port Authority.

Aurora LNG updated its strategy just days after Exxon Mobil Corp. said in a new study that it plans to spend up to $25-billion to develop a nearby LNG site at Tuck Inlet. The moves by CNOOC and U.S. energy giant Exxon come as Malaysia's state-owned Petronas wavers on whether to forge ahead with its $11.4-billion Pacific NorthWest LNG joint venture at Lelu Island, also located near Prince Rupert.

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In December, Pacific NorthWest LNG announced an indefinite delay to its final investment decision. Britain-based BG Group PLC said in October that it deferred its decision on whether to give the go-ahead to its Prince Rupert LNG project on Ridley Island, a move that could lead to a verdict in 2017, or a one-year delay.

Aurora LNG and Exxon also have 2017 in mind for their final investment decisions.

There are 18 projects being pitched in British Columbia to develop the province's fledgling LNG industry. While proponents have invested millions of dollars in preliminary studies and some have even done detailed engineering work and expensive site preparation, no project has made a final investment decision yet. A small-scale venture, Woodfibre LNG near Squamish, submitted its application Tuesday to the provincial environmental regulator.

Should Aurora LNG get the green light, the export terminal with 200 to 400 employees would open for exports to Asia in 2023. The plant's capacity would be 10 million to 12 million tonnes a year of LNG in the first phase. A second phase would double capacity to at least 20 million tonnes annually by 2028. The total cost estimate ranges from $17-billion to $20-billion.

The Aurora LNG partners argue that they have an inside track with their experience in Asia. Through Nexen, CNOOC owns 60 per cent of Aurora LNG, while the remaining 40 per cent is held by Inpex Corp. and JGC Corp., both of Japan.

Industry experts caution that British Columbia lags foreign rivals in the race to export LNG, including proposals to ship to Asia from Oregon and Alaska.

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