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An artistic rendering of Pacific NorthWest LNG’s proposed liquefied natural gas export terminal on Lelu Island, near Prince Rupert in northwestern B.C.

Pacific NorthWest LNG

The Canadian Environmental Assessment Agency has restarted its review of Pacific NorthWest LNG after an 11-week delay, putting the regulator in a position to issue a draft report on whether to grant conditional approval to the controversial B.C. energy project.

The draft report by CEAA will serve as a regulatory road map for Pacific NorthWest LNG as it strives to construct a massive terminal to export liquefied natural gas, despite objections from the Lax Kw'alaams First Nation.

Public comments will be invited for the regulator's draft report, expected by this summer. CEAA will ask the venture to meet an array of environmental conditions before and during construction, if approval is granted, industry observers say.

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The federal agency is examining a report commissioned by Pacific NorthWest LNG and filed to CEAA on May 5. The report prepared by engineering firm Stantec Inc. argues there will be little to no environmental impact from building an $11.4-billion LNG terminal on Lelu Island. The picturesque island near Prince Rupert is part of the traditional territory of the Lax Kw'alaams in northwestern British Columbia.

Lax Kw'alaams members recently overwhelmingly rejected a $1-billion cash offer over 40 years from the LNG venture led by Malaysia's state-owned Petronas, declining to give aboriginal consent to the project.

The federal environmental agency temporarily stopped the regulatory clock on Feb. 23 because it wanted more information from Pacific NorthWest LNG on the predicted effects of building an export terminal near Flora Bank.

Flora Bank, a sandy reef-like area visible at low tide next to Lelu Island, contains eelgrass beds that are crucial to the survival of juvenile salmon in the estuary of the Skeena River, according to the Lax Kw'alaams band. The band submitted its own study to CEAA in January, warning about Pacific NorthWest LNG's proposal to construct a suspension bridge and trestle from the planned Lelu Island terminal to a deep-berth location for LNG tankers in Chatham Sound.

While the regulator could still request more details from the Petronas-led group, "the timeline for the Pacific NorthWest LNG project has resumed," effective May 11, CEAA confirmed in a statement.

On Tuesday, Pacific NorthWest LNG's quest for environmental approval will be on day 249 of the process, clearing the way for a final decision on the project by federal Environment Minister Leona Aglukkaq by early October. That final decision will be within the legislated time frame of 365 days, excluding delays arising from requests from CEAA for more information.

Any conditions attached to the final report will be legally binding, if Ms. Aglukkaq gives the project the go-ahead.

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The January study commissioned by the 3,600-member Lax Kw'alaams band, written by SedTrend Analysis Ltd. president Patrick McLaren, warns that the trestle would disrupt a complex system that effectively holds Flora Bank in place. The 1.6-kilometre-long suspension bridge would go over Flora Bank, and then connect with the 1.1-km-long trestle in deeper waters, extending southwest just beyond Agnew Bank.

Sources say Pacific NorthWest LNG's detailed engineering work has yet to be done, so there is still time to scrutinize plans and make improvements. There is some leeway to tweak the suspension bridge's design and relocate the trestle by altering the angle so that the marine terminal for LNG tankers is situated slightly farther away from Flora Bank.

Dramatic design changes are not in the cards in the coming months, sources say, because Pacific NorthWest LNG and Stantec decided last fall that the suspension bridge and trestle – estimated to cost roughly $1-billion – will be the best solution to address concerns about Flora Bank.

In an interview last week, Pacific NorthWest LNG president Michael Culbert said the company remains open-minded after substantial design modifications were made last fall. "Significant change to the infrastructure has occurred as a result of constructive engagement with the First Nations," he said.

Pacific NorthWest LNG had considered an option that would have tunnelled under Porpoise Channel, from the planned Lelu Island terminal to nearby Ridley Island, said a study prepared by Stantec last year. Petronas and its Asian partners later ruled out that option, which would have involved building a trestle carrying an LNG pipeline from Ridley Island to Chatham Sound, according to an industry insider.

Using Ridley Island is fraught with complications. Both Ridley Island and Lelu Island are federal Crown properties that are administered by the Prince Rupert Port Authority. Pacific NorthWest LNG would have needed permission from the federal port authority if it devised new plans involving Ridley Island.

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"Lelu Island was selected after detailed analysis of 16 sites," according to a 2014 study prepared by Stantec for Pacific NorthWest LNG.

BG Group PLC's Prince Rupert LNG project holds the development rights for a large parcel of land on Ridley Island. BG and Royal Dutch Shell PLC announced plans last month to merge.

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