The Pacific NorthWest LNG joint venture led by Malaysia's Petronas has received a boost with the approval of TransCanada Corp.'s pipeline project in northeastern British Columbia.
This week's majority ruling from a National Energy Board panel paves the way for TransCanada to construct the North Montney Mainline gas route in northeastern British Columbia, where producers have enjoyed success with prolific gas wells.
The North Montney Mainline would connect with TransCanada's proposed Prince Rupert Gas Transmission project, which aims to take natural gas from the northeast part of the province to liquefied natural gas terminals envisaged for the West Coast, notably one proposed by Pacific NorthWest LNG.
Pacific NorthWest LNG president Michael Culbert said the venture must still clear other hurdles in order to export LNG, notably obtaining clearance from the Canadian Environmental Assessment Agency and reducing costs related to engineering and subcontractors. The uncertainty surrounding the LNG proposal is gradually diminishing as the project's list of to-do items get checked off, Mr. Culbert said. The federal environmental agency began its review of the Petronas-led project in April, 2013, and the much-delayed assessment could stretch into September.
"We're trying to remove the remaining items from a regulatory and fiscal perspective, and put ourselves in a position where we can make a final investment decision in the context of where the economics stack up," Mr. Culbert said in an interview Thursday. "As we nail these things down, it's quite positive in that we create the certainty that is required to make the decision."
Two natural gas pipelines to be built by TransCanada – the $5-billion Prince Rupert Gas Transmission plan and the $1.7-billion North Montney Mainline – are vital elements in Pacific NorthWest LNG's quest to export natural gas in liquid form to customers in Asia.
"This is another important piece of the puzzle to help us build an industry capable of supporting the demands of a global energy market," a B.C. Natural Gas Development Ministry spokeswoman said.
Both TransCanada lines hinge on the LNG project getting the go-ahead from Petronas and its Asian partners.
The two pipeline projects are part of $36-billion in estimated spending required to launch exports from Pacific NorthWest LNG's proposed $11.4-billion terminal on Lelu Island, located near Prince Rupert in northwestern British Columbia. TransCanada said it "will continue to engage and work with affected aborginal groups on further opportunities to address and mitigate routing and other potential project impacts."
B.C. Natural Gas Development Minister Rich Coleman, who returned to Canada recently after meeting Petronas executives in Malaysia, said in an interview this week that is he optimistic about Pacific NorthWest LNG. He will be playing host to Petronas executives when they visit Vancouver later this spring.
Meanwhile, Royal Dutch Shell PLC executives have briefed Mr. Coleman by phone after the company announced its merger with BG Group PLC last week. Shell leads the LNG Canada joint venture proposing to build a B.C. export terminal in Kitimat while BG has selected a site on Ridley Island near Prince Rupert. "I spoke to some senior Shell folks in The Hague. They are quite bullish and solid, and this is good for LNG Canada," he said. "Their focus right now really is on LNG Canada."
Analysts say Pacific NorthWest LNG and the Shell-led LNG Canada project are two of the front-runners among 19 B.C. LNG proposals, though fierce competition and a looming global glut of LNG will mean only a handful of plans provincially stand a chance to proceed.
Mr. Culbert said Mr. Coleman has reason to have a positive outlook on Pacific NorthWest LNG. "We are continuing to move forward, and I would share the optimism. We're working hard to make it happen," Mr. Culbert said.