Malaysia's state-owned Petronas says it expects to make up its mind about whether to construct a huge energy project in Canada after it studies a crucial ruling pending from the federal Liberal cabinet.
Petronas said it will start a comprehensive review of the Pacific NorthWest LNG joint venture when the Canadian Environmental Assessment Agency (CEAA) completes its report into plans to build the B.C. project, which would export liquefied natural gas to Asia.
Canada's environmental regulator is slated to post its final report by early October on its website and, at the same time, also announce the federal cabinet's decision on the $11.4-billion terminal to be built on Lelu Island in northwestern British Columbia.
"Petronas is still waiting for the finalization of the Canadian Environmental Assessment Agency's extended review of the environmental report for its proposed Pacific NorthWest LNG project," Petronas said in a statement from Kuala Lumpur.
If the federal cabinet approves the project, there will be a wide range of conditions attached to address environmental concerns.
Petronas's timetable paves the way for the Malaysian energy giant and its partners to make a final investment decision by the end of 2016 to determine the fate of the export terminal. Industry experts say Petronas also has the option to delay that decision, if it needs more time to scrutinize the cabinet's conditions and their impact on the project's economic viability in a world of low LNG prices.
Petronas owns 62 per cent of Pacific NorthWest LNG. Its partners are from Japan, China, India and Brunei.
"Upon the finalization of the report, we need to conduct a total review of the proposed project prior to tabling it to the project's partners for a final investment decision," Petronas said.
The weak state of the global LNG industry has cast doubt on all 20 proposals to export the fuel from British Columbia. Industry observers say the Petronas-led project represents the best chance for the province to play a significant role in the global LNG market, which is also suffering from a worldwide glut of supply.
CEAA said in a statement that cabinet "would consider all of the information relevant to the project, including the environmental effects and mitigation strategies, economic and social impacts and public and indigenous input received, and decide whether the significant adverse effects of the project are justified in the circumstances."
The controversial B.C. venture has faced protests from environmentalists and some First Nations, which are concerned about the risks to juvenile-salmon habitat in the Skeena River estuary.
In March, more than 130 scientists signed a letter to federal Environment Minister Catherine McKenna, arguing there would be a devastating impact to fish habitat and that the environmental regulator disregarded science that was not financed by Pacific NorthWest LNG.
Pacific NorthWest LNG has been examining ways to reduce costs, including expenses related to engineering work and suppliers.
Construction could take at least four years, and the partners hope to be in a position to start exporting in late 2020 or in 2021 from Lelu Island in the Port of Prince Rupert.
"Petronas reiterates that a project of this magnitude requires coherent support from the various relevant stakeholders to work within a reasonable time frame for successful project implementation," Petronas said.
Petronas has already invested billions of dollars in Canada. In 2012, the Malaysian company paid $5.2-billion to acquire Progress Energy Canada, a natural-gas producer in northeastern British Columbia.
Progress spent $5-billion on its drilling operations from 2013 to 2015, and forecasts spending $500-million annually in 2016 and 2017.
In order to transport the natural gas, TransCanada Corp. plans to build the $1.7-billion North Montney Mainline in northeast B.C., and construct the $5-billion Prince Rupert Gas Transmission pipeline from northeast B.C. to Lelu Island.
In total, roughly $36-billion will need to be spent to make Pacific NorthWest LNG's planned exports a reality by 2021.
The budget includes $11.4-billion for the LNG export terminal on Lelu Island, $6.7-billion for the two pipelines, Petronas's $5.2-billion acquisition of Progress and $12-billion related to drilling and natural-gas production.