A federal environmental review of a B.C. liquefied natural gas proposal led by Petronas has stalled, leaving the project in regulatory limbo with a deadline looming for the Malaysian energy giant.
The Canadian Environmental Assessment Agency is studying Petronas-led Pacific NorthWest LNG's proposed $11-billion export terminal on Lelu Island, especially the project's impact on the early life cycle of wild salmon in northwestern British Columbia.
On May 9, the CEAA halted the regulatory clock at Day 167 of the one-year federal review process because it required more information from Pacific NorthWest LNG. The CEAA is now examining a revised plan filed by the consortium two weeks ago, but the original timeline has been delayed by five months and counting, industry sources say.
Even if the assessment were to resume this week, the federal environmental review would stretch into May 2015. That timeline complicates matters because Petronas warned recently it wants regulatory answers soon to allow Pacific NorthWest LNG to make a final investment decision by the end of 2014.
Malaysia's state-owned energy company has cautioned that red tape has placed the project in jeopardy of being suspended for up to 15 years. Petronas believes the window of opportunity to develop the B.C. terminal is closing due to fierce global competition to export LNG.
Federal regulators raised environmental red flags in May, concerned about the fate of tiny juvenile salmon. The worry is that the project will damage eelgrass beds in Flora Bank, where young salmon swim after they hatch.
Over the past five months, Pacific NorthWest LNG has been scrambling to find ways to lessen the project's ecological impact, culminating in a last-ditch plan to build a 1.6-kilometre-long suspension bridge.
The suspension bridge plan, unveiled earlier this month, is designed to vastly minimize dredging and avoid damaging the sensitive eelgrass beds in Flora Bank. Pacific NorthWest LNG submitted the proposal for the bridge after environmentalists and First Nations warned that the original plan to construct a jetty supported by a trestle would wreak havoc on the salmon habitat in the estuary of the Skeena River, near Lelu Island.
The Skeena River's salmon stocks are the second-largest in B.C., after the Fraser River.
The CEAA is the lead regulator on the case, co-ordinating the review with its provincial counterpart, the B.C. Environmental Assessment Office. Pacific NorthWest LNG is playing down the federal delay, emphasizing that its project remains on track to receive a provincial environmental assessment certificate by the end of December.
"We do not anticipate receiving a CEAA decision by the end of the year. We are working hard to provide additional information to CEAA to enable them to make their decision. We continue to work toward a final investment decision by the end of the year," the Petronas-led group said in a statement to The Globe and Mail.
The CEAA confirmed that "the timeline is stopped while Pacific NorthWest LNG is preparing the required information." In the months ahead, the federal agency will be scrutinizing the venture's impact on the environment and First Nations. Wild salmon are important for First Nations' food fishing, so protection of the fragile resource would go a long way toward Pacific NorthWest LNG's bid to secure support from aboriginal groups.
The B.C. regulator will report by Nov. 5 to two provincial cabinet ministers, who have until Dec. 20 to decide whether to issue a B.C. environmental assessment certificate. "Decision dates for the two respective processes are not closely aligned and the planned provincial decision time will be likely months before the federal decision," the B.C. Ministry of Environment said.
Last month, the B.C. regulator granted Pacific NorthWest LNG's request for an extra 45 days for the consortium to draft a revised plan. On Oct. 6, the LNG joint venture proposed a suspension bridge that would extend southwest for 1.6 kilometres away from Lelu Island, and that span would connect with a 1.1-kilometre long trestle/jetty to a deep berth location in Chatham Sound.