Clock Is Ticking for Trudeau to Decide on Petronas LNG Bid

1467091887_justin trudeau

Justin Trudeau.

Photographer: David Kawai/Bloomberg
  • Project files final response to Canadian environmental agency
  • Petronas warns some conditions could make investment inviable

A three-month clock has just started ticking for Canadian Prime Minister Justin Trudeau to decide whether to allow Malaysia’s Petroliam Nasional Bhd to build an ambitious liquefied natural gas project that could transform the nation’s energy exports but raise the ire of environmentalists.

More than three years and 100,000 hours of studies since first proposed, the project’s final filing was posted on the website of the Canadian Environmental Assessment Agency on Monday. Canada Natural Resources Minister Jim Carr committed in June to decide whether to approve the project within 90 days of final submission.

Canada exports gas to an oversupplied U.S. market through pipelines. The C$36 billion ($28 billion) project aims to ship gas from Lelu Island -- a small, uninhabited islet on the Pacific Coast -- to energy-hungry Asian markets. Yet its approval has been mired over concerns about the impact on fish, wildlife and the traditional ways of life of First Nation tribes in the region.

In its final submission, the venture warned that certain environmental conditions would constrain it to a point where the project may become inviable.

Regulators told the project to clear trees on Lelu Island only during a one-month window between mid-September to mid-October in order to minimize the impact on a species of bat known as little brown myotis. Pacific NorthWest LNG, as the project is known, countered that it needs to be able to clear the site throughout the fall and winter and that the condition shouldn’t apply to 76 hectares of peat bog, where only shrubs grow.

Pacific Northwest originally planned to start construction in 2015. In June of that year, the venture said it would proceed pending outstanding approvals, becoming the only Canadian proposal to issue an investment decision to date.

State-owned Petronas’s partners in the project include China Petroleum & Chemical Corp., Japan Petroleum Exploration Co., Indian Oil Corp. and Brunei National Petroleum Co.

The project is one of almost two dozen proposed for Canada’s Pacific Coast by companies including Royal Dutch Shell Plc and Exxon Mobil Corp. Yet not one major LNG export project has been sanctioned in Canada amid a glut of seaborne natural gas and plunging prices that have caused cancellations and delays of LNG projects from Australia to Qatar.

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