Canada Hasn’t Sought Petronas Guarantee on Gas Plant: Minister

  • Trudeau government has until Oct. 2 to approve B.C. project
  • Company’s final decision will hinge on costs, commodity prices

Prime Minister Justin Trudeau’s government will decide on final approval of the Pacific NorthWest gas project without any guarantee Petroliam Nasional Bhd. will actually proceed, Canada’s resources minister said.

The $11 billion liquefied natural gas plant in British Columbia remains under political review while similar proposals are being scaled back or delayed amid low prices. Trudeau’s government has committed to a decision by Oct. 2 and is balancing a stated desire to grow the economy with toughening environmental regulations and lowering carbon emissions.

“I don’t think we’re in a position to get guarantees from the company,” Natural Resources Minister Jim Carr said in a recent interview. “We know other LNG projects in B.C. that are not proceeding. Those decisions will be made by boards and by executives.”

The company’s final decision will also hinge on any conditions -- and costs attached to them -- the government places on its approval, Carr said.

Pacific NorthWest project is one of several major energy projects Trudeau is considering in the westernmost province. His government must also decide whether to appeal a legal ruling impeding Enbridge Inc.’s Northern Gateway pipeline this month, and whether to green-light Kinder Morgan Inc.’s Trans Mountain expansion by December. 

Pipeline Plans

Trudeau, elected last year in part on an environmental platform, plans to approve at least one pipeline in his first term and is said to favor the Trans Mountain project. Carr and Environment Minister Catherine McKenna are overhauling regulatory review rules to boost confidence in the system.

“Proponents have every reason to believe there’s clarity and the process is clear,” Carr said Aug. 25. “Will, at the end of the day, everybody be happy? I doubt it. But I want most Canadians to believe this is a better process.”

LNG remains a priority for B.C.’s provincial government, which is heading into an election next spring. Premier Christy Clark favors the project but has stopped short of publicly pressuring Trudeau for approval.

“British Columbia is waiting for a timely decision from Canada,” Rich Coleman, Clark’s deputy and minister of natural-gas development, said Thursday in a written statement. The project will “help reduce emissions globally by getting our export to markets that are currently using coal.”

Shareholders’ Call

Petronas, Malaysia’s state-owned energy company, faces falling profits amid a commodities slump and says it will review the project, its cost and market conditions after Trudeau’s government makes its call. “The decision to proceed to the construction phase of the project rests with Pacific NorthWest LNG’s shareholders,” spokesman Spencer Sproule said Thursday by e-mail.

Opponents of the project, including those from indigenous communities near the proposed development site in northern B.C., have called on Trudeau to reject Clark’s calls for approval. An indigenous delegation visited Ottawa this spring to push for the plan to be turned down.

Trudeau, speaking to reporters last month, declined to say whether he supports LNG development as part of his plan to both cut emissions and stoke economic growth. Pressed for detail, he characterized LNG as a lower-emission power source than oil or coal.

Canada is interested in “cleaner and more renewable sources of energy,” the prime minister said Aug. 22.

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