Government of Canada Approves Pacific NorthWest LNG Project

Written By Don Greenfield, Will Osler, Vivek Warrier and Brad Eidsness

On September 27, 2016, the Government of Canada approved the Pacific NorthWest LNG natural gas liquefaction and export facility, sending a strong signal that it is committed to growing Canada's role as a global energy supplier.

The facility, which is to be located on Lelu Island near Prince Rupert on British Columbia's northern coast, will liquefy natural gas produced in the North Montney region of B.C., as part of an integrated project.

This is the first decision that the current government has made with respect to a major energy project since taking office in November 2015. Approval of the project suggests that the government is focused on increasing trade with Asia-Pacific nations and foreign investment in Canada's energy industry.

The approval is subject to 190 conditions relating to environmental effects. Among them are conditions requiring on-going consultation with Indigenous groups, adherence to greenhouse gas emissions and air quality standards and the monitoring of the environmental impact of the facility on freshwater and marine fish and marine mammals and their habitat, wetlands, migratory birds and human health, as well as conditions relating to the construction and operation of the facility.

Total investment for the 40-year project, which includes the liquefaction and export facility as well as associated natural gas wells and pipeline and processing infrastructure (including the Prince Rupert Gas Transmission project), is estimated to be $36 billion. The project has been subjected to rigorous regulatory scrutiny since 2013, at both the federal and provincial levels.

Pacific NorthWest LNG is a joint venture led by Malaysia's state-owned Petronas. The joint venture also includes partners from Japan, China, India and Brunei. Petronas has said recently that it needs to conduct a full review of the proposed project prior to tabling it with its partners for a final investment decision. If that decision is positive, it could begin exporting liquefied natural gas in 2020 or 2021.