B.C., Petronas reach deal on LNG project development agreement

BRENT JANG

VANCOUVER — The Globe and Mail

Published Tuesday, May. 19 2015

Crustacean Clark

 
The B.C. government will announce plans on Wednesday to sign a project development agreement with the Pacific NorthWest LNG joint venture led by Malaysia’s Petronas.

Both sides agreed in May, 2014, to assign officials to prepare the terms of reference, leading to the deal. The project development agreement is subject to approval later this year from the B.C. legislature.

B.C. Premier Christy Clark will make the announcement at a news conference in Vancouver, an industry source said Tuesday night.

While further details will be disclosed later this year, the project development agreement spells out broad terms for taxes and B.C. LNG rules.

Pacific NorthWest LNG has yet to make a final investment decision and the Canadian Environmental Assessment Agency recently restarted its review of the controversial project. Federal Environment Minister Leona Aglukkaq could render a final decision on the LNG project some time between mid-September and early October, depending on whether there are further delays in the lengthy regulatory process.

Lax Kw’alaams members recently overwhelmingly rejected a $1-billion cash offer over 40 years from the LNG venture, declining to give aboriginal consent to plans to build an export terminal on Lelu Island, located next to Flora Bank in northwestern British Columbia. Flora Bank, a sandy reef-like area, contains eelgrass beds crucial to the survival of juvenile salmon in the estuary of the Skeena River, according to the Lax Kw’alaams band.

Pacific NorthWest LNG wants to construct a 1.6-kilometre-long suspension bridge over Flora Bank, and then connect with a 1.1-kilometre-long trestle that would start on the western edge of Flora Bank and extend in a southwesterly direction beyond Agnew Bank.

Petronas and its Asian partners previously considered but dismissed an option that would have tunnelled under Porpoise Channel from Lelu Island to nearby Ridley Island, and then placed LNG pipes along a trestle originating from Ridley Island and toward a marine terminal in Chatham Sound.

Using Ridley Island, however, is fraught with complications. Both Ridley Island and Lelu Island are federal Crown properties that are administered by the Prince Rupert Port Authority.

While they are both federal Crown lands, Ridley Island is within Prince Rupert’s city limits and Lelu Island is within the District of Port Edward.

BG Group PLC, which holds the LNG development rights for a large parcel of land on Ridley Island, plans to merge with Royal Dutch Shell PLC.

Some industry analysts say that the combined Shell-BG firm will focus its attention on the Shell-led LNG Canada joint venture in Kitimat, leaving BG’s Ridley Island rights possibly up for grabs, but that could take years to play out.

Pacific NorthWest LNG, which wants to launch exports as early as 2019, believes time is of the essence because fierce global competition will create a glut of LNG supplies and squeeze out most of the 19 B.C. LNG proposals, analysts say.