Ottawa conditionally approves Pacific NorthWest LNG project

The $36-billion liquefied natural gas project would ship 19 million tonnes a year of liquefied gas to markets in Asia

RICHMOND, B.C. – The federal government gave conditional approval Tuesday to the massive Pacific NorthWest LNG project planned for British Columbia’s northwest coast.

Environment Minister Catherine McKenna, Natural Resources Minister Jim Carr and Fisheries Minister Dominic LeBlanc travelled to Richmond, B.C., to announce their government’s acceptance of what is expected to be one of the largest infrastructure investments in Canadian history.

There are 190 legally binding conditions attached to the approval, including for the first time the imposition of a condition placing a maximum cap on greenhouse gas emissions, McKenna said.

“This project was subject to a rigorous environmental assessment and today’s announcement reflects this commitment,” she told a news conference, which was interrupted by a heckler as the ministers spoke outdoors on the waterfront near Vancouver’s airport.

The Petronas-led $36-billion liquefied natural gas project on Lelu Island near Prince Rupert, B.C., would ship 19 million tonnes a year of liquefied gas to markets in Asia while pumping more than five million tonnes of carbon dioxide annually into the atmosphere. That would make it one the largest single greenhouse gas emitters in Canada, according to the Canadian Environmental Assessment Agency.

The government’s conditional approval sets the table for an autumn of more crucial decisions on a national climate change plan and energy sector infrastructure.

But it doesn’t necessarily mean the massive LNG project will ever get underway.

Low global oil prices and an increasing supply of natural gas have depressed international prices for LNG, making the economics of the project less certain than they were when it was first announced in 2013.

A spokesman for Pacific NorthWest LNG said Monday that any decision to begin construction would still have to go to the company’s shareholders if Ottawa approved the plan, but the company applauded the decision on Tuesday night.

“This is a significant milestone for Pacific NorthWest LNG and our shareholders,” it said in a statement.

The company said it will conduct a total project review along with its shareholders over the coming months before announcing next steps for the project.

Nonetheless, the decision by the cabinet of Prime Minister Justin Trudeau signals the course the new Liberal government will navigate among competing interests on the energy and environment files.

“The only way to get resources to market in the 21st century is if they can be done in a responsible and sustainable manner,” McKenna said in a news release. “This decision reflects this objective.”

The government says the conditions it is placing on the project are aimed at minimizing effects on fish, fish habitat, marine mammals, wetlands, migratory birds and human health.

LeBlanc said the project will have broad benefits.

“The Pacific NorthWest LNG proposal will bring great economic benefit to middle-class British Columbians and First Nations,” he said in a statement, adding that the project will require regulatory approval decisions from his department and steps will be taken to mitigate its impact.

Ottawa says an estimated 4,500 jobs would be created during the construction phase of the project, and 630 workers would be needed to operate the facility.

Environmentalists and First Nations have denounced the Pacific NorthWest LNG project due to concerns over climate change and salmon habitat, while pro-development advocates, including the B.C. government of Christy Clark, have called it a key economic driver for the country as a whole.

At Tuesday’s announcement, Clark said B.C. has as much natural gas as Alberta has oil in its oil fields.

Even before the government said it was pulling the trigger Tuesday, a group of six First Nations from the Skeena corridor issued a release saying the project “does not meet the test” for respecting indigenous rights and would be challenged in court.

“Providing a green light for this project at this time will only lead to protracted litigation which benefits no one,” said the Skeena Corridor First Nations, whose traditional lands include Lelu Island where the project will be centred.

Conservative interim Leader Rona Ambrose said in Ottawa that Trudeau had only one decision he could make on the project, and the prime minister now needs to “champion the project” to help make it a reality.

“He needs to make this project important, not only for British Columbians, but for all Canadians,” said Ambrose, citing the job creation and investment potential.

McKenna will carry the Pacific Northwest decision into a meeting with her provincial and territorial counterparts next Monday in Montreal, where they are set to begin negotiations on a strategy for meeting Canada’s international climate commitments.

Canada has pledged to reduce its emissions 30 per cent from 2005 levels by 2030, but the country’s greenhouse gas output has been on a slow but steady rise for the last five years.

A draft assessment of Pacific NorthWest project released in February found that it would emit 5.3 million tonnes of carbon dioxide a year for 30 years, not including another 6.5 million to 8.7 million tonnes produced from natural gas collection and transportation.

“This will increase the B.C. and national emission totals by 8.5 per cent and 0.75 per cent respectively, based on 2011 levels,” said an early project assessment.

The Liberals added an additional three-month assessment period last spring to gather more information, and the final Canadian Environmental Assessment Agency report was delivered last week.

It won’t be the first difficult call for the Liberals this autumn.

The government must decide by mid-December whether to approve the proposed expansion of the Trans Mountain oil pipeline from Alberta to Burnaby, B.C., while also negotiating a climate policy with the provinces and territories that McKenna has said will include a national floor price on carbon.