Despite being green-lit by the Trudeau government, the Pacific NorthWest LNG (PNW LNG) project will not be going ahead.
The PNW LNG board made the announcement Tuesday morning saying the decision was made by Petronas and its partners after a careful and total review of the project “amid changes in the market conditions.”
“We are disappointed that the extremely challenging environment brought about by the prolonged depressed prices and shifts in the energy industry have led us to this decision,” Anuar Taib, Chairman of the PNW LNG Board said.
Due to low global oil prices and an increasing supply of natural gas depressing international prices for LNG, it made the economics of the project less certain than they were when it was first announced in 2013.
READ MORE: Five things to know about the proposed Pacific NorthWest LNG project in B.C.
The $36-billion PNW LNG project, which included a pipeline and terminal proposed for Lelu Island near Prince Rupert, received conditional approval from the federal government in September 2016. Ottawa said 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.
A question of politics
New NDP Energy Minister Michelle Mungall said when the company called with the bad news Tuesday morning, it was unequivocal about the reasons
“This isn’t about anything else other than Petronas looking at that long term reality of what’s happening on the international market. It’s impacting all jurisdictions. That’s what this is about,” she said.
Mungall said B.C.’s some 20 other LNG projects will continue to move forward, and that she would be meeting with the industry on Tuesday afternoon.
WATCH: LNG megaproject not going ahead in B.C.
“With all of our LNG stakeholders to reassure them that this new NDP government is going to be working with them.”
Mungall said despite the NDP’s past criticism of LNG projects, the government is committed to building jobs in all corners of the province.
But Jas Johal, Liberal MLA and former director of communications for the BC LNG Alliance, said while Pacific Northwest LNG’s board chair might have said the decision had nothing to do with a change in government, the reverse is actually true.
“He is telling the truth in regards to market conditions but he also, and his company also, have to do business in this country in the future,” Johal said.
“So at the end of the day he is not going to come out and say directly that the NDP are responsible.”
Johal said in the months leading up to the election the NDP sent “signals” to the Malaysian energy giant that the project wasn’t welcome.
WATCH: Pacific Northwest LNG wins federal approval
Mixed reaction
The Independent Contractors and Businesses Association (ICBA) said the decision to scrap the PNW LNG project is a “tough blow” for the B.C. constructions industry.
“We are deeply disappointed that PNW will not go forward, as it means thousands of construction jobs will not materialize,” said ICBA president Chris Gardner in a release.
Environmentalists and First Nations denounced the PNW LNG project due to concerns over climate change and salmon habitat, while pro-development advocates, including the then B.C. government of Christy Clark, called it a key economic driver for the country as a whole.
Following the approval, several First Nations and environmental groups filed lawsuits against the federal government and Malaysian state-owned oil firm Petronas in an attempt to stop a liquefied natural gas project on British Columbia’s northern coast.
For Karen Wu, acting director at the Pembina Institute, the cancellation of the project was good news since it “would have been one of the largest polluters in Canada.”
“Petronas and its partners cited shifts in the energy sector as key to their decision. Indeed, LNG demand and prices have fallen as the world transitions to renewable sources of energy. We now have an important opportunity to ensure B.C. is not left behind as the global economy shifts and the costs of a changing climate begin to mount,” Wu said in a release.
Wu said with the cancellation of the project, there’s a need for B.C.’s new government to “act quickly to stand up for healthy and safe communities, grow sustainable resource sector jobs… and make clean choices more affordable.”
WATCH: LNG dreams vanishing in British Columbia?
Gitanyow Hereditary Chiefs and the Gitwilgyoots Tribe, filed separate lawsuits to get the Federal Court to rule that proper consultation with First Nations did not occur and that would reverse approval for the project.
More than 200 scientists and salmon experts wrote letters to the federal government in 2016 year asking the government to reject the project because of severe consequences.
The draft environmental report released in February estimated that the LNG facility would result in the equivalent of 5.3 million tonnes of carbon dioxide being released a year. That would add 8.5 per cent to B.C.’s total emissions.
Upstream emissions, including the gathering of the natural gas, are estimated to add the equivalent of 6.5 million to 8.7 million more tonnes of CO2.
Petronas and its partners said they invested a little more than $400-million in the PNW LNG and are still committed to developing a “significant” natural gas project in Canada and will be continuing to explore options.
~ with files from Canadian Press