The decision to scrap the Petronas-backed Pacific NorthWest liquid natural gas (LNG) mega-project on the British Columbia coast is having a dramatic ripple effect right through Alberta.
Had the project, which has federal approval, gone ahead shipments to China of methane would have proceeded, easing a glut that’s on the market, while also providing propane, butane and other natural products to the Industrial Heartland in northeast Metro Edmonton for other value added production.
That’s according to executive director Mark Plamondon who couldn’t put a dollar value on the lost opportunity, but said it will lead to less investment and economic activity here.
“There’ll be an overall effect on jobs, GDP and overall economic development associated with the Industrial Heartland.”
Pacific NorthWest LNG said Tuesday it will not be proceeding with the $36-billion liquefied natural gas project it had planned to build in B.C.
The consortium said the announcement by Petronas and its partners comes after a careful review of changes in market conditions. Anuar Taib, executive vice-president and CEO (upstream) for Petronas, said prolonged depressed prices and shifts in the energy industry made the decision necessary.
“It is just further illustration that international investors and foreign direct investment is seeing Canada as perhaps less attractive as they had originally thought, and the global economic climate has changed such that projects that had been considered and then been looked at are no longer economic and the playing field has changed somewhat,” Plamondon said.
“It’s just not a good sign for B.C. and western Canada that we’re seeing projects that had been proposed now being put on hold or being scrapped entirely.”
Plamondon also pointed out that the United Stations used to be Canada’s largest customer for LNG, but has gradually been turning into a competitor.
“We now have excess LNG on the market that needs to find a home, and China would have been a natural home for some of the LNG.”
LNG prices have been hit by a global oversupply as numerous projects have come online, challenging the economics of the development and others that were proposed in the province.
The consortium has already sunk billions into developing the natural gas fields in the B.C. interior, but the project would have required much more investment – including an $11.4-billion LNG terminal in Port Edward, B.C.
The decision by Petronas is also hitting TransCanada Corporation.
“With this news, we are reviewing our options related to our proposed Prince Rupert Gas Transmission (PRGT) project as we continue to focus on our significant investments in new and existing natural gas infrastructure to meet our customers’ needs,” said TransCanada’s executive vice-president Karl Johannson in a statement.
“There is still a strong need for Canadian natural gas supplies to get to market, and the infrastructure we are building in Alberta and British Columbia – including recently announced multi-billion dollar investments in our NGTL system and North Montney Mainline – are designed to help move natural gas supplies to markets where they are needed.
The release also said TransCanada will be reimbursed for full costs to advance PRGT Project.
The project, which secured Prime Minister Justin Trudeau’s approval last year, was proposed as a way to reduce coal use in Asia, but it has also faced criticism for the potential greenhouse gas emissions that would have resulted.
– With files from Paula Baker, Global News and The Canadian Press