LNG Canada announces final investment decision to build export facility in Kitimat
It’s official — LNG Canada has decided to build an export facility in Kitimat.
The joint venture which includes energy industry players such as PETRONAS, Shell, PetroChina, KOGAS and the Mitsubishi Corporation announced its final investment decision in a Monday news release.
PetroChina and Korea Gas had announced approvals of their share of the investment on Friday.
WATCH: Prime Minister Justin Trudeau said Tuesday that he was excited about the approval of LNG Canada’s export facility, calling it the “single largest private sector investment in the history of Canada.”
The LNG Canada deal is expected to be be the subject of an event in Vancouver on Tuesday with provincial, federal and industry officials.
The $40-billion LNG megaproject would be the fastest route to Asia for gas from North America.
“The Final Investment Decision taken by our joint venture participants shows that British Columbia and Canada, working with First Nations and local communities, can deliver competitive energy projects,” Andy Calitz, LNG Canada’s CEO, said in a statement.
This investment decision concerns two processing units or “trains” into which LNG Canada’s joint venture partners will provide their own gas supply.
The partners will also market their own share of LNG, the news release said.
WATCH: LNG Canada CEO Andy Calitz announced on Tuesday that they were moving into construction phase to build an export facility in Kitimat after a final investment decision had been made.
Canadian Prime Minister Justin Trudeau called the announcement the “single largest private sector investment project in Canadian history.”
“It is a vote of confidence in a country that recognizes the need to develop our energy in a way that takes the environment into account, and that works in meaningful partnership with Indigenous communities.”
WATCH: One of B.C.’s First Nations communities thanked the various corporations involved in approving the LNG Canada export facility, saying First Nations are having their say in the project.
B.C. Premier John Horgan said the project symbolizes “the kind of balanced and sustainable path forward British Columbians are looking for.”
“The critical importance of this project is what it represents — the intersecting of economic development, jobs for local workers, partnerships with Indigenous communities and forward-looking climate leadership.”
WATCH: LNG project set to transform small B.C. community of Kitimat
In March, the B.C. government announced it was redoing the fiscal framework for the liquefied natural gas industry in an attempt to secure a final investment decision from LNG Canada.
The province still needs to pass legislation that would provide a PST exemption on construction costs of an LNG facility.
The government has projected that would be a $6-billion rebate for LNG Canada, compared to the framework designed by the previous provincial government.
Not everyone took such a positive view of the project.
In a statement on Monday night, BC Green Party leader Andrew Weaver said he was “disappointed that the NDP minority government’s tax giveaway has resulted in the country’s single biggest source of emissions receiving an FID.”
“Adding such a massive new source of greenhouse gases (GHGs) means that the rest of our economy will have to make even more sacrifices to meet our climate targets,” he said.
“A significant portion of the LNG Canada investment will be spent on a plant manufactured overseas, with steel sourced from other countries. B.C. taxpayers will subsidize its power by paying rates twice as high and taking on the enormous public debt required to build Site C.”
WATCH: Energy industry leaders signed documents on Tuesday to conclude the final investment decision to build an LNG Canada export facility in Kitimat.
Weaver is concerned that the B.C. government would not be able to hit the target of a 40 per cent reduction in greenhouse gas emissions by 2030 if the LNG facility goes forward.
One of the key parts of the power sharing agreement between the Greens and the NDP was a commitment to “implement a climate action strategy to meet our targets.”
Coverage of the LNG industry on Globalnews.ca:
Weaver met with Heyman on Monday morning to discuss the climate action plan and how it can still work with an LNG project.
“Still a lot of work to do but there is a lot of time to do that work,” said Weaver.
“I have said all along it is very challenging to do this. The BC NDP campaigned on 40 per cent reduction emissions by 2030 that is not legislation. They have claimed they can add a two-train LNG facility, that is about 3.4 megatonnes and emissions and get 40 per cent — the challenge is theirs to show British Columbians they can do that. It’s tough.”
WATCH: B.C. Premier John Horgan said Tuesday that Green Party Leader Andrew Weaver is an independent climate scientist and that he believes he can convince Weaver to get behind the LNG facility.
The project could generate as much as $23 billion in revenue for B.C. and help to foster as many as 10,000 jobs throughout the north, said provincial Energy Minister Michelle Mungall.
“It would be a huge economic opportunity for B.C.,” she said.
“When LNG first started coming on to the scene, jurisdictions all around the world were looking to get into LNG. Under the BC Liberals, it just didn’t happen. They didn’t yield any results. We came in and we saw we needed to have a new framework.”
The province has committed to making the LNG facility the “cleanest LNG facility” in the world.
“Any time someone wants to make a massive investment in British Columbia, it’s important, it’s good for B.C.,” said Environment Minister George Heyman. “We also have to ensure the benefits to British Columbians and that our climate targets are met.”
WATCH HERE: B.C. premier reveals new ‘bombshell’ LNG plan
LNG Canada will be able to get LNG on cargo ship from Kitimat to Tokyo in about eight days compared to 20 days from facilities in the southern United States.
British Columbia has been close to landing a major LNG facility before. Petronas pulled the plug on the Pacific NorthWest LNG project in 2017 after the company and its partners conducted 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,” said Anuar Taib, chairman of the PNW LNG Board at the time.
Due to low global oil prices and an increasing supply of natural gas depressing international prices for LNG, the economics of the project were less certain than they were when it was first announced in 2013.
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.
The LNG Canada project is expected to be heavily built by British Columbian workers, with local workers jumping to the front of the line. At peak construction, the facility will employ 6,000 people.
“It has been always under the previous administration, and certainty under this administration, the jobs will be prioritized under local hires first,” said Tom Sigurdson, executive director of the B.C. Building Trade.
“Followed by British Columbians, followed by the rest of Canada before we even look at the use of temporary foreign workers. When we look at what the local workforce can supply, you know the skill set that will be available — anybody who wants a job within 100 kilometres of the project if they have the skill set will be employed on that project.”
WATCH: LNG project set to transform small BC community of Kitimat
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