Petronas defers final investment decision on BC LNG project

Just two days ago the premier of British Columbia was optimistic about a major Petronas liquefied natural gas plant proposed for that province. The Malaysian state energy giant has been in talks with the province for months. The BC government just this week passed new legislation that outlines its tax structure and environmental regulatory requirements for LNG projects. But today the Petronas CEO, Shamsul Abbas, who was in BC for more meetings with the government, said they were not prepared to go ahead at this time, and the final investment decision (FID) in the Pacific NorthWest LNG plant is deferred.

The reason Petronas gave is economic. The company says that the government has resolved “key provincial policy matters” that would provide the necessary certainty for proceeding with the project, but declining oil prices present challenges of economic viability. Petronas and its partners in the $36 billion project say that costs associated with the pipeline and the LNG facility are too high. “Costs associated with the pipeline and LNG facility remain challenging and must be reduced further before a positive FID can be undertaken.”

LNG-export-Asia-Pacific-British-Columbia-China-CNOOC-Japan-Petronas-Shell-EDIWeekly

 

The Petronas statement acknowledged that the BC government had put in place a “competitive” LNG income tax, provided details for offsetting greenhouse gas emissions, and entered into agreements with First Nations that would allow the project to move ahead. However, the company is biding its time, balancing the need to control costs against lower oil prices, and desperate not to lose out in the long term to competitors in the US.

On the same day as the disappointing news from Petronas, GE Oil and Gas announced that another major BC LNG consortium, LNG Canada, has chosen GE technology to power a proposed liquefaction plant in Kitimat BC. LNG Canada comprises Shell Canada Energy, affiliates of Royal Dutch Shell and PetroChina, Korea Gas Corporation and Mitsubishi Corporation.

The BC government has been counting on an LNG industry to bring in billions of dollars in revenue. It has set a goal of having five LNG plants operational in the province. Today Premier Clark said that the province was “on schedule” to build its LNG industry.

On the other side of the country, meanwhile, a Spanish energy company, Repsol, is reported to be interested in building an LNG export facility on the east coast. A Reuters report says that Repsol is looking for partners to raise $4 billion for the project, which would ship LNG to Europe. Repsol has a facility in New Brunswick.

Did you miss this?

Other Popular Stories

  • Valve industry in growth mode as LNG prospects grow brighter
  • Technology that could help save the earth: Carbon Capture and Storage
  • Aerospace companies announce satellite, service contracts
  • First Energy Island to Provide Electricity for 3 Million Households
  • How Greener Grids Can Stay Lit
  • Pratt & Whitney Canada to invest $275 million in Quebec plant
  • Elon Musk's green vision extends to the Tesla Semi, capable of hauling 80,000 pounds for up to 400 miles on a single 30 minute charge
  • With $390 billion in trade at stake, Premier Ford met with manufacturing trade partners; says steel and aluminum tariffs hurt the U.S. more than Canada
  • Aerospace industry trade war? $2 billion at stake as Canadian Foreign Affairs Minister reviews Boeing sole sourcing
  • Slower growth, need for new markets challenge Canada's oil producers
  • Canada Goose expanding workforce, launching global ad campaign
  • Auto Sales Down Again for Big Car Makers
  • Detroit Auto Show Highlights
  • UPS Canada implementing 50 per cent alternative fuels in fleet by 2018
  • Hyundai Plans to Sell Millions of BEVs
  • Bombardier Challenger 350 set to fly with NetJets
  • Overseas growth in future for Canada's air transportation industry
  • Natural Resource GDP increased 0.4%, led by Energy subsector at 0.7% — Statscan
  • Forestry sector providing job relief for former oil patch workers
  • Waterloo researchers seek cheaper fuel cells for electric cars
Scroll to Top