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Ottawa poised to rule on major B.C. natural gas project

An artistic rendering of Pacific NorthWest LNG proposed liquefied natural gas export terminal on Lelu Island, near Prince Rupert in northwestern B.C.

Pacific NorthWest LNG

The federal cabinet will disclose its decision Tuesday on a major project to export liquefied natural gas from northern British Columbia.

In its draft report in February, the Canadian Environmental Assessment Agency (CEAA) said Pacific NorthWest LNG's proposal to build an $11.4-billion export terminal would likely harm harbour porpoises and contribute to climate change. But the federal regulator said the terminal could be built and operated without causing major ecological damage to Flora Bank – a sandbar with eelgrass that nurtures juvenile salmon.

Federal Environment Minister Catherine McKenna, Natural Resources Minister Jim Carr and Fisheries Minister Dominic LeBlanc will make a joint announcement about the Pacific NorthWest LNG project late Tuesday after travelling from Ottawa to British Columbia. The federal cabinet met on Tuesday morning in Ottawa. Pacific NorthWest LNG wants to construct the terminal on Lelu Island, which is located next to Flora Bank in the Skeena River estuary.

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"Cabinet will make their decision based on the best available science and facts," Caitlin Workman, a spokeswoman for Ms. McKenna, said in a statement before the announcement in the Vancouver suburb of Richmond.

In March, Ms. McKenna approved a small-scale project near Squamish in southern British Columbia. That proposal, Woodfibre LNG, didn't need to go before cabinet because it was deemed not have significant adverse environmental impacts, clearing the way for Ms. McKenna to rule in favour of the project.

CEAA found that there would be large increases in greenhouse gas emissions, including from natural gas production, processing and pipelines for Pacific NorthWest LNG. Ms. McKenna later determined the project is likely to cause significant adverse environmental effects and referred the controversial file to Prime Minister Justin Trudeau and his cabinet ministers.

The Liberal cabinet will also assess Pacific NorthWest LNG's impact on the country's greenhouse gas emissions as it attempts to forge a pan-Canadian strategy to reduce GhGs.

After taking office late last year, the government ordered CEAA to assess the GhG impacts from the natural gas needed to supply the plant. It concluded, in total, Pacific NorthWest LNG would represent the third-largest source of emissions in the oil and gas industry.

Environmentalists argue approval would be inconsistent with Canada's climate commitments, while the B.C government says the exported gas would reduce emissions from coal-fired plants in Asia.

Pacific NorthWest LNG, a joint venture led by Malaysia's state-owned Petronas, is considered the frontrunner among 20 B.C. LNG proposals. But with the world awash in LNG supplies, low prices in Asia for the fuel have rendered most B.C. proposals uneconomic, industry experts say.

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"The decision to proceed to the construction phase of the project rests with Pacific NorthWest LNG's shareholders," said Spencer Sproule, the project's senior adviser of corporate affairs.

CEAA has said that in producing its final report, it "would consider all of the information relevant to the project, including the environmental effects and mitigation strategies, economic and social impacts, and public and indigenous input received, and decide whether the significant adverse effects of the project are justified in the circumstances."

The environmental agency's final report is slated to be publicly released on the same day as the federal cabinet's decision.

"The agency does not comment on the nature or content of possible advice provided to cabinet," CEAA spokeswoman Karen Fish said in a statement.

Since April, 2013, CEAA has been examining Pacific NorthWest LNG's plans to build an export terminal.

Pacific NorthWest LNG has consulted with five Tsimshian First Nations – the Metlakatla, Kitselas, Gitxaala, Kitsumkalum and Lax Kw'alaams. While four of those groups have signed term sheets that are intended to lead to impact benefit agreements, the Lax Kw'alaams First Nation is the holdout.

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Environmentalists, some First Nations and a group of scientists argue that Pacific NorthWest LNG chose a location in which construction of the LNG terminal and related infrastructure would ruin the eelgrass.

Flora Bank and Lelu Island are part of the traditional territory of the Allied Tsimshian Tribes of Lax Kw'alaams. That group of hereditary chiefs opposes the LNG project while a rival organization – the Nine Tribes of Lax Kw'alaams – supports development plans.

Lax Kw'alaams Mayor John Helin has indicated that the elected band council may support Pacific NorthWest LNG, as long as the environment will be protected.

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About the Authors

Brent Jang is a business reporter in The Globe and Mail’s Vancouver bureau. He joined the Globe in 1995. His former positions include transportation reporter in Toronto, energy correspondent in Calgary and Western columnist for Report on Business. He holds a Bachelor of Commerce degree from the University of Alberta, where he served as Editor-in-Chief of The Gateway student newspaper. Mr. More

Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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