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Petronas-led consortium vows to build B.C. LNG terminal

In the foreground is Lelu Island, site of an LNG export terminal proposed by Pacific NorthWest LNG.

Brent Jang/The Globe and Mail

An international consortium has committed to building a massive liquefied natural gas terminal in British Columbia as long as the project receives federal environmental approval.

The Pacific NorthWest LNG joint venture led by Malaysia's state-owned Petronas said on Thursday that giving conditional approval is a crucial milestone. After waffling last year and even threatening to cancel the project, the group is striving to start construction on the $11.4-billion terminal near Prince Rupert by the end of this year and launch LNG exports to Asia in 2019.

Petronas and its Asian partners stipulated that two conditions must still be met. Industry observers say the key condition focuses on the completion this fall of the federal environmental assessment.

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"The final investment decision will be confirmed by the partners of Pacific NorthWest LNG once two outstanding foundational conditions have been resolved," the consortium said in a statement.

"The first condition is approval of the project development agreement by the Legislative Assembly of British Columbia, and the second is a positive regulatory decision on Pacific NorthWest LNG's environmental assessment by the government of Canada," it added.

The Canadian Environmental Assessment Agency (CEAA) began its review of Pacific NorthWest LNG in April, 2013.

"In parallel with work to support the final investment decision, Pacific NorthWest LNG will continue constructive engagement with area First Nations, local communities, stakeholders and regulators," Pacific NorthWest LNG president Michael Culbert said. "The integrated project is poised to create thousands of construction and operational careers in the midst of the current energy-sector slowdown."

B.C. Natural Gas Development Minister Rich Coleman welcomed the long-awaited conditional approval by Pacific NorthWest LNG. "We recognize there is work to do, including an environmental assessment by the government of Canada, as well as engagement with First Nations," Mr. Coleman said in a statement.

Some aboriginal organizations support Pacific NorthWest LNG, but the project's backers must deal with opposition from the Lax Kw'alaams Band on the North Coast and other native groups such as the Blueberry River First Nations in northeastern B.C.

Greg Rickford, the federal Natural Resources Minister, said he is pleased with Thursday's announcement by the consortium, adding that CEAA is conducting a rigorous, science-based review. The federal environmental agency temporarily stopped the regulatory clock, most recently on June 2, because it wanted Pacific NorthWest LNG to provide more details on the predicted effects of building the export terminal on Lelu Island, near an area called Flora Bank.

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Since February, 2014, the agency has sent six letters to Pacific NorthWest LNG related to seeking more information from the proponent.

Flora Bank, a sandy reef-like area visible at low tide, contains eelgrass beds that are crucial to the survival of juvenile salmon in the estuary of the Skeena River, according to the Lax Kw'alaams Band and environmentalists. The band submitted its own study to the agency in January, warning about Pacific NorthWest LNG's proposal to construct a suspension bridge and trestle from the planned Lelu Island terminal to a deep-berth location for LNG tankers in Chatham Sound.

In May, Pacific NorthWest LNG filed its own report, prepared by engineering firm Stantec Inc., arguing there will be little to no environmental impact from building the LNG terminal on Lelu Island. The picturesque island is part of the traditional territory of the Lax Kw'alaams in northwestern British Columbia.

The environmental assessment agency asked two federal departments for their views, and both expressed doubts about the Stantec study's conclusions.

Fisheries and Oceans Canada said the bridge and jetty design are improvements because extensive dredging of Flora Bank would not be required, but cautioned that the Skeena River estuary is an important part of the ecosystem. Natural Resources Canada cited deficiencies in the Stantec report, saying there were unsubstantiated claims that the project would have little effect on Flora Bank's structure.

The environmental assessment has been stalled on Day 263 of the process since June 2. Despite a series of delays in the review, the agency could issue a draft study this summer and a final report by October. Any conditions attached to the final report will be legally binding if federal Environment Minister Leona Aglukkaq gives the project the regulatory go-ahead.

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About the Author

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

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