Petronas LNG Plant Requires Remedial Measures

A Canadian review of a proposed Petronas-led liquefied natural gas plant has found the project would have a significant environmental impact that requires major remedial measures, two sources briefed on the report said.

The Liberal government of Prime Minister Justin Trudeau has until October 2 to decide whether to approve the Pacific NorthWest LNG export terminal in northern British Columbia.

Pacific NorthWest LNG is a proposed natural gas liquefaction and export facility on Lelu Island within the District of Port Edward on land administered by the Prince Rupert Port Authority (PRPA). With two trains operating, approximately two LNG carriers would call on the facility every three days.

Malaysian oil and gas company Petronas and its partners have been waiting about three years for a permit for the C$11 billion ($8.35 billion), which depends on the review by the Canadian Environmental Assessment Agency (CEAA), an independent body.

The CEAA has no veto rights. Instead, it decides whether a project would have minor or significant adverse environmental impact, and what measures must be taken to allow it to go ahead.

The agency has concluded the project - opposed by local environmental and aboriginal groups - needs significant remedial work to counter the environmental impact before it can be built, said the sources.

Environment Minister Catherine McKenna must now present the report to the full cabinet with her recommendation as to whether it should go ahead.

Caitlin Workman, a spokeswoman for McKenna, said the cabinet would make a final decision. She declined to comment further.

Spencer Sproule, a spokesman for the Petronas-led project, declined to comment. The CEAA said it was not in a position to comment immediately.

The decision is a potentially fraught one for the Liberals, who must balance the needs of an energy industry suffering from job losses as well as the concerns of environmentalists, who Trudeau courted in his successful 2015 election campaign.

Even if Petronas is granted permission for the plant, it may decide not to proceed. The firm has seen a global slump in crude prices squeeze finances, which make up a third of Malaysia's oil and gas revenue.

In August, the firm said it would conduct a total review of the project in Canada before committing to a final investment decision.