B.C. reveals PNW LNG development agreement

The project development agreement signed by the British Columbia and Pacific NorthWest LNG marks a major milestone on the path to realizing the largest capital investment in B.C.’s history, Finance Minister Michael de Jong said in publicly releasing the full agreement.

The agreement between the province and Pacific NorthWest LNG is the first of its kind with an LNG proponent. It sets out the ratification process for the company and for government, identifies important milestones toward achieving project certainty, and provides long-term certainty that the investments will be treated equitably and consistently over the term of the agreement, according to B.C.’s statement.

The agreement provides the proponent with assurance through legislation to be proposed and debated in the legislature that it will not face significant increases in certain specific taxes and environmental charges for the specified term of the agreement:

  • The LNG Income Tax;
  • The Natural Gas Tax Credit;
  • The Carbon Tax (specific to liquefying natural gas at an LNG facility);
  • The key features of greenhouse gas emissions regulatory scheme at an LNG facility;
  • The PDA does not provide the proponent with assurance on laws of general application, such as changes to provincial sales tax or corporate income tax.

Pacific NorthWest LNG plans to build an LNG facility on Lelu Island, located in the District of Port Edward on land administered by the Prince Rupert Port Authority. The first phase of the project would consist of two liquefaction trains, two LNG storage tanks, marine infrastructure with two berths for LNG carriers, a material offloading facility, as well as administration and auxiliary buildings. The facility would liquefy and export natural gas produced by Progress Energy Canada in northeast B.C. for transport to Lelu Island by the Prince Rupert Gas Transmission project proposed to be built, owned and operated by TransCanada.

Pacific NorthWest forecasts the US$36-billion investment is expected to support up to 4,500 jobs at peak construction, 330 direct operational long-term jobs, and 300 local spin-off jobs, in addition to significant new revenues for local government, the provincial government, and the federal government.

The PDA was signed on May 20, 2015, in Vancouver, initiating a ratification process by both the proponent and the B.C. legislature. The B.C. government is recalling the legislature on July 13, 2015, to introduce and publicly debate legislation that will enable the PNW LNG agreement and future potential agreements.