PNW LNG closer to FID following new agreements

The government of B.C. and Pacific NorthWest LNG, led by Petronas of Malaysia, signed deals that establish the path to a final investment decision on the project and set the stage for a potential US$36-billion investment in Northern B.C.

B.C. Premier Christy Clark and Michael Culbert, president of Pacific NorthWest LNG, signed a memorandum of understanding that sets out the steps leading toward ratification of a project development agreement between government and the company, a statement by the Province said.

Michael de Jong, Minister of Finance, signed the project development agreement on behalf of government, which initiates a ratification process by both the company and the British Columbia Legislature. Rich Coleman, Deputy Premier and Minister of Natural Gas Development, signed the Province’s long-term royalty agreement with the company.

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.

These LNG facilities will be some of the largest capital infrastructure projects in British Columbia. The projects require a significant initial investment by the companies, and project development agreements provide proponents with long-term cost certainty regarding certain provincial taxation and environmental laws and regulations applicable to LNG facilities.

According to the statement, another way the province is paving the way for LNG investment is through changes to the Petroleum and Natural Gas Act under Bill 23, the Miscellaneous Statutes Amendment Act, 2015.

A new section in the act will allow the province to enter into long-term royalty agreements with natural gas producers specifying the royalty rates owed to the province by a producer. With this certainty, industry can plan their operations over a longer period of time and commit capital to jobs and production needs, while the province has a guaranteed royalty revenue each year.

The province said it continues to consult with Tsimshian Nations – Lax Kw’alaams, Metlakatla, Gitxaala, Kitsumkalum, Kitselas and Gitga’at First Nations – regarding the Pacific Northwest LNG project. B.C. has also engaged with 19 First Nations along the proposed Prince Rupert Gas Transmission Pipeline route. Fourteen agreements related to the facility and pipeline have been achieved to date.

Over the coming weeks, the agreement will be subject to internal approvals by Pacific NorthWest LNG and partners.

If approved by the proponent and its partners, the government of B.C. said it intends to recall the legislature as soon as practicable to introduce legislation that enables the agreement, where it will be debated publicly and be subject to approval.