A plan to build a liquid natural gas liquefaction and export facility in Port Edward, B.C., will not go ahead.

A release from Pacific NorthWest LNG said the decision to cancel the $36-billion project was made after "a careful and total review of the project amid changes in market conditions."

Pacific NorthWest LNG is majority owned by Petronas, a Malaysian oil and gas company.

Anuar Taib, chair of the Pacific NorthWest LNG board, wrote that "prolonged depressed prices and shifts in the energy industry have led us to this decision."

The proposed project was to build an LNG export facility on Lelu Island in the district of Port Edward, in northwest B.C.

Speaking at a news conference, B.C. Minister of Energy, Mines and Petroleum Resources Michelle Mungall said the project was "uneconomical to move forward. We respect the company's decision."

Mungall denied that the decision was related to B.C.'s new NDP government's position on LNG projects. 

"This is about global market pricing, this isn't about anything else other than Petronas looking at that long-term reality in the international market," she said.

"Our government is committed to working with the LNG industry to ensure we are competitive."

B.C.'s political players weigh in

Jas Johal, the Liberal MLA for Richmond-Queensborough who previously worked as a spokesperson for the B.C. LNG Alliance, said the decision represents "a bad day for British Columbia."

"It's a signal that obviously this company wasn't comfortable with what they were seeing in British Columbia," he said.

"Market forces of course play a role," he said, noting there has been a "glut" of natural gas in recent years.

When former B.C. premier Christy Clark first pitched LNG to B.C. in 2013, Canada's prices were highly competitive internationally. But as the number of cheap energy options for Asia increased, that advantage proved shortlived.

While the U.S. had previously been a market for surplus Canadian gas, demand for Canadian LNG exports has dwindled as American shale gas production has increased.

Andrew Weaver, leader of the B.C. Green caucus, said that the B.C. LNG industry was never viable.

"I've been expecting this for quite some time, I was on record saying LNG in British Columbia was not going to happen anytime soon because of global markets," he said.

"It was unrealistic, it was misleading to the general public, and here we have the evidence, despite the desperate attempts of the former B.C. government to do the impossible by giving away a resource." 

Project was approved last year

The Pacific NorthWest LNG, that would have shipped 19 million tonnes of liquefied gas to markets in Asia every year, was supposed to be the largest of the promised LNG facilities, and create 4,500 jobs.

The proposal was approved by the federal government in September 2016, subject to meeting a wide range of environmental conditions. 

In an email, Natural Resources Canada spokesperson Alexandre Deslongchamps wrote that the federal process to review major energy projects "considers science, evidence, traditional knowledge of Indigenous peoples and the views of affected communities and the public."

"The Pacific NorthWest LNG project was approved under this process. Once a project is approved, it is then up to the proponent to decide how to proceed. Today's announcement concerning the Pacific NorthWest LNG project was a business decision made by the proponent."

The project divided the area's First Nations communities. Members of the Lax Kw'alaams First Nation camped on the proposed site for almost a year in protest of the proposal, while leaders of the Metlakatla, Kitsumkalum, Kitselas and Gitxaala First Nations wanted the project to go forward.

Mungall said Petronas will remain in Canada and will continue their operations in B.C.

With files from Richard Zussman