British Columbia

'Global industry challenges' delay LNG Canada's Kitimat project

Instability in global energy markets has caused the international partners in a proposed liquefied natural gas project in Kitimat, B.C., to delay their final decision on the venture indefinitely.

Consortium says liquefied natural gas facility in Kitimat, B.C., still 'a promising opportunity'

A rendering of LNG Canada's proposed project in Kitimat, B.C. (LNG Canada/Flickr)

Instability in global energy markets has caused the international partners in a proposed liquefied natural gas project in Kitimat, B.C., to delay their final decision on the venture indefinitely.

LNG Canada CEO Andy Calitz said in a conference call Monday that a drop in natural gas prices around the world, particularly in Asia, has made the project too expensive for now.

"The whole global energy industry is in turmoil," he said.

"In the context of global industry challenges, including capital constraints, the LNG Canada Joint Venture participants have determined they need more time prior to taking a final investment decision," the multinational company said in a written statement issued on Monday as well.

The consortium LNG Canada, which is jointly owned by Shell, PetroChina, Mitsubishi and Koga, was set to make a final investment decision for the project last February.  That decision was later pushed back to the end of 2016.

"At this time, we cannot confirm when this decision will be made," said the statement issued on Monday.

If it ever goes ahead, the LNG Canada project would export up to 24 million tonnes of liquefied natural gas per year and cost up to $50 billion to build.

Delayed, not cancelled

All four companies have now jointly decided to put off the final decision, Calitz said, and representatives from each company are currently in Canada to look at a range of options for the project.

"In the coming months, LNG Canada will continue key site preparation activities and work with its joint venture participants, partners, stakeholders and First Nations to find a revised path forward," he said.

LNG Canada still sees the project on B.C.'s northwest coast as a promising opportunity, he said.

"It is important for the community to understand that the project has been delayed and has not been cancelled," Calitz said.

However, global oil and gas prices will have to recover before the companies involved can move forward, he added.

Last year, the multinational cleared an important hurdle when it was granted the first permit to build a liquefied natural gas export facility in northern British Columbia.

But doubt was cast on the LNG Canada project last month when Shell announced it was shifting away from growing its LNG business after acquiring the gas giant BG Group in February.

In 2014, BG put an LNG project slated to be built near Prince Rupert, B.C., on hold indefinitely.

Elections promises

Christy Clarke's B.C. Liberal government has staked the province's financial future on LNG and promised it would generate 100,000 jobs,

But the premier is poised to enter the 2017 campaign with no LNG revenues and the potential of no shovels in the ground on any major LNG facility.

Other projects, such as the Pacific NorthWest LNG export facility proposed for Prince Rupert, have faced opposition from environmentalists who say LNG development would come with dire environmental consequences.

With files from Betsy Trumpener


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