What's next for Pacific NorthWest LNG project? 4 questions answered

Prime Minister Justin Trudeau and his cabinet colleagues have signed off on one of the largest energy infrastructure projects in the country's history but now attention turns to whether the Pacific NorthWest LNG terminal will actually be built.

Project faces market pressures in addition to environmental conditions

Federal Environment Minister Catherine McKenna, centre, is flanked by Natural Resources Minister Jim Carr and British Columbia Premier Christy Clark after the Liberal government announced approval of the Pacific NorthWest LNG project. (Darryl Dyck/Canadian Press)

Prime Minister Justin Trudeau and his cabinet colleagues signed off on one of the largest energy infrastructure projects in this country's history this week, but now attention turns to whether shovels will ever actually hit the ground to build the Pacific NorthWest LNG terminal.

The government demanded 190 legally binding conditions be met for the project to go ahead, including greenhouse gas emission limits and the creation of local First Nations monitoring committees to ensure those targets are actually achieved.

It might all be too much to bear for Petronas, the project's Malaysian proponent. The company is facing a global glut in natural gas that has driven down prices and is cutting costs across its operations.

Other LNG projects in B.C. have been postponed indefinitely amidst gloomy global conditions for the fossil fuel. Petronas has said construction will not start right away, even with a green light from cabinet.

Here are four questions about the $36-billion project:

What is the environmental impact?

The conditions imposed on the project largely deal with two of the major concerns raised by environmentalists, First Nations and local communities during the consultation process — greenhouse gas (GHG) emissions and their impact on local fisheries.

The federal Canadian Environmental Assessment Agency released a draft report in February that said the project would result in roughly 6.5 to 8.7 megatonnes of GHG pollution each year, a marked increase in emissions both at the provincial (8.5 per cent) and national (0.75 per cent) level. The agency has said the project "would be one of the largest greenhouse gas emitters in Canada."

Those levels were too high for federal Environment Minister Catherine McKenna, who said the project must emit no more than 3.2 megatonnes when fully operational.

Experts have suggested that this can be achieved by using hydroelectricity, rather than natural gas, to power the plant that liquefies the natural gas for transport abroad.

"We've mitigated the emissions from this particular project significantly," McKenna said Wednesday, pointing to electrification of upstream operations and methane targets on the oil and gas industry. "We're very committed to meeting our Paris target, we've been clear about that."

McKenna says there will be 190 conditions on the natural gas project, including a limit on greenhouse gas emissions. (Darryl Dyck/Canadian Press)

George Hoberg, a University of British Columbia professor, and an expert on the project, said it was "surprising" the federal government opted to approve this project over others in the province — including the Woodfibre LNG project in Squamish — which are completely fuelled by electricity and use newer technology. "This project uses nowhere near best practices in terms of GHGs," he told CBC News.

"What is baffling to me is how B.C. Premier Christy Clark basically abandons all pretense of climate leadership [with this project] and the federal government, with this decision, simply rewards her for that."

He said McKenna's assertion that the Liberals are still committed to targets agreed to in Paris is questionable. "The Liberal government keeps making decisions that are adding new pulses of GHGs to Canada's emissions," he said. "It makes it harder to meet our 2030 climate targets."

Regardless, the LNG industry is still subject to the province's carbon tax and will have to pay the going rate on all of its combustion emissions. Clark committed Tuesday to raising the provincial price above $30 a tonne, which will bring the province in line with the government's proposal for a national price on carbon to cut pollution.

What about the fisheries?

There are persistent concerns that Pacific NorthWest LNG's choice to build the export terminal on Lelu Island would threaten a salmon habitat in the Skeena River estuary and the eelgrass beds around Flora Bank.

Christine Smith-Martin, of the Tsimshian First Nation, holds up a jar of salmon before the federal government announced the approval of the Pacific NorthWest LNG project. (Darryl Dyck/Canadian Press)

The Canadian Environmental Assessment Agency found that the terminal would not significantly damage the fisheries, and yet the government has demanded there be extensive monitoring for 10 years of "morphological changes" as a result of constructing the terminal, and the resulting tanker traffic.

Where do First Nations stand?

First Nations in B.C. are divided on LNG, and much more so than with other projects, such as Enbridge's Northern Gateway crude oil pipeline, which faces a more united opposition.

Pacific NorthWest has signed impact agreements with four First Nations near the terminal, which will result in cash payments to those whose territory is significantly impacted by the project.

Training, employment, financing for cultural support and access to environmental monitoring are aspects of these agreements that First Nations can avail themselves of in exchange for supporting the project.

It also seems the federal government may have done enough to satisfy its constitutional "duty to consult" with First Nations, although it is difficult to tell in advance how courts will rule on these issues, Hoberg said.

Grand Chief Stewart Phillip, president of the Union of B.C. Indian Chiefs, was one of the speakers opposed to Pacific NorthWest LNG project at a press conference on Parliament Hill. (Sean Kilpatrick/Canadian Press)

That has been an issue in the Northern Gateway project — the Federal Court of Appeals overturned the previous Harper government's approval of that pipeline because of inadequate consultation.

"The government strengthened its position [on Pacific NorthWest] by directly involving First Nations in the monitoring processing," Hoberg added.

Assembly of First Nations National Chief Perry Bellegarde said Wednesday that Indigenous people have to be involved in all natural resource development projects from the beginning, a move he said will "stave off" court battles and blockades.

"There's a lot of chiefs that are supporting, and finding the balance between the economy and the environment," he said. "But it's not a done deal, by any means. There are 190-plus qualifications or expectations before you even start building."

Not all Indigenous people are on board. A group of six First Nations from the area issued a statement Tuesday saying the project "does not meet the test" for respecting Indigenous rights and would be challenged in court.

"Providing a green light for this project at this time will only lead to protracted litigation, which benefits no one," said the Skeena Corridor First Nations, whose traditional lands include Lelu Island, the site of the proposed terminal.

What's the timeline?

It's hard to pinpoint exactly. Petronas has launched a "total project review" to assess its viability in the current price-sensitive climate.

The company had been targeting the launch of exports to Asia by the end of 2020, although that will likely be delayed until 2021 at the very earliest, as that timeline was based on construction starting this year.

TransCanada's Prince Rupert gas pipeline, which will carry natural gas from the northeast part of the province to the Pacific NorthWest LNG terminal, was slated to begin pipeline operations in late 2019 or early 2020.


John Paul Tasker

Senior reporter

J.P. Tasker is a journalist in CBC's parliamentary bureau who reports for digital, radio and television. He is also a regular panellist on CBC News Network's Power & Politics. He covers the Conservative Party, Canada-U.S. relations, Crown-Indigenous affairs, climate change, health policy and the Senate. You can send story ideas and tips to J.P. at john.tasker@cbc.ca.