Malaysia-led group gives conditional approval for B.C. LNG project

VANCOUVER -- A Malaysia-led consortium has become the first in British Columbia to announce conditional approval of a liquefied natural gas project, a major step forward for the Liberal government as it stakes its future on development of the industry.

Pacific NorthWest LNG, which is controlled by Malaysian energy giant Petronas, said Thursday it will confirm a final investment decision on the $36-billion project in northeast B.C. subject to two conditions.

The first condition is approval of the project development agreement by the provincial legislature, while the second condition is a positive environmental assessment by the federal government.

"In parallel with work to support the final investment decision, Pacific NorthWest LNG will continue constructive engagement with area First Nations, local communities, stakeholders and regulators," said president Michael Culbert in a statement.

"The integrated project is poised to create thousands of construction and operational careers in the midst of the current energy sector slowdown."

The consortium is proposing to build an LNG export facility at Lelu Island near Prince Rupert, B.C., which would represent the largest capital investment in the province's history.

In May, the Lax Kw'alaams First Nation rejected a natural gas benefit offer worth $1.15 billion, citing environmental threats to the salmon-rich Skeena River.

Natural gas development minister Rich Coleman applauded the announcement, but acknowledged the province still had work to do, including engagement with First Nations.

"Our government has put this new industry in a position of strength to move forward and created certainty for Pacific NorthWest LNG on its path," he said in a statement.

"The Province of British Columbia will continue to work with all partners to ensure the project is developed with the highest standards of environmental protection and enhancement."

A government source said the Liberals are expected to decide by the end of next week whether to recall the B.C. legislature to adopt legislation for the project.

Bruce Ralston, natural gas critic for the Opposition New Democrats, said his party is looking forward to the possibility of a final investment, but there are still major hurdles to overcome.

"Unfortunately, the big promises made by (Premier Christy Clark) and the B.C. Liberals in the last election have still not been met. There are no shovels in the ground, and no final investment decisions," he said.

Ralston said First Nations must be involved as "true partners," but the project is a long way from getting their support. He added the federal environmental review has been repeatedly delayed and will not be finished until at least this fall.

B.C. Chamber of Commerce president John Winter called the announcement "historic" and said it was rare for a brand new industry to arrive in the province.