2 of 5 investors grant final approval for $40B LNG Canada project

Two of the five primary investors in a proposed liquefied natural gas project in northern B.C. granted their final approval Friday for the development, bringing Canada's first major LNG project one step closer to becoming a reality.

PetroChina and Kogas, of South Korea, have both announced their readiness to move forward with the $40-billion investment led by the joint venture LNG Canada.

On Sunday, a report from Bloomberg said all five investors had approved the final investment decision according to unnamed sources, but LNG Canada said in a tweet it had not received a final investment decision.

If approved, the project would see the construction of a 640-kilometre pipeline to transport natural gas from Dawson Creek in northeastern B.C. to a brand new processing terminal on the coast in Kitimat, where the gas would be processed into liquid for export to overseas markets.

Kitimat Mayor Phillip Germuth said in an interview he was surprised but happy after hearing about the decision.

"There's more smiles in the community, and everyone is looking forward to what the future might bring," said Germuth.

"We're really looking forward … to being the LNG capital of Canada."

Germuth believes the project will bring economic benefits to Kitimat similar to the construction of the Alcan aluminum smelter built there in the 1950s. Indeed, housing prices in Kitimat are already rising in anticipation of the project's approval. 

Signs look positive

The CEO of Shell called the project "promising" in the company's second-quarter conference call in July, but said Shell is still studying the project to ensure it is financially competitive and, longer term, carbon competitive, particularly in comparison with opportunities in the Gulf of Mexico.

The chief executive of LNG Canada has previously said the company was committed to starting construction this year.

Meanwhile, Germuth is hoping for a positive decision from the remaining investors soon.

"We're hoping that in the next week or two all of that comes into fruition," Germuth said.

LNG struggling in Canada

There is widespread support from Canada's energy sector for the project.

The LNG industry has struggled to take off in British Columbia, but is booming in the United States, where billions of dollars are being pumped into natural gas pipelines and LNG facilities.

Canadian producers say a positive final investment decision for the Kitimat-based LNG Canada project could eventually encourage others to follow suit, creating the demand needed to soak up Western Canada's glut of natural gas.

But even if investors decide to move forward, the project is not guaranteed.

B.C. Green Party Leader pledged in January to bring down the NDP government if Premier John Horgan pursues the development of the province's LNG industry. A spokesperson for the party said at the time Weaver is concerned about keeping the province within emissions targets.

Since then, Weaver has said he won't move a vote of non-confidence against the government on the matter but on Sunday tweeted that the Greens would not support, "required LNG legislation."