By Chester Dawson
CALGARY--The government of British Columbia on Tuesday granted
key environmental permits to a natural gas export plant backed by
Malaysia's state-owned energy company and two pipelines proposed
for shipping gas to terminals on Canada's Pacific Coast.
The move comes ahead of a year-end deadline that Malaysian
energy company Petroliam Nasional Bhd., or Petronas, has set for
deciding whether to build a multibillion-dollar liquefaction plant
in the province, which would cool and compress natural gas for
transport overseas by tanker ship.
One of the two pipelines that received environmental assessment
certificates from British Columbia is designed to connect the
Petronas plant with gas fields hundreds of miles inland. The other
pipeline to win approval is for a rival liquefied natural gas plant
backed by British energy company BG Group PLC.
Both projects are among 18 LNG terminals proposed for shipping
gas from Western Canada to global markets, particularly in Asia.
None have been built yet amid concerns about construction and
operational costs, and BG said last month it would push back its
development timeline into next decade.
The provincial government has looked to revitalize its remote
northern coast with LNG exports by tapping into surplus natural gas
in North America. To induce investment, it has halved a planned
provincial tax on LNG exports to 3.5% after Petronas and others
complained about regulatory and tax policies.
British Columbia's environment ministry said the certificates,
which are subject to a series of conditions specific to each
project, were granted only after the sponsoring companies "proposed
a number of significant route or design changes."
Petronas has said its LNG project, known as Pacific Northwest
LNG, could cost upward of C$36 billion. It is the second planned
LNG terminal to receive environmental clearance from the province
after a competing LNG project sponsored by Chevron Corp. Earlier
this month, yet another LNG project led by Royal Dutch Shell filed
paperwork with the British Columbian government for its
environmental assessment certificate.
"We welcome the positive decision from the BC Government,"
Michael Culbert, president of Pacific NorthWest LNG, said in a
statement. He noted the project is still awaiting a federal
environmental assessment certificate, another permit required
before it can start development.
In April, Petronas sold a 15% stake in Pacific Northwest LNG to
China Petroleum & Chemical Corp., or Sinopec. Japan Petroleum
Exploration Co. and Indian Oil Corp. each have 10% stakes in the
project, along with 3% owned by Brunei National Petroleum Co.
Write to Chester Dawson at chester.dawson@wsj.com
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