CALGARY—Malaysia's state-owned energy company Thursday
said it would build a large-scale natural-gas plant on Canada's
Pacific coast, paving the way for the export of cheap North
American gas to high-demand markets in Asia.
The 36 billion-Canadian-dollar (US$29.3 billion) project, known
as Pacific NorthWest LNG, marks Canada's emergence as a hub for
exporting surplus North American natural gas to Asia. It is the
first of nearly two dozen liquefied-natural-gas plants proposed for
the Pacific Coast to move ahead with construction.
Petroliam Nasional Bhd., or Petronas, is the lead sponsor of the
project, along with minority partners China Petroleum &
Chemical Corp., Japan Petroleum Exploration Co., Indian Oil Corp.
and Brunei National Petroleum Co. Petronas has said it wants to
start up commercial operations in 2019.
"Pacific NorthWest LNG is poised to make a substantial
investment that will benefit Canada for generations to come,"
Michael Culbert, president of Petronas subsidiary Progress Energy
Canada Ltd., said in a statement.
The Petronas project has been considered a front-runner and its
decision on whether to move ahead with construction has been
closely watched by other Canadian LNG project proponents, including
Royal Dutch Shell PLC and Chevron Corp.
The decision is conditional on the approval by the British
Columbian legislature of a favorable royalty payment plan announced
by Premier Christy Clark last month, as well as a positive
environmental assessment by the Canadian federal government, which
is expected to be issued later this year.
Ms. Clark's government, which has lobbied hard to attract an LNG
industry, welcomed the decision as a key driver of future economic
growth.
"Developing an LNG industry will result in some of the largest
private-sector investments in British Columbia's history,
stimulating economic activity throughout our province like never
before," Rich Coleman, the province's minister of natural gas
development, said in a statement.
Pacific NorthWest LNG plans to ship six million tons of natural
gas a year from inland British Columbia to a liquefaction plant to
be built on an undeveloped island at the port of Prince Rupert on
the province's rugged and remote northwestern coast.
In December, Petronas missed a self-imposed deadline for making
a final decision on the project by year-end 2014, citing high
development costs and a slump in energy prices. But following the
announcement last month of fixed royalty regime, which caps future
payments, the company said Thursday that "the required technical
and commercial components of the project have been satisfied."
Petronas said it was also working to win over a handful of
Native American groups with traditional territorial rights along
its proposed natural-gas pipeline route that it hasn't already
reached deals with.
Earlier Thursday, Canada's federal government approved a C$1.7
billion TransCanada Corp. plan to construct a 301 kilometer (187
mile) pipeline system designed to feed natural gas from
northeastern British Columbia into a larger C$4.7 billion
900-kilometer pipe that will connect to the Petronas LNG
project.
Write to Chester Dawson at chester.dawson@wsj.com
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