Petronas official confirms LNG site may relocate

Petronas CEO confirms company is considering alternative site: state news agency

Relocating export terminal would address major environmental concerns

The CEO of Malaysia’s Petronas has confirmed speculation that the company is seriously considering relocating the export terminal for its Pacific NorthWest LNG project in Prince Rupert.

At the end of December, Bloomberg News cited anonymous insiders who said the company was considering moving the loading terminal, which might go some way to addressing concerns over the impact on salmon habitat off Flora Bank.

On Monday,  Mayalsian state news agency Bernama quoted Petronas CEO Chairman Tan Sri Mohd Sidek Hassan, who confirmed that is being considered.

"We have to take into account the various factors like it being poorly sited and also where it warrants," the news agency quoted Sidek as saying during an economic forum.

Bernama also suggested that the decision to consider an alternative site may be partly in response to “Canada’s political race” – a reference to the provincial election.

The story referenced NDP Leader John Horgan’s vow to find a better location for the export terminal.

The biggest concern over the $11 billion LNG project is an export terminal, which would be connected to Lelu Island – where the actual liquefaction plant would be built – via a suspension bridge.

The bridge would have to transit Flora Bank, where eelgrass beds provide important salmon rearing habitat.

Only recently, industrial property on nearby Ridley Island became available, when Canpotex Ltd. abandoned its plans in June 2016 to build a new potash export terminal on Ridley Island.

Were the export terminal to be moved to Ridley Island, it might not only address some of the environmental concerns – it might also save the company money.

The Flora Bank terminal has been contentious, dividing First Nations in the area. The Lax Kw’alaams First Nation originally opposed the project. A band council election changed the dynamics, however, with the new council expressing some support for the project.

Meanwhile, a division between hereditary chiefs took an interesting turn recently in favour of the provincial government and the PNW LNG project.

Hereditary Chief Don Wesley insists that his clan has the rightful claim to Lelu Island.

But nine hereditary chiefs within the Tsimshian tribal organization have now thrown their support behind the project. More recently, a number of Lax Kw’alaams members have said in affidavits in Wesley’s Federal Court challenge of the PNW LNG project that Wesley does not have authority over Lelu Island.

Should the company decide to relocate the terminal, a new environmental assessment would likely be required, pushing the timeline back for the project's construction. But a glut of new LNG now on the market means that there is not likely to be a demand for additional LNG supplies until about 2025 anyway, according to gas and LNG analysts.

The PNW LNG project has been in serious question since the oil price crash. Petronas was expected to make a final investment decision on the project in 2016, but deferred.

Oil and gas prices are now recovering, however, and if the company can relocate the export terminal and if the company and provincial government can get key First Nations on side - as it appears to be doing - it could remove a significant roadblock.

When upstream gas assets and a new pipeline that would have to be built are factored in, the PNW LNG project is estimated to be a worth a total capital investment of $36 billion.