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Steelhead LNG Scuttles Vancouver Island Export Project

After scrapping the most politically sensitive location option in British Columbia (BC), efforts continue to develop a Pacific coast liquefied natural gas (LNG) export terminal on Vancouver Island.

The strategy shuffle by Steelhead LNG drops a scenic suburban site about 40 kilometers (25 miles) from the provincial capital in Victoria to focus on a remote spot secured by agreement with its aboriginal owners on the island’s west coast.

“Steelhead LNG made the decision after careful consideration and based on several factors, as we look to develop a project that delivers low-cost LNG that is globally competitive,” management said.

Another statement announced a native name -- Kwisspa LNG -- for the still live site planned by a project co-management partnership between Steelhead and Huu-ay-aht First Nation. The proposed terminal was formerly known as Sarita LNG, after the name on conventional maps for its home ocean front bay.

The National Energy Board in 2015 had approved Steelhead and granted it a 25-year license to export up to 4.25 Bcf/d from up to five floating production trains on vessels capable of operating at multiple locations.

Steelhead’s project package includes a gas supply planning arrangement with Calgary-based producer Seven Generations Energy Ltd. and a pipeline study agreement with Williams subsidiary Northwest Pipeline. Costs remain undisclosed while the scheme remains in early planning stages.

Like all other Canadian LNG export project sponsors, Steelhead set no dates for starting construction or shipments and acknowledged it faced stiff competition from lower-cost rivals in the United States and elsewhere.

Cancellation of the Victoria-area site drew applause from BC environmental and native opponents of all fossil fuel industry branches, and especially from the Green Party, which holds the balance of power in the fractured provincial legislature.

While cancellations and delays plague plans for BC export terminals, the campaign to put abundant Canadian gas on the global LNG market from the west coast remains far from abandoned.

The LNG Canada group of Royal Dutch Shell plc, Korea Gas Corp., Petrochina and Mitsubishi Corp. has a target of 2018 but not a deadline for a final investment decision to build a Kitimat, BC, export terminal. TransCanada Corp. still counts the pipeline proposed to supply the operation, Coastal GasLink, among its live projects.

A revival is underway by a plan to export Canadian-produced gas as LNG via a U.S. terminal proposed on the Pacific coast of Oregon.

Under new ownership by Pembina Pipeline Corp., Calgary-based Veresen in September filed a revised application for the Jordan Cove LNG project with the U.S. Federal Energy Regulatory Commission.

The US$10 billion package also revives Pacific Connector Gas Pipeline, a conduit proposed by Williams and Veresen to relay supplies from established Canadian export routes to the Oregon outlet on the Pacific.

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