Pacific NorthWest LNG signaled Monday that its deferred liquefied natural gas (LNG) terminal proposal is still alive by signing a tax agreement for its site on the northern coast of British Columbia (BC).
The project announced a commitment to pay about C$150 million (US$129 million) over 25 years for property taxes and infrastructure such as roads and municipal utility services to the District of Port Edward, near Prince Rupert.
Pacific NorthWest President Michael Culbert said the export terminal "intends on being a long-term positive contributor to the District of Port Edward, and this agreement in principle serves as the blueprint for a multi-decade cooperative relationship."
A minister of community affairs in BC's Liberal provincial cabinet, Coralee Oakes, told a signing ceremony that enabling legislation will be enacted early in the new year to provide formal support for the agreement.
Political fanfare for all steps toward building terminal projects has become a BC trademark over the past two years. The Liberals won re-election in 2013 on a campaign platform that pledged to whip up waves of industrial activity, job creation and provincial revenues by encouraging LNG development. Premier Christy Clark continues to predict that as many as three export terminals will be operating by 2020.
The Port Edward agreement, however, provides that the promised local government revenues forecast to start at C$3.25 million (US$2.79 million) per year then escalate over time will only flow if and when Pacific NorthWest builds its project. A final lease agreement has also not yet been signed for the site.
The terminal sponsors -- led by Malaysian state-owned oil and gas conglomerate Petronas and its wholly-owned Canadian subsidiary Progress Energy -- on Dec. 3 announced deferral, until further notice, of a final commitment to proceed with construction. The decision was scheduled for this month. No new target date was set. Pacific NorthWest is the most advanced of 18 BC coast LNG projects.
Petronas president Tan Sri Shamsul Azhar Abbas described Pacific NorthWest as severely challenged by market conditions, including deteriorating oil prices that determine LNG's value in Asia but especially competition from lower-cost export terminal projects in the United States.
Canadian Pacific coast projects are much more expensive because they start from scratch in remote locations. The price tag for the Pacific NorthWest terminal alone is C$11.6 billion (US$9.97 billion). Petronas calculates the total investment needed to carry out the scheme, including pipelines across BC and northern shale gas supply development, as C$36 billion (US$30.95 billion).