In 2013, Woodfibre LNG (WLNG) received permission from the National Energy Board to export 2.1 million tonnes of liquefied natural gas from Canada annually. After completing a First Nation environmental assessment process, the company received conditional support from the Squamish Nation to continue along its approval process.
WLNG participated in a B.C./Canada environmental assessment (EA), which had the objective of requiring the company to submit their application to one process and satisfied the two jurisdictions of British Columbia and Canada. As per the Canadian Constitution, the federal and provincial governments have different areas of responsibility and therefore different interests in any development project that meets a threshold that triggers an EA. The delegated joint EA recognizes and accommodates for these specific interests while creating an efficiency to get the applicant to a ‘yes’ or ‘no’ decision.
While EAs are sometimes criticized for rarely rejecting projects, the reality is that, as obstacles are identified, proponents often either amend the application (as did WLNG moving from gas drive to electric drive) or withdraw from the process as they recognize that they will not be able to adequately mitigate environmental impacts.
This past November, based on a recommendation from the BC Environmental Assessment Office, WLNG received an Environmental Assessment Certificate with 25 conditions from the two provincial statutory decision makers, the ministers of natural gas development and the environment.
The company now awaits a decision of the federal cabinet based on a recommendation from the Canadian Environmental Assessment Agency (CEAA).
It is an interesting time. This will be a precedent-setting and very telling decision indicating the federal government’s direction with regard to natural gas development in Canada.
Even while we recognize the global need to decarbonize our societies, jurisdictions around the world are demanding huge amounts of energy resources to provide the most basic of services to their populations, and there is no doubt that they will get the energy that they need. For example, India is planning to commission one coal-fired power plant a week for the next five years. Natural gas will be an important option within the international energy market for at least several decades.
A tight global gas supply is projected within five years, and an annual gap of 140 megatonnes is possible by 2030 without additional supply coming on stream. The market could be satisfied by countries such as Russia, Iran, Qatar or Turkmenistan, all of whom have bigger reserves than Canada but are not necessarily the more responsible producers. They may lack the Canadian environmental standards, the fiscal transparency and the partnerships with communities or indigenous people which adds cost relative to these other less demanding jurisdictions.
Forecasting future LNG market conditions, given the uncertainties of global supply and demand and the possibility of disruptive low carbon energy technologies, make these longterm capital intensive investments high-risk decisions.
WLNG is still awaiting a FortisBC gas supply agreement, a federal cabinet decision and the completion of First Nations agreements, but if those hurdles are overcome, a highly complex final investment decision still awaits.
