Shell-Led Natural Gas Export Project in Canada Clears Environmental Hurdles

The approval moves the multibillion-dollar LNG shipping project closer to a decision on whether to begin construction

CALGARY—A liquefied natural gas export plant proposed for Canada’s Pacific coast cleared a joint provincial and federal environmental assessment on Wednesday, moving the multibillion-dollar project closer to a decision by chief sponsor Royal Dutch Shell PLC on whether to begin construction.

Dubbed LNG Canada, the planned facility is one of nearly two dozen terminals proposed for the West coast that would ship natural gas in liquefied form to energy-hungry markets in Asia.

 None of these plants has been built yet amid concerns about operational costs and regulatory hurdles, but last week Malaysian state-owned energy company Petroliam Nasional Bhd., commonly known as Petronas, said it would move ahead with a similar LNG project subject to obtaining additional approvals from provincial and federal authorities in Canada.

 “Receiving both provincial and federal approval of our Environmental Assessment is a critical milestone on our path to making a final investment decision,” LNG Canada Chief Executive Andy Calitz said in a statement.

 Shell has said it would make its decision on construction by “mid-decade” and that the project is expected to cost up to 40 billion Canadian dollars ($32.7 billion). The plant is designed to produce and ship 13 million tons of LNG a year with an option to double that volume in the future.

 Canada has looked to LNG exports as an outlet to ease a North American natural gas supply glut and the government of British Columbia has sought to nurture a LNG industry to attract investment and create jobs.

 The federal environment ministry said its approval of Shell’s plans was contingent on meeting 50 conditions “throughout the life of the project” to mitigate the effect on wildlife habitat, Native American land use and human health. 

“Canada is a secure, reliable and responsible producer and supplier of energy to the world that is firmly committed to making environmental assessment decisions that protect the environment while growing our economy and benefiting Canadian families,” Environment Minister Leona Aglukkaq said in a statement.

LNG Canada is the third LNG project to win an environmental assessment certificate from British Columbia following approvals granted to rival plants led by Petronas and Chevron Corp. Petronas is awaiting the results of a federal environment assessment, which is expected later this year.

Shell’s Canadian unit owns half of the Canadian project in partnership with affiliates of Chinese state-owned energy company PetroChina Co., which owns another 20%, along with 15% stakes each for Korea Gas Corp. and Japan’s Mitsubishi Corp.

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