Blame Game Sidesteps Crashing Prices as Cause of Petronas Cancellation

The decision by Malaysia’s state-owned Petroliam Nasional Bhd (Petronas) to scuttle a planned liquefied natural gas (LNG) export terminal on the British Columbia coast quickly became a political football, with fossil advocates seeking—against most evidence—to blame the cancellation on a hostile political climate.

Petronas announced last week that it was not going ahead with its proposed C$36-billion Pacific NorthWest LNG terminal at Prince Rupert due to “prolonged depressed prices and shifts in the energy industry.”

Nonetheless, fossil lobbyists and their media proxies worked hard to torque that statement into a condemnation of Canadian infrastructure approval policies, and the election in B.C. of a New Democratic Party government that promises to shift the province to a more sustainable economic course.

While careful to avoid speaking for Petronas in an interview with the National Observer, Tim McMillan, CEO of the Canadian Association of Petroleum Producers, blamed poor “regulatory efficiencies and costs” for keeping Canadian gas out of an Asian market where American and Australian suppliers have found ready buyers.

“The election of an NDP government has nothing to do with the project being cancelled? Give me a break,” columnist Mike Smyth wrote in the reliably pro-fossil Vancouver Province. “The NDP was hostile to the Pacific NorthWest LNG project from the start.”

DeSmog.ca delivered a takedown of those specious arguments—and some others—in a thoughtful analysis noting that “B.C. came late to the party” in seeking to sell its gas to Asia. The Petronas project, reports Editor Emma Gilchrist, was “predicated on [Asian] prices as much as five times higher than in North America in 2013. But by 2016, prices had plunged and have shown little sign of increasing.”

At home, meanwhile, claims that gas could be exported with minimal impact on the environment were always misleading. “The project was sited in a location the federal government had studied and found to be unsuitable for industrial development due to its importance to juvenile salmon,” Gilchrist writes. And “on the climate change front, the Pacific NorthWest LNG plant would have been the single largest source of emissions in the country, emitting as much carbon dioxide-equivalent as 1.9 million cars.”

At the same time, the former Liberal government in the province green-lit a hydroelectric dam at Site C on the Peace River in large part to deliver clean electricity to power the equipment required to produce, compress, and transport natural gas, Gilchrist writes, citing a study last year for the Canadian Centre for Policy Alternatives. The dam project has been condemned as surplus to British Columbia’s domestic needs, and likely to run far over budget, in addition to violating Indigenous treaty rights and flooding valuable farm land. “Now that the future for an LNG industry in B.C. looks bleaker than ever,” Gilchrist notes, “it further calls into question the demand for the $8.8-billion, publicly-funded dam.”

Nor is the Petronas decision quite the death knell for B.C. gas that the industry’s aggrieved boosters pretend. TransCanada Corporation announced last month that it “would spend $2 billion to expand its NOVA Gas system to connect northern B.C. and Alberta natural gas producers to ‘premium intra-basin and export markets,’” Gilchrist observes. In other words, “our gas is going to go east, not west,” but will still find buyers.

Several industry voices noted the fact that Pacific NorthWest had received all required approvals (though the process by which they were awarded has come under severe criticism) before the Malaysian company pulled the plug on it. As Gilchrist reports, however, those approvals followed 22 lobbying contacts in Ottawa and contributions of more than $18,000 to the former Liberal government in Victoria between 2014 and 2017.