Canada: BC LNG - Waiting For The World To Change

February 2013 was the height of optimism regarding the LNG export facilities that were being proposed for the West Coast of British Columbia. At that time almost 20 projects of varying sizes were at different stages of development. The province released budget papers that included a forecast for its future revenues from LNG. The province's forecast was based on assumptions about future growth, about which the province could not and did not give assurances. The assumptions included the completion of two large-scale and three smaller-scale LNG facilities by 2020 producing in aggregate 82 million tonnes per annum (MTPA) of LNG. LNG production at that level would have placed BC among the first rank of global LNG producers such as Australia and Qatar.

For 12 to 18 months after 2013, global demand for LNG was and remained high, particularly in Asia. Prices for LNG delivered to Asian markets were over US $16 per million btu (mmbtu) at their peak in 2013. However, by 2016 the global LNG market was affected by new production – principally from Australia and prospectively from the United States. In addition, the price of oil (to which the price of LNG has historically been linked) declined by more than 50%. That resulted in the price for Asian-landed LNG declining from US $16/mmbtu or more to US $6/mmbtu or less.

The implications for BC LNG of these changes in the LNG markets were nicely summarized recently by Nelson Bennett in Business in Vancouver who concluded that:

The next window for long-term LNG contracts will not open for about four or five years once demand and supplies balance out...David Ledesma, a British natural gas and LNG consultant and fellow at the Oxford Institute for Energy Studies, told Business in Vancouver that it's unlikely that any large LNG project in the world will get a FID [Final Investment Decision] before 2019.

Source: "Lead contractor on Shell LNG Canada project cancels bidding" from
Business in Vancouver, December 7, 2016.

In these circumstances many of the proposed BC LNG facilities have either been abandoned or deferred. The following table shows the current status for the five proposed LNG facilities which were previously considered most likely to proceed:

Project MTPA Status First Gas
Woodfibre 2.1 FID Issued 2020
Pacific NorthWest 18 FID Deferred -
LNG Canada 24 FID Deferred -
Kitimat LNG 10 FID Deferred -
Douglas Channel 0.55 Cancelled -


Woodfibre LNG holds all material regulatory approvals including export licences from the federal government and environmental assessment certifications from both federal and provincial governments. The Woodfibre project also submitted to an environmental assessment process conducted by the Squamish First Nation, in whose traditional territory the project and its associated pipeline is to be constructed. The process of complying with various conditions imposed by the Squamish First Nation is well advanced but is not yet complete. Among other things, the Woodfibre LNG plant was redesigned in part to abandon a proposal to use a seawater coolant process to allay environmental concerns raised by the Squamish First Nation.

Woodfibre has indicated that construction is expected to start in 2017 and to be completed by 2020. It would not be unreasonable, however, to expect that actual construction could be tied to the BC provincial election, scheduled for May 2017. If the current provincial government, which has been a strong proponent of LNG project development in BC, was defeated it is conceivable that there could be a reassessment of the timing for construction of Woodfibre, and possibly a reconsideration of whether to proceed at all.

Pacific NorthWest LNG

For the last few years all eyes have been on the Pacific NorthWest LNG project, led by Petronas, Malaysia's state-sponsored petroleum company. The Pacific NorthWest project has attracted attention because of its sheer size and because its sponsors were widely expected to have reached a Final Investment Decision by now.

As to its size, the Pacific NorthWest sponsors have proposed an 18 MTPA liquefaction facility, which together with related facilities, has been estimated to cost approximately $36 billion. 

Pacific NorthWest's sponsors were originally aiming to make a Final Investment Decision in respect of the project by the end of 2014. However, regulatory approvals –particularly under federal environmental assessment legislation – took longer to obtain than anticipated. Final federal regulatory approvals were not received until September 2016. Given the combination of regulatory delays and material adverse changes in the global LNG markets, Pacific NorthWest did not make a Final Investment Decision on receipt of regulatory approvals. Instead, its sponsors commenced a thorough strategic review of the project which is expected to take months to complete. There have been press reports that this review could be concluded by April 2017. But rumours have recently surfaced that the Pacific NorthWest project could be reconfigured to significantly reduce capital costs. In these circumstances, any Final Investment Decision could be pushed back further.

Given the size of the project, potential changes both to its design and its sponsorship, and the unsettled global market for LNG generally, this project appears to be subject to substantial uncertainty. It is entirely possible that a Final Investment Decision could come in 2017 or be deferred for a period of years. It is also entirely possible that any Final Investment Decision, whenever announced, is ultimately implemented slowly and/or in stages to tie expenditures for the massive capital costs of the project to hoped for improvements in market conditions.

LNG Canada

In 2016, Shell completed its merger with British Gas and also deferred indefinitely any Final Investment Decision on its LNG Canada project. The BG merger made Shell a global leader in virtually all phases of the LNG business. Shell appears to have taken the position that, given the precarious state of the LNG markets in the short and medium term, it has a satisfactory position in LNG for now and will not be making material LNG-related capital expenditures in BC or anywhere else until global markets recover.

Kitimat LNG

Although Kitimat LNG was the first major project to go through the regulatory process – and was the first to receive all material regulatory approvals – Chevron has consistently taken the position that no Final Investment Decision would be taken unless the LNG off-take from Kitimat LNG was fully spoken for, at prices satisfactory to the sponsors. There has been no suggestion from Chevron over the last several years that its criteria for proceeding with the Kitimat LNG project are close to being met.

Douglas Channel

Douglas Channel LNG was a small scale LNG project – producing 0.55 MTPA – proposed by an experienced and highly qualified group led by AltaGas. Douglas Channel was small enough to be exempt from environmental assessment review and held all other material and required approvals. However, in February 2016, AltaGas announced that, due to market conditions, they were halting work on the Douglas Channel project. A few months later, Idemitsu, AltaGas' principal partner in North American LNG, announced it was withdrawing from Triton LNG – a larger and related project being undertaken with AltaGas. News reports have suggested that, at least for now, Idemitsu was withdrawing from the North American LNG market altogether to pursue other opportunities.

LNG Developments in the United States

The comparative disarray in the BC LNG market can be contrasted with the situation in the United States. The following table shows the current status of the leading LNG export projects in the US:

Project MTPA Status First Gas
Sabine Pass 27 FID Issued 2016
Cove Point 5.25 FID Issued 2017
Cameron 15 FID Issued 2018
Freeport 14 FID Issued 2018
Corpus Christi 22.5 FID Issued 2019

Most of these projects are brownfield conversions. And most of them are located on the US Gulf Coast, which hosts the world's largest petrochemical complex and where the energy industry enjoys substantial political and public support for new facilities. All of the US LNG projects are served by a web of existing pipelines to provide gas feedstock with minimum new construction. Capital costs for these projects are estimated to be substantially less than for comparable Canadian facilities. As a result of these various factors, the US LNG industry was able to move much faster to line up contractual commitments with global LNG buyers and to authorize completion of LNG export terminals and related facilities. The US LNG industry is on course to be producing 60-80 MTPA by 2020. The US may actually have, by 2020, the kind of fully-formed LNG export industry that BC was originally hoping for.


We have been politely skeptical of some of the more aggressive forecasts of BC's LNG prospects in the short term and have considered them to be overly optimistic. See for instance our prior posts on the evolving status of BC LNG – Reality Bites and One Step Forward – One Step Back. But the view that there is a single window of opportunity that, once missed, precludes the eventual emergence of a BC LNG industry is too pessimistic. There are broad global and secular trends at work supporting growth in long term demand for natural gas generally and for LNG in particular, including that natural gas is expected to steadily displace higher carbon-intensity fuels such as coal in the non-OECD world in particular. See ExxonMobil – 2016 Outlook for Energy: A View to 2040.

Perhaps it would be better for us to start thinking of the emergence of a BC LNG industry in the same terms and with the same perspective that major LNG sponsors have and focus more on the pace of development measured in decades. And we should recall that projects of this size and type tend to proceed based on current and foreseeable market terms and conditions, not political imperatives or deadlines.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Stikeman Elliott LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Stikeman Elliott LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions