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Don’t hold that LNG victory party quite yet

LNGWaiting for the liquefied natural gas industry to finally set up shop in B.C. has been like watching an excruciatingly slowly played football game where the score has remained 0-0 since the opening kickoff.

But it now appears one of the largest players may be about to finally cross the goal line and score, thus setting in motion what could end up to be several “touchdowns” by LNG companies in this province.

Or will it?

A consortium led by the Malaysian government-owned energy giant Petronas has made what it calls a “conditional” final investment decision to build a $11.4 billion LNG terminal near Prince Rupert.

One of the conditions (approval by the B.C. legislature) is a foregone conclusion. The other — federal environmental approval — has so far proven to be elusive, although it may still be granted before long.

But there’s a third “condition” the consortium (Pacific NorthWest LNG) so far hasn’t addressed or included in its official explanation of its decision-making process: approval of relevant First Nations bands in the area where the terminal is supposed to be built.

B.C.’s Natural Gas Minister Rich Coleman insists the deal is basically done, but his endless optimism about all things LNG is part of his job title.

The news release that Pacific NorthWest LNG issued, heralding its conditional approval of the project, is not legally binding. In fact, one has to wonder whether, given the intense competition that rules the worldwide LNG industry and markets, whether this latest announcement is simply part of the strategic maneuvering that occurs among these energy giants.

In any event, back to the conditions.

The B.C. legislature will reconvene sitting sometime this summer (likely late July) to pass legislation authorizing what’s called the “project development agreement” to build the LNG terminal. Given the B.C. Liberals’ strong support for the LNG industry and the fact they enjoy a majority in the house, the vote outcome is automatic.

The federal environmental assessment review is a bit trickier. The project has been in the review process for more than two years now, and there is no end in sight.

The Canadian Environmental Assessment Agency, which is conducting the review, stood down earlier this month and told Pacific NorthWest LNG to provide more details about the project’s potential impact on local salmon habitat.

Where things get a bit hazy about this “condition” is the approaching federal election campaign. If there is no decision handed down by the CEAA before the campaign begins in September, the next government may be charged with signing off on approval.

If the ruling Stephen Harper Conservatives win the election, the chances of the project getting federal approval will presumably be quite good.

But what might happen if the federal Liberals or the federal NDP win power, or form a coalition government to block the Conservatives?

Support for an LNG industry among NDPers is spotty at best (a huge segment of the party strongly opposes the practice of fracking, which is used to extract natural gas from deep in the ground), so a federal government led, or partly led, by that party would presumably cast a cloud of uncertainty over any LNG project.

And then we come to something governments at both levels and the industry itself have much less control over:  the support of First Nations for this industry and this particular project.

The Lax Kw’alaam First Nations, which claims the land where Pacific NorthWest LNG hopes to locate its terminal, has already turned down a $1.15 billion benefit package from the consortium  in exchange for its support for the project.

Since then, talks have quietly been taking place with the First Nations band and it may very well revisit its initial decision. We’ll see.

But for now, for all the high-fiving and backslapping the B.C. government is doing over this “conditional” investment decision, the fact remains that Petronas and its partners have still not carried the ball over the goal line.

Until they do, any end zone celebration dance should remain on hold.

The Original Posted by  Keith Baldrey / Global News