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Stakeholders disappointed with indefinite delay of Kitimat LNG project

Warren Frey
Stakeholders disappointed with indefinite delay of Kitimat LNG project

Industry stakeholders are disappointed but not surprised by an indefinite delay for one of British Columbia’s biggest proposed liquefied natural gas (LNG) projects.

The LNG Canada consortium, consisting of Shell, KOGAS, PetroChina and Mitsubishi, recently announced they would delay their final investment decision on a LNG project near Kitimat, B.C.

Keith Sashaw, president of the B.C. chapter of the Association of Consulting Engineering Companies (ACEC-BC), said the issue is complex, with proponents making decisions on projects that may last for 40 to 50 years.

"Current conditions don’t lend themselves to a decision to build, based on today’s prices, but it could be a whole other set of circumstances in two to three years," Sashaw said.

He also cited the difficulty in B.C. of gaining approvals for megaprojects as another stumbling block.

He added no one foresaw the large number of LNG projects initially predicted for British Columbia, but when Premier Christy Clark pledged her election to the legislature around the LNG issue, "it was a realistic target to have two to three plants."

Sashaw said despite the Kitimat delay, there is still optimism in the industry.

"It’s not a definite no, and we’re still hopeful there will be one or two plants forthcoming," he said.

BC Building Trades executive director Tom Sigurdson said while his organization is supportive of building an LNG industry in B.C., the job prospects initially put forward by Clark and other stakeholders were "exaggerated."

"There was a false expectation that we’d have a debt-free B.C. and a prosperity fund. It just didn’t come to fruition, and we’re disappointed in that," Sigurdson said.

But he added the Building Trades were cautious from the outset regarding LNG’s potential.

"From our perspective, we expected one or perhaps two plants, but never did we think we’d see the kind of development envisaged by the (provincial) government," Sigurdson said.

Independent Contractors and Businesses Association president Philip Hochstein also expressed disappointment with the delay and said the provincial government had done all it could to encourage LNG development, but worldwide conditions prevented further progress.

"Kitimat had all its ducks in a row, but one duck is the world price of gas," Hochstein said.

He also pointed out that while LNG is important to the construction industry, other sectors are doing well.

"Commercial work, residential including highrise are doing well and there’s government money coming for infrastructure. It’s quite buoyant except in the north, where LNG really was needed," he said.

Sigurdson said there is still a significant demand for skilled workers with a coming wave of retirements from the industry, but that LNG projects could have streamlined the apprenticeship process.

"It’s easier to have a single site or project where you have literally hundreds of apprentices, as opposed to dozens of sites spread all over the province," he said.

Despite recent setbacks, Sashaw said, LNG is the most environmentally friendly fossil fuel source and would be of great benefit not only for B.C. but for developing economies.

"It’s overall a global benefit. It might increase B.C.’s greenhouse gas emissions (GHG) by a certain amout, but it reduces fossil fuel use in emerging economies," he said.

"When anything combustible is used as fuel, it’s dirty and LNG is just so much cleaner," Sigurdson said.

"I still am hopeful that the project or projects will go ahead, when commodity prices come back up."

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