TransCanada Corporation (ticker: TRP) will be reimbursed for all of the costs and charges it incurred to develop the Prince Rupert Gas Transmission (PRGT) project, following the announcement from Pacific NorthWest LNG that it was cancelling its approximately $11 billion liquefied natural gas terminal.
Pacific NorthWest LNG is an affiliate of the Malaysian oil and gas company, PETRONAS.
The PRGT project is a 900 kilometer long natural gas pipeline in northern British Columbia which TransCanada was selected to build by Progress Energy Canada, which itself is an affiliate company of PETRONAS.
While the Pacific NorthWest LNG facility project has been cancelled, TransCanada’s executive vice president and president, Karl Johannson, noted that there “is still a strong need for Canadian natural gas supplies to get to market,” and that TransCanada remains “ready to move forward.”
The PRGT project has so far signed 14 project agreements with First Nations in the British Columbia area and received regulatory permits from the British Columbia Oil and Gas Commission.
The LNG project would have been capable of exporting 19.2 tons of LNG per year. The export facility would have represented a $36 billion dollar investment, including infrastructure, pipelines, and regulatory costs. Such an investment would have been the largest private investment in the province and in the nation.
The terminal would have sourced natural gas out of Progress Energy’s Montney acreage in Alberta.
PETRONAS has expressed that its decision to cancel the project was influenced by “prolonged depressed prices and shifts in the energy industry.” Analysts looking at the PETRONAS exit also point to the increasingly difficult political climate for large energy export projects in Canada.
While the cancellation of the LNG project has removed one of four of Canada’s approved LNG export terminals, Michelle Mungall—the provincial Energy Minister—noted that she is “committed to working with the LNG industry” and that she would be speaking with other LNG developers regarding potential in the province.
