With a final investment decision yet to come, Woodfibre LNG Ltd.'s proposed export facility near Squamish was granted conditional environmental approval by the province's Environmental Assessment Office (EAO) Monday.
The $1.8-billion facility would liquify natural gas drilled near Dawson Creek and export it to Asian markets at a rate of about 2.4 million tones per year, according to the EAO.
The project will also require federal, provincial and local government permits to proceed, as well as environmental approval from the Canadian government.
Twenty-five conditions were attached to the environmental certificate, issued Monday afternoon, including provisions to mitigate and monitor impacts to marine mammals during construction, a key concern of the Squamish Nation.
The Squamish Nation, which had issued five conditions on the project this past summer, announced its approval Oct. 14.
According to a government news release, Woodfibre LNG made a number of changes to the facility's design after consulting with the Squamish Nation, the District of Squamish, and the public.
These changes included reducing the construction area and land disturbance by making use of an existing industrial site, reducing underwater noise and vibration by shifting to a land based facility and limiting LNG carrier speeds to reduce the effects from wakes and the risks to marine mammals.
Global LNG market faces oversupply
The project has major implications for natural gas development in the Peace Region, and its success relies on Canada's ability to carve out a place in the increasingly competitive market for liquefied natural gas exports.
Woodfibre also has implications for the Site C dam. It would run off the BC Hydro grid, instead of its own gas, creating massive electricity demand. According to BC Hydro, the Woodfibre plant, LNG Canada and an upgraded Tilbury project in Delta would generate enough demand to justify Site C.
The global LNG market is in a state of oversupply, with several countries competing for Asian demand, according to the research firm Wood MacKenzie.
Compounding the problem is the fact that as a new wave of supply will be coming online just as China's demand growth has begun to decline, Wood MacKenzie's expert Noel Tomnay told the Daily Oil Bulletin.
LNG production in the United States has also driven the price of natural gas down over the last six years.
However, projects like Woodfibre—and the pipelines that get the gas supply there—are good news for gas stranded in Northeast B.C.
According to the Daily Oil Bulletin, areas north of Fort Nelson in the Horn River Basin contain around 450 trillion cubic feet of natural gas that is on hold because of supply growth south of the border.
Wood MacKenzie says the Asian market for new LNG will not grow until 2022, but says that could be pushed back to 2025 depending on the amount of new supply that comes online.
Canadian gas exports have been falling for the last eight years, reaching 10.4 billion cubic feet per day (bcf/d) in 2007, but dropping to 7.4 bcf/d in 2015. Exports are expected to continue declining without new LNG exports.
The Bulletin described the Canadian gas industry as being "caught in the crossfire as global giants fight for export markets."
District of Squamish still evaluating
Mayor Patricia Heintzman told the Squamish Chief on Monday that she had yet to see the details of the conditions of the environmental certificate. She said her council would take a close look at the conditions to ensure their concerns were addressed.
Byng Giraud, vice president of corporate affairs for Woodfibre, estimates that the project, located on the shores of Howe Sound about seven kilometres from downtown Squamish, will bring $83.7 million in tax revenue for all three levels of government during the construction phase, and an estimated $86.5 million in tax revenue to all three levels of government during each year of operation.
Heintzman has her reservations about those tax benefits.
"We don't see that as permanent tax revenue," she told the Alaska Highway News in September.
Heintzman and her council toured the Peace Region that month on a fracking fact finding mission, after an invitation from Dawson Creek city council.
"It's not sustainable funding, just like your Fair Share isn't sustainable funding," she said.
Heinztman also took aim at the company's projections for jobs.
According to Giraud, Woodfibre estimates more than 650 jobs per year will be created by the project, along with 1,080 indirect jobs during the construction phase.
"(Woodfibre) is an Indonesian company exporting to China," Heintzman said. "For us, there are not a huge amount of jobs with the facility. There are maybe 100 jobs locally and maybe 15 are going to be people who live in Squamish now."
Heintzman could not be reached before press time.