LNG isn’t dead, but the cancellation of a $36-billion liquefied natural gas project in northern B.C. means construction industry stakeholders will have to “seriously assess how this affects the market,” said B.C. Building Trades executive director Tom Sigurdson.
He, along with the majority of British Columbia's construction industry, is expressing disappointment with the cancellation of the Pacific NorthWest (PNW) LNG project in Port Edward, B.C., which was initiated in 2011 by Malaysian oil and gas firm PETRONAS who announced the project's demise on July 25 citing poor market conditions in the energy sector.
"We'd hoped to see a project that provided opportunities for B.C. workers and apprentices, and we'd also worked with First Nations and hoped for hundreds of job opportunities for First Nations," said Sigurdson.
The cancellation of the PNW project is another blow to B.C.'s nascent LNG industry, which saw the large-scale Kitimat LNG project face an indefinite delay when stakeholders withheld a final investment decision in 2016.
"It's a big project, an important project, and a lot of work went into it," explained Independent Contractors and Businesses Association president Chris Gardner.
He expressed concern that as projects are cancelled, delayed or held up by regulatory review, other nations will move ahead of Canada's LNG efforts.
"My concern is that this is our last window of opportunity. We're competing in a global marketplace," he said, citing the United States, Australia and nations in the Middle East and Africa as competitors.
British Columbia Construction Association president Chris Atchison expressed sympathy for northern communities.
"The economy will be affected in these regions, and there's been an ebbing and flowing of expectations," he said.
But Atchison also cited the fluctuating nature of the construction industry as a damper on his own expectations.
"There's a certain amount of understanding in the construction sector that there was always the possibility something wouldn't materialize," he said.
Sigurdson echoed his comments.
"The hyperbole was extraordinary," Sigurdson said. "Nobody ever believed we'd have 18 projects up and running, and over the last several years, projects oversold. We don't prepare for proposals. We plan for a steady supply of workers when projects arrive."
Gardner warned that the PNW cancellation, along with new moves to oppose or delay other projects, sends the wrong message to investors.
"We have a new government and this is an opportunity to say 'B.C. is open for business,' but the signals they're sending are very negative and give pause to those looking to invest," he said.
"We can't expect to attract international investment if we're saying that regulatory processes don't mean much. It's a dangerous signal to be sending outside of B.C."
But while LNG's current status in B.C. is in doubt, Sigurdson expressed optimism for future development and cited the province's environmental practices and carbon tax as positives.
"What we offer is a superior product," he said.
Atchison was also optimistic and said while current commodity prices may stifle the LNG market, B.C. is still an optimal location for future development.
"We're still a sought after destination due to our proximity to eastern markets and that won't change," he said.