Partners pull plug on Aurora LNG project near Prince Rupert for economic reasons

CALGARY — In the latest setback to B.C.’s liquefied natural gas export industry prospects, the partners developing the Aurora LNG project say they are ending a feasibility study after four years.

Nexen Energy, a Calgary-based subsidiary of Chinese oil giant CNOOC Ltd., says it has decided with Japanese partner INPEX Gas British Columbia Ltd. to stop work on the proposal effective immediately.

The company says in a statement the current “macro-economic environment” doesn’t support building a large LNG business as proposed at Digby Island, west of Prince Rupert, B.C.

In July, a consortium led by Malaysia’s state-owned Petronas cancelled its $36-billion Pacific NorthWest LNG project near Port Edward, B.C., citing a downturn in market conditions.

The project would have included a natural gas export terminal on Lelu Island on the province’s northern coast and a 900-kilometre pipeline to bring the natural gas in from northeastern B.C.

The Aurora project was awaiting word on a B.C. environmental assessment certificate. Phase 1 was tentatively set to begin construction in 2020 and begin supercooling natural gas and shipping it to world markets by 2025.

Like Petronas, CNOOC says the Aurora partners will continue to produce natural gas from their Horn River wells in northeastern B.C. while monitoring the North American market to evaluate future investments.

In a statement Thursday, B.C.’s energy minister said Nexen and their partners were always clear that the project would be based entirely on global market conditions and low commodity prices.

“We will continue to work with industry to ensure that LNG development creates jobs and training opportunities for British Columbians, provides a fair rate of return for our resources, engages with First Nations as partners, and protects our air, land and water,” Michelle Mungall said.

In a recent report, the National Energy Board warned that Canada is a late entrant to the global LNG market and the next seven years will be critical to the development of the industry.

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