Pacific NorthWest LNG will invest nearly $36 billion in a liquefied natural gas (LNG) export project in Northern B.C., the company announced Thursday.

Project-leader Petronas and its partners sanctioned the project on two conditions: approval from British Columbia's legislature, considered a formality, and the granting of an environmental assessment from the federal government.

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The move represents a significant vote of confidence from the consortium, after months of uncertainty cast doubt on the probability of any of B.C.'s 19 proposed LNG projects moving forward.

Major hurdles remain, however, particularly when it comes to winning the support of the Lax Kw’alaams band, on whose land the LNG terminal would be built.

The project, if it does proceed, would be transformative for Northern B.C.’s economy. At $36 billion, it represents the largest-ever foreign investment in the province's history, and most of the economic activity would take place in Northeast B.C. and on the North Coast.

The gas would come from the Peace Region, where Petronas subsidiary Progress Energy is the largest holder of drilling rights in the Montney play. The company has drilled 215 natural gas wells and identified 13,000 more locations.

Progress and other partners have already sunk $2 billion-plus into the North Montney shale gas basin, representing approximately 4,000 jobs, the company says. Thousands more would be needed to construct pipelines, wells and other infrastructure.

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"In parallel with work to support the final investment decision, Pacific NorthWest LNG will continue constructive engagement with area First Nations, local communities, stakeholders and regulators," Michael Culbert, President of Pacific NorthWest LNG said in a release. "The integrated project is poised to create thousands of construction and operational careers in the midst of the current energy sector slowdown."

Petronas owns a 62 per cent interest along with Sinopec (10 per cent), Indian Oil Corp. (10 per cent), Japan Petroleum Exploration, (10 per cent), China Huadian Corp., (5 per cent) and Petroleum Brunei (3 per cent).

South Peace MLA Mike Bernier said the conditional decision goes a long way towards providing certainty to the oil and gas industry — and the region in particular." There are some things that have to be worked out with First Nations along the coast and we have to be sensitive around those concerns,” he said.

“But in our area … to me what this is all about is, are people going to have jobs and be able to stay in the region? This goes a long way towards [that]."

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Yesterday the federal government accepted the National Energy Board’s (NEB) recommendation to approve an important pipeline for Pacific NorthWest LNG.

TransCanada Pipelines Ltd.’s North Montney Mainline Pipeline project was given the green light subject to 45 conditions.

The $1.7-billion pipeline will transport gas from Northeast B.C to its existing NGTL system, where it will meet up with the Prince Rupert Gas Transmission (PRGT) pipeline to bring natural gas to the liquefaction facility on the coast.

The PRGT pipeline has already received the first two permits to begin construction from the British Columbia Oil & Gas Commission.

Dawson Creek Mayor Dale Bumstead said that while the biggest economic impacts will be in the North Peace, the effects of an LNG plant on the North Coast would trickle through the entire Peace Region. He said a likely uptick in pipeline development will follow.

[Petronas] have got to have the gas processed and ready to go, which means increased drilling and fracking, pipelines, processing facilities, to get that gas from Northeast B.C. to the West Coast."

"All of the service sector — water, sand, vac trucks — that support the industry, you'll see that ramping up, particularly in Dawson Creek and Fort St. John as anticipation builds for that activity," he added.

Among the most directly impacted will be residents in Pink Mountain, the rural area around Mile 143 on the Alaska Highway. Those people are represented at the Peace River Regional District by director Karen Goodings.

She said the roughly 150 permanent residents in the area are ranchers and farmers who live close to hundreds of drilling operations, many of them owned by Progress Energy, along with new resource roads and industrial worker camps.

“It’s going to present its issues,” she said of the potential for a massive ramp up of industrial activity in the area. “The residents in Pink Mountain who have been there for years will be the ones impacted. The cities feel they need their fair share of [revenues from gas operations], but so do those communities and those rural residents.”

“We can’t stop it. We can work with it,” she said. “[Those residents] are not going to complain about industry, but they are going to complain if someone doesn’t do some work on their roads and look after the issues this creates.”

— With files from Jonny Wakefield.

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