By JUDY MCKINNON and CHIP CUMMINS
Progress Energy Resources Corp. and Malaysian state-run
energy giant Petronas said Tuesday they are moving their
proposed liquefied-natural-gas (LNG) export terminal off
Canada's west coast into the next phase of engineering.
The big energy companies, which are awaiting Canadian
government approval for their multibillion dollar tie-up, said
a detailed feasibility study for the proposed facility has been
completed and the project is now moving into the pre front-end
engineering design, or pre-FEED, phase.
The companies said a final investment decision on the project, named Pacific Northwest
LNG, is expected in late 2014, followed by first LNG
exports in 2018.
The decision to move to the next phase comes as the two
companies await Ottawa approval for Petronas' $5.18 billion
Canadian dollar ($5.21 billion) offer to buy Progress
That deal, announced in June, requires approval from the
Canadian government, which reviews all big foreign deals for
"net benefit" to the country's economy.
Michael Culbert, president and CEO of Progress, said Tuesday
he remains confident the takeover of his company by Petronas
will get Canadian government approval and that he's "hopeful"
this approval will happen by the end of this year.
Mr. Culbert said in an interview that the proposed LNG
export terminal will go ahead even if the merger doesn't.
At the time of the deal announcement, the two companies said
as part of the tie-up they would jointly develop an LNG
terminal in British Columbia, aimed at exporting natural
gas to Asian markets.
Amid a gas-drilling boom in North America, gas prices have
plummeted across the continent. That has sent a number of other
big energy companies scrambling to propose LNG export projects.
Petronas is already a global leader in LNG
technology, and Canada's federal
government has been eager to push infrastructure that would
open its natural resources to new markets, particularly
energy-hungry ones in Asia.
The now-completed, preliminary feasibility work on the
Petronas-Progress LNG export terminal could become a factor in
Ottawa's review, if it is seen as tipping the balance over net
benefit to the economy.
In their joint statement, Petronas and Progress said the value
of the investment in the LNG export facility is expected to be
between C$9 billion and C$11 billion, depending on the final
project scope. The construction phase would result in
up to 3,500 direct jobs and the long-term operations of the
facility would result in 200 to 300 direct jobs, the companies
The companies said the size of the project will depend on government
approval of the takeover. If approved, "the throughput of natural
gas at the LNG
export facility is expected to increase by approximately 60%,"
the companies said in their joint statement.
Canada's Industry Ministry declined to comment about the
joint Petronas-Progress announcement, reiterating the Minister,
Christian Paradis, continues to review the proposed takeover
Dow Jones Newswires
-Alistair MacDonald and Paul Vieira contributed to this