03 Jun 2025 4 min read

Petronas divestment, new oil pipelines, North Coast Transmission Line consultations, delays for Ksi Lisims LNG

Highlights

PETRONAS, the Malaysian state-owned oil and gas company that has a 25% stake in LNG Canada, is reportedly considering selling off its upstream gas production assets in northeast BC
- Update as of June 5th: Petronas denies that it is considering selling its upstream assets
Prime Minister Carney indicated, following a meeting with provincial premiers, that he is supportive of new pipelines for what he called "decarbonized barrels" of oil (a nonsense phrase)
The North Coast Transmission Line, a proposed doubling of BC Hydro's transmission infrastructure in northern BC being pushed to supply power to potential LNG facilities, is hosting open house information sessions June 9-19 across the region
Delays in dispute resolution processes between the Environmental Assessment Office (EAO) and some First Nations regarding the Ksi Lisims LNG proposal have pushed back approval at least another month, potentially delaying any decisions regarding PRGT

Got tips?

If you have access to unpublished information about these projects or about LNG in BC more broadly, check out our Tips page for information on secure channels.

Details

PETRONAS

There seem to be two plausible explanations of the news about PETRONAS's plans to sell its upstream assets, and aspects of both may be true simultaneously. On the one hand, it's clear that we are at a critical juncture in the Canadian regulatory environment. By threatening capital flight, major operators, particularly in the fracked gas and LNG space, might be trying to maximize the benefits they reap from this moment of flux. Certainly, this seems to be the strategy behind PETRONAS Canada CEO Mark Fitzgerald's approach to public communications lately: he's aggressively pushing deregulation and a sense of urgency for LNG development.

On the other hand, the reality is that the business case for new LNG projects in Canada, and also for expanding oil production, is very tenuous, and investment in Canada genuinely has been dampened by activism and the exercise of Indigenous sovereignty. Aboriginal title, from a legal perspective, has been a major issue for energy investors in Canada for years, explicitly cited in shareholder materials. Perversely, attempts to streamline permitting processes by provincial and federal governments will likely only worsen this uncertainty rather than assuage it. PETRONAS may be pulling out because the business case is simply dwindling. As a major global operator, they can and will move their capital to where it's most profitable.

Update as of June 5th: Petronas has denied these reports, although the wording of its statement doesn't seem to entirely rule out the potential upstream asset divestment that was reported.

North Coast Transmission Line (NCTL)

The NCTL is a major new infrastructure project proposed for northern BC that would, in very general terms, double the existing electricity transmission infrastructure between the Site C dam and Terrace. The project also includes a more-than-doubling of the Northwest Transmission Line (NTL) that runs north near the Cassiar Highway, a nearly billion dollar project completed in 2012 that was built to provide power for the Red Chris gold mine near Iskut.

The government's justifications for the NCTL tend to be vague, but the reality is it is critical to their vision for so-called "net zero" LNG facilities. Liquefying natural gas is an immensely energy-intensive process. Most LNG facilities simply burn gas to power the liquefaction, meaning that they are burning gas to transport gas to burn more gas. By electrifying this process, the "emissions intensity" of LNG can be reduced, though it should be clear to anyone who isn't being paid by the industry that, as a carbon-based fuel that is burned to generate power, gas cannot actually be "net zero."

The BC government has been trying to square the circle of LNG and its climate goals since the early 2010s and electrification has been key to that. LNG Canada's phase 2 expansion was supposed to be electric, but the company has indicated it plans to move forward — if it can attract investors for the expansion — with gas turbines.

The NCTL is, in large part, a subsidy for existing and proposed LNG facilities, it's important to keep in mind the northern connection: this project is very likely also being planned to supply rate-payer-subsidized electricity to the veritable gold rush happening in northwest BC under the rhetorical guise of "critical minerals." The BC government is fast-tracking an expansion of the Red Chris mine and megaprojects like KSM, Eskay Creek, and Galore Creek are chugging along and stand to benefit greatly from access to even more subsidized electricity than they already have.

Ksi Lisims Approval Facing Delays; Implications for PRGT

Despite the public rhetoric, Ksi Lisims LNG, the proposed export terminal in the Nass River estuary that PRGT would feed, has not yet been approved by the EAO. The process is stuck within the bureaucracy and won't move forward until EAO staff finalize their assessment report, at which point the Ministers of Environment & Parks and Energy & Climate Solutions will either approve or reject it.

In January of this year, the Gitga'at First Nation challenged the EAO's assessment of the project's impacts and entered a "dispute resolution process." In February, Lax Kw'alaams Band and Metlakatla First Nation did the same. Gitga'at withdrew, unhappy with the arbitration process, in May, which suggests that they may be pursuing legal action. The EAO announced yesterday that the dispute resolution process with Lax Kw'alaams and Metlakatla has been extended and won't be concluded till June 30th. This means that the EAO's report on the project won't be submitted until after that, pushing approval out at least another month.

While we don't know for sure that this will impact PRGT's "substantial start" approval, it seems like the province may be trying to avoid wastefully burning political capital by approving PRGT while its terminal remains uncertain because of regulatory and legal challenges. This delay may push the PRGT decision even further down the road.