Petronas–Progress up LNG stakes in takeover proposal

Malaysian petroleum giant Petronas and its Canadian partner, Progress Energy Resources Corp. (TSX:PRQ), are upping the stakes in their bid to build a liquefied natural ...

Malaysian petroleum giant Petronas and its Canadian partner, Progress Energy Resources Corp. (TSX:PRQ), are upping the stakes in their bid to build a liquefied natural gas plant near Prince Rupert.

Progress yesterday confirmed that a joint-venture plan to build a two-train LNG plant in Prince Rupert is moving ahead, and has given the project a name: Pacific Northwest LNG. The two-train plant would be designed to produce 7.6 million tonnes of liquefied natural gas per year, at a cost of between $9 and $11 billion.

However, the company added that the initial output could be increased by 60% to 12 million tonnes annually if the Canadian government approves a $6 billion bid by Petronas to acquire Progress, which is the largest holder of gas properties in the Montney formation north of Fort St. John.

The bid was quashed in October with a federal government rejection. The companies have appealed the decision.

Meanwhile, Progress announced Tuesday that it is moving forward, regardless of what the federal government decides on the takeover proposal.

The companies have completed a feasibility study for an LNG export terminal on Lelu Island in the District of Port Edward near Prince Rupert and are now moving into what Progress calls a “pre-front-end engineering design” stage.

“We are excited to have completed the detailed feasibility study phase and are now moving into the next phase of our engineering work, which will include the submission of our project description to Canadian regulators in early 2013,” said Progress CEO Michael Culbert.

Petronas and Progress are still working on an investment plan, which it hopes to conclude in late 2014. It hopes to ship its first LNG exports in 2018.

Progress estimates the plant would create 3,500 direct jobs during construction and 200 to 300 permanent jobs.

nbennett@biv.com

@nbennett_biv

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