Ksi Lisims LNG Project Secures Key Approvals in British Columbia

A significant liquefied natural gas (LNG) project in British Columbia has recently cleared crucial regulatory hurdles and is being hailed by industry insiders as essential for Western Canada’s gas producers. The Ksi Lisims LNG project, which is spearheaded by the Nisga’a Nation, received key environmental approvals from both provincial and federal governments last week. Despite this progress, analysts caution that the project’s future remains uncertain as a final investment decision is still pending later this year.

The Ksi Lisims LNG project is notable for its strong Indigenous involvement and is viewed by some as potentially more impactful than the well-known LNG Canada, which is the country’s first export terminal. According to Ian Archer, a natural gas analyst at S&P Global Inc., Ksi Lisims LNG could be considered “the most Canadian project of all because of its Indigenous participation.”

At a capacity of 12 million tonnes per year (Mtpa), Ksi Lisims is the second-largest LNG project currently proposed for the B.C. coast. It represents a partnership between the Nisga’a Nation, U.S. developer Western LNG, and Rockies LNG, a consortium of primarily Canadian independent gas producers. These producers have collectively committed to supply the necessary volumes if the project advances.

While the Canadian oil sector has largely supported LNG Canada, owned by major global firms including Shell, Petronas, and Korea Gas Corp. (KOGAS), industry experts point out that the benefits of LNG Canada primarily accrue to its equity partners, most of which are based outside Canada. Consequently, many Canadian producers feel sidelined as these partners reap higher returns from lucrative Asian LNG markets.

The challenge for many Canadian producers is access to premium pricing. Charlotte Raggett, CEO of Rockies LNG, noted that producers involved in LNG Canada have their own upstream resources, which complicates access for others. The need for a Canadian-led project like Ksi Lisims has become increasingly evident as regional gas prices remain low due to supply gluts and limited export options.

The Ksi Lisims LNG initiative formally began in May 2020 but has roots going back several years. The Nisga’a Nation and gas producers sought a partnership that would allow for significant Indigenous equity in an LNG project. Heather Exner-Pirot, director of energy, natural resources, and environment at the Macdonald-Laurier Institute, emphasized the importance of the Nisga’a ownership and the producer-led nature of the initiative, especially given the historical challenges faced by Canadian LNG projects.

Despite its recent approvals, challenges remain for Ksi Lisims LNG. The project requires a 750-kilometre pipeline to supply its floating LNG terminal located on Pearse Island, north of Prince Rupert. Industry experts argue that without the involvement of a major pipeline company, the project may struggle to move forward efficiently. Currently, both Enbridge Inc. and TC Energy Corp. have expressed reluctance to undertake another long-haul pipeline project in Canada.

In a recent interview, Francois Poirier, CEO of TC Energy, reiterated that the company sees better returns on investment opportunities in the U.S. than in Canada. Archer noted that the lack of a major midstream partner could pose significant technical challenges for Ksi Lisims LNG, making it difficult to execute the project in a timely and economically viable manner.

As the Canadian natural gas sector continues to navigate these complexities, the ambition for LNG exports from the West Coast remains a central goal. Historically, Canadian producers have taken initiative when faced with market challenges. Mike Belenkie, CEO of Advantage Energy Ltd., pointed to the successful push for the Alliance Pipeline in the mid-1990s as a parallel to the current efforts of Rockies LNG.

The outcome of the Ksi Lisims project could have far-reaching implications for the Canadian natural gas industry, particularly for producers seeking to enhance their market access and profitability. As the final investment decision approaches later this year, all eyes will be on the developments surrounding this pivotal project.