Can Kitimat’s historic CN railway station be saved from demolition?

Analysis    (Long Read)

A crowd gathers at the Kitimat CN Station sometime in 1955. This picture may be of the station opening since the windows and trim are unpainted. (Walter Turkenburg/Kitimat Museum & Archives. ) See Note 1.

UPDATE There  will be a public meeting to discuss the future of the station in Kitimat on Thursday,  April 11, 2019 at Riverlodge, in the Activity Room, at 7:30 pm.

March 12: This story has been updated to clarify that Kitimat Heritage has not yet discussed municipal, provincial or federal heritage status with CN. Also more information about CN telegraph communications has been added.

Kitimat Heritage and supporters in the community are campaigning to save the town’s old Canadian National Railway Station. Kitimat Heritage wants to preserve the station because it is symbolic of the earliest days of the townsite when Kitimat was first being built and celebrated as the 1950s “town of the future.”

District of Kitimat Council voted Monday February 25 to send a letter of support to CN and to take other appropriate measures to support an effort to save the old CN Railway Station in the Service Centre.

Retiring Member of Parliament Nathan Cullen (NDP Bulkley Valley) is also working at the federal level to get help to preserve the station. The provincial MLA Ellis Ross (Liberal Skeena) has promised he will work at the provincial level.

Louise Avery and Walter Thorne make a presentation to District of Kitimat Council on the future of the CN Station on February 25, 2019. (Robin Rowland)

Local historian Walter Thorne and Executive Director of the Kitimat Museum & Archives Louise Avery presented a package to council that gave the history of the station and the current state of negotiations with CN. (Disclosure I am chair of the museum board but not directly involved in the campaign. The opinions in this article are strictly my own and may not reflect the views of Kitimat Heritage or the museum)

There have been two architectural assessments of the railway station. The first by John Goritsas on behalf of the Kitimat Museum & Archives in 1992 and this year on behalf of Kitimat Heritage by Prince Rupert architect Alora Griffin.

While the station overall is in “desperate condition” it appears from both assessments that the core of the station is, as far as can be determined, structurally sound.

A close view of the station in 2014, showing the “desperate condition.” (Robin Rowland)

The station, built in 1955, has been in poor repair for years.  According to Kitimat Heritage CN  has said it  sees no other clear alternative than to demolish the station given its run-down nature, the potential liability issues, and the revenue potential of the land.

If CN  did want to demolish the station ,  it can’t at the moment because it is protected by both municipal and provincial heritage status. So far the question of heritage status has not yet come up in the discussions.

District of Kitimat Council first passed a bylaw giving the station heritage status in September 1985.The municipal heritage status of the station is part of the official Kitimat Community Plan, adopted by council in 2008.

The railway stations in Prince Rupert and Smithers are designated under the federal Heritage Railway Stations Act.

Only designated heritage railway stations that are still owned by a railway company under federal jurisdiction are subject to the nationwide Heritage Railway Stations Protection Act. Under the act no railway company may in any way alter, demolish, or transfer ownership of a designated heritage railway station without the authorization of the federal cabinet.

In the case of Kitimat, the Heritage Group has not yet officially asked CN to support designation.

CN officials, speaking to the heritage volunteers, have told them that the station is an “eyesore” and there is “revenue potential” from the station site as Kitimat gears up for the building of the LNG Canada plant and other projects including a proposed propane terminal.

The CN Station in 2012. (Robin Rowland)

Railway stations as brands

To understand what makes the Kitimat station unique, you have to know about the history of railway station construction in North America.

From the mid-nineteenth century until the First World War, a time when railways were the prime form of transportation, railway stations were designed to both attract paying passengers and to promote the railway brand. The railways hired the leading architects of the day to design metropolitan stations in grand style, often neo Classical like Toronto’s Union Station or Grand Central in New York or “Romanesque” such as Union Station in Nashville, Tennessee (now a Marriot Hotel) that resembles the style of Canada’s Parliament Buildings.

Montreal’s Windsor Station, once the headquarters for Canadian Pacific was also built in a Romanesque style.

See Time Magazine’s selection of the world’s ten most beautiful railway stations  and Fodor’s travel has a list of what it believes to be the world’s 20 most beautiful main line stations .

The same care in architectural design and construction was applied to even the smallest railway stations in those early years—although many were based on same designs from stop to stop.

When the Grand Trunk Pacific was building the line to Prince Rupert a century ago the GT built iconic smaller stations (designated by the Plan Number 100-152) along the route, with fourteen in the Smithers subdivision, including at Tyee, Kitwanga and Kwinitsa. (See Vanishing BC Grand Trunk Pacific Stations)

The latter station is now part of the Kwinitsa Station Railway Museum & Park in Prince Rupert.

The Prince Rupert station built in 1921 is an example of a utilitarian brick box that has federal protection.

The designation says the Prince Rupert Station is an example is “significant as a very early example of a public building in the Modern Classical style. Executed in brick and trimmed with Tyndall limestone, the station design combines traditional composition with simple, stripped-down classical detailing.”

The Smithers Station is considered more special it is an important and rare example of the custom-designed “special stations” built by the Grand Trunk Pacific Railway (GTP) at several divisional points along its transcontinental line. This small group of specially designed stations represented a departure from the GTP’s overall policy of rigid standardization in depot design. (like the ones at Tyee, Kwinitsa and Kitwanga)

End of an Era

That era of great railway stations ended in 1929 with the Great Depression when commerce largely collapsed. Railways in North America had little money to spend on grand passenger stations. Then came the Second World War when the priority for the railways was supporting the war effort.

Railway historians say that after 1945 most spending for North American railways was to replace aging  steam locomotives with new diesel locomotives. The railways also had to retire old rolling stock such as boxcars that had been kept in service during the war.

That meant even in the post war decade from 1945 to 1955 constructing new stations was not a priority. Those stations that were built, mostly in the United States, replaced buildings that were no longer usable. Most were “modern” brick boxes based on a utilitarian design that reached back to the 1920s or the newer “brutalist” buildings of mostly poured concrete.

Kitimat was a different case—there was a brand new branch line from Terrace.  That meant Kitimat needed a railway station.

The architects who assessed the Kitimat station say it is an example of the modernist “form follows function” style of architecture popularized by Frank Lloyd Wright. The load bearing 2 x 6 trusses align the exterior walls which was one of Wright’s innovative ideas.

The station was designed by CN staff. The 1992 architect, John Goritos, said, “it was designed to suit the site and wasn’t a replica of any of other CN railway stations.”

The architects say that one reason the Kitimat Station was built of wood was not only that it had to be constructed quickly but the light weight was suited to the site which was on the Kitimat River flood plain filled in with sandy landfill.

Building the Kitimat branch line

As Alcan was planning and building Kitimat, the company signed transportation contracts with CN. That was the reason the branch line was built to the townsite, then past the sandhill to the aluminum smelter.

CN worked to build the new branch line for 38.5 miles crossing “difficult terrain of the area, including swamps, hard clay, rocks and watersheds.’ The route included three steel Pratt triangular truss bridges over the Lakelse, Wedeene, Little Wedeene Rivers and plus a number of smaller old fashioned traditional wooden trestles over creeks.

Canadian Transportation magazine reported in July 1952 that the branch line alone would cost $10 million 1952 dollars or $217,391.30 per mile.

Freight travel began as soon as the branch line was completed in December 1954. Temporary huts acted as the train station when passenger service began in January 1955 but were soon overwhelmed.

It was CN practice to use huts (and sometimes a retired boxcar) to act as a temporary station until a new one was built. (Mrs. L Byron collection/Kitimat Museum & Archives)

Former Kitimat mayor Joanne Monaghan who worked at the station recalls that once the Alcan plant became operational although most of the ingots were shipped out by sea, there were long trains outbound with car after car loaded with aluminum ingots.

The British news magazine The Sphere published a photograph of the first passenger train to arrive in Kitimat in February 1955,

The British magazine The Sphere (an equivalent of Life or Look) covered the story this way in a report on Feb. 19, 1955.

“In the far north-west of Canada new trains have just started to run along a new railway. The line starts in a small town called Terrace and its only forty-three miles long. But its importance is out of all proportion to its length for the new terminus is in Kitimat, the new wonder aluminum manufacturing of the Canadian Aluminum Company (sic).”

The anonymous reporter photographed what The Sphere said was the arrival of the first passenger train in Kitimat. The locomotive was Canadian National steam locomotive 2129, a 2-8-0 “Consolidation” that had been in service since 1911 with three railways, the Canadian Northern and the Duluth, Winnipeg and Pacific ( a CN subsidiary in the United States) before being transferred to CN. The loco hauled three passenger coaches and two boxcars on that initial run from Terrace. Note 2.

A Northern Sentinel photo taken a little later than the Sphere photo, showing the “:twice weekly train” in Kitimat, February 1955, before the new station was built. (Northern Sentinel/Kitimat Museum & Archives)

The 2-8-0 was a heavy-duty locomotive designed for hauling freight. All those outbound boxcars filled with ingots and, inbound, as the town was being built, boxcar after boxcar filled with lumber to build the houses and stores of the brand-new town.

Building a town of 8,000 almost overnight required whole CN trains filled with lumber (Walter Turkenburg/ Kitimat Museum & Archives)

The “milk-run” train also serviced Lakelse Lake (where there was a whistle stop in a clearing by the tracks, which I remember from a vacation at Lakesle in the summer of 1957) as well as “stations” (again really just clearings) on the timetable at Wedeene, Dubois, Lakelse and Thunderbird, to pick up loggers, surveyors, fishers and hunters. The trip from Lakelse to Kitimat would have taken one hour and thirty minutes if the train was running on schedule.

Once dedicated passenger service began, CN assigned another steam locomotive, a lighter 4-6-2 Pacific, Number 5000, built in 1913.

As CN was transitioning to diesel, it assigned its last remaining steam locomotives to more remote parts of Canada, like northwest BC.  The Pacific, Number 5000, was retired in May 1958. The 2-8-0 Consolidation Number 2129 was scrapped in May 1960.

The station

CN put the station construction out to tender in June 55. The building was completed by the Skeena Construction Company, based in Terrace, before the end of the year.

Dignitaries welcome the first daily train to arrive in Kitimat on June 2,1955 . (Northern Sentinel/Kitimat Museum & Archives)

Train was the main mode of travel between Terrace and Kitimat from December 1954 until November 1957 when the highway to Terrace was opened.

Freight operations continued to use the depot for years after passenger traffic ended.

Like many branch line railway stations in North America, the Kitimat station combined passenger and some freight and express operations (most of the freight operations were carried on down the line to Kitimat Concrete Products at the sandhill and on to the Alcan smelter.)

There was soon a lot of traffic in those days people coming in from all over the world to find work. News reports at the time said the three-hour train journey from Kitimat to Terrace was so popular that there was often “standing room only” in the passenger cars.

An undated aerial shot of the Kitimat CN Station and the service centre. A train with six carriages is stopped at the station. (Max Patzelt Collection/Kitimat Museum & Archives)

The trains expanded from a single passenger car to three and later several as demand grew.

The station had a large interior large waiting area with washrooms, a “restroom” and later a small coffee and snack bar was added to the waiting room.

Along a corridor were the depot office and the combined telegraph office and what was called the “repeater room.” Off the corridor were also the station keeper room and conductors’ office. There was a typical bay window operator’s room in the waiting area that looked out onto the tracks.

On the freight side were the express office and the “on hand” (goods for pick up). The original plans had had one door in on the east wall and one door out by the tracks on the west side. Two doors on the north wall added later to meet demand.

A shot of the Kitimat station in the 1950s. (David Wade Collection/Kitimat Museum & Archives)

CBC Radio

On the blue prints for the station there is what is today a cryptic reference to the Telegraph-Repeater room which is the part of the building where we see the Canadian National Logo today. The role of the telegraph – more likely teletype by the 1950s—is obvious. The telegraph office operated for many years after passenger service ended.

It turns out the “repeater” was the first transmitter for CBC Radio in Kitimat. Canadian National Telegraphs operated most non-telephone communications in Canada along its railway lines.

CN had actually had some of the first radio stations in Canada, which were later taken over by the CBC when the Parliament created the public broadcaster.

So, in the Kitimat Station there was a LPRT or a Low Power Relay Transmitter. The  “radio” signal came into Kitimat via a CN landline for broadcast. The LPRT was designed to be sited in a location were there was no other coverage or before an actual transmitter was built.

The railway company domination of telecommunications continued in 1967 when CN and CP telegraph services merged to form CNCP telecommunications. That company was later sold to Rogers when the railways got out of the telecommunications business they had founded in the previous century.

Some smaller locations across Canada still have CBC LPRTs where it is not economic to build a transmitter. Today the signal is downlinked from satellite.

CN and the station were also the conduit for secure government communications, including the RCMP.  It also transmitted the Canadian Press wire service.   Later BC Tel (now Telus) took over many of those functions.

End of passenger service

CN stopped passenger rail service to Kitimat in November 1957 almost as soon as then Highway 25 to Terrace was completed, although the station was still used to coordinate freight and express operations for a few years after that.

In the 1960s, passenger traffic on railways across North America plummeted as the era of the car and air travel became more the normal way to go.

CN used the station for storage in the 1970s and let it deteriorate and at one point it was vandalized. It was briefly owned by the District of Kitimat, but ownership has since reverted to CN.

Today’s train stations were most often just glass and steel, if there were stations at all. Many new stations are glass covered platforms with perhaps a small ticket office (and if passengers are lucky, washrooms).

The Kitimat CN Station is a unique snap shot of Canadian railway architecture and construction from the mid 50s that wasn’t duplicated.

CN has boarded up the building and says it is an “eyesore” and has told the heritage group that it is not structurally sound and should be moved from the site or be demolished.

Architectural assessments

The two architects reported that the station is a one story 3500 square foot structure supported by 2 x 6 fir trusses and 2 x 4 stud walls set in concrete slab. The roof trusses appear to be made of red cedar. As far as both architects could tell (access was somewhat limited) both the fir and reds cedar have survived the previous 62 years largely intact.

The roof was made of aluminum shingles, which were popular at the time as part of what was called “machine age allure” of the “space age” Streamline Moderne and “Googie” forms of architecture. The aluminum shingles, as well as the flashing were well suited for Kitimat because aluminum aged well, and snow would slide off an aluminum roof easier than traditional asphalt shingles.

The problem with the roof is that the sheathing between the red cedar and the aluminum has warped over the decades and that has displaced or heaved most of the aluminum shingles. The fascia will also have to be replaced.
The station hasn’t been heated or properly maintained for many years. That means apart from the structural walls, the rest mostly plywood and plasterboard has deteriorated markedly.

Asbestos

The greatest mistake—in retrospect—and the greatest challenge is the widespread use of asbestos in the building.

It appears that the CN architects and structural engineers in 1955 who designed the station wanted to add to that “machine age allure” by using the “modern” asbestos cladding. Before that almost all the smaller Grand Trunk and CN stations in western Canada had stucco on the exterior walls. In retrospect if CN had stuck with stucco, the station would—allowing for the poor maintenance– probably be in better shape. There are houses in Kitimat with stucco walls that have survived the elements for 50 to 60 years. If the walls were stucco, there would not be today’s cost of removing asbestos.

The asbestos cladding or siding is seen on the CN station, March 6, 2019. (Robin Rowland)

The most obvious use of asbestos is in the cladding or siding on the walls of the station which was a popular material up until the 1980s when the cancer risk from asbestos was realized. In the parts of the station which had linoleum floor—the passenger and office areas—it is likely that linoleum from that era contained asbestos. There is bare concrete floor for baggage express storage and heater rooms, so those are areas where there is presumably no asbestos in the flooring.

Asbestos was also wrapped around many of the building’s mechanical infrastructure and heating ducts. The soffit under the eaves may also contain asbestos.

There is so much asbestos that even if CN wanted to demolish the station the company couldn’t just bring in a backhoe or bulldozer and pull it apart as is done some other cases were there is no asbestos.

Under BC law, the asbestos would have to be safely removed by an asbestos qualified removal company before a demolition permit can be issued.

Renovating also requires a BC qualified asbestos abatement contractor.
In both cases, there has to be a hazardous material survey prior to any work commences.  During the work—whether demolition or renovation—there has to be continuous hazardous material and air quality monitoring in the area. (Noting that the station is close to the Kitimat Hotel and service centre businesses)

It appears that CN hasn’t really bothered to undertake a detailed cost benefit analysis. The question is how much cost difference would there be in safely removing the asbestos prior to demolition and the cost of safely removing the asbestos prior to restoration?

Another question that has to be ironed out is who is responsible for the asbestos. CN owns the building and is currently responsible. If, as originally proposed, CN sold the building to the Kitimat Heritage for one dollar, the heritage group would then be responsible. If the heritage group gets to lease the building from CN, then CN, as the landlord, is likely still responsible for the upkeep of the building—a cost that CN apparently, at present, doesn’t want to undertake.

Worksafe BC must be notified of any project where asbestos is being removed (ws0303-pdf-en) PDF

Links
Province of British Columbia
Management of Waste Asbestos 
Worksafe BC Asbestos 

Stay or go? And if go, where?

Kitimat faces two choices with the station. To keep it on the current site or to move it elsewhere.

At present, according to the report by Kitimat Heritage presented to District of Kitimat Council, CN would like the building moved away from a potential revenue producing area along the right-of-way.

The Kitimat Heritage group wants the station to remain in place as the role as a train station is part of the Kitimat’s history. As the report says, “The building is not heritage without its provenance—the rail line.”

Both architect Alora Griffin and some building experts say it cannot be moved because the original design placed the load bearing trusses on the concrete pad foundation and therefore there is no floor that would support the station if it was to be moved.

That raises another question, which the far away CN executives have probably never considered because they appear to be clearly unfamiliar with Kitimat infrastructure is where would an intact station be moved to?

The bottle neck would be the Kitimat River/Haisla Boulevard bridge which was built back in 1954, a bridge that urgently requires a seismic upgrade at very least and should be replaced if it is to sustain loads of trucks heading the LNG Canada construction site.

The current District limits for crossing the bridge call for a height restriction of four metres. The maximum clearance on the bridge is 4.2 metres or 13 feet nine inches in height. The maximum weight is 65,000 kilograms or 143,000 pounds. The station is just over nine metres or 29 feet high, which means the station would never fit onto the Haisla Bridge. So why move the station from its current location?

The Haisla Boulevard Kitimat River Bridge seen on March 6, 2019. It is likely impossible to move the station via the bridge to the main Kitimat townsite. If a moving company did attempt the job, all those wires would have to be removed or moved. (Robin Rowland)

If a contractor found a way to move across the Haisla Bridge, however unlikely, by splitting up the building, costs of moving such a building are determined by the size of the building, what work has to be done to the building prior to moving, the distance moved and incidentals such as working with BC Hydro and telecom companies if overhead wires are in the way, cutting down trees if necessary, traffic control or traffic restrictions and other problems a moving company might run into.

So far, no company has been involved that specializes in moving large structures, including heritage structures.

The average minimum cost of moving a residential house in the United States can be $16 a square foot or more, so the minimum cost of moving the 3,500 square foot station—if the sound parts of the structure can actually be moved—would probably begin at least $60,000. Actual costs are usually much higher.

The bridge restrictions mean that the station would have to remain in the service centre anyway.

So why move it?

Another possibility that was raised by local contractors is dismantling the structure, numbering the salvageable parts such as trusses, beams and roof supports and reconstructing the building elsewhere. . One factor is how the trusses would be removed from the concrete base and rebuilt elsewhere in Kitimat.

That latter solution, however, is considered by many to be cost prohibitive. That evaluation would have to be made a qualified restoration architect. A check of available records shows that many–not all– of the  CN stations that have been moved are in the prairie provinces where logistics are much easier.

Restoring the station

Kitimat Heritage is asking that the funds CN would have to spend in any case to demolish the building instead be put toward restoration.

The aim of the heritage group is to convert it into a community meeting space, perhaps with a restaurant and a small museum or other guide to Kitimat Heritage.

The heritage group wants a land lease from CN, but the company says a lease at present is impossible due to liability issues. CN has told the heritage group that if was to lease the building it would want $5,000 per year in rent, a $50,000 letter of credit and $10 million in liability insurance.

CN, as the present owner of the station, is, of course, currently solely responsible for any current liability issues that may occur.

CN has told the heritage group that it doesn’t entertain land sales within 100 feet of its right-of-way which is why the railway wants the station moved if it is sold (but as noted above there is no where for the station to go). That is why the heritage group wants a lease.

There are dozens of heritage railway stations across Canada that are still owned by CN and thus have federal protection. (see Note Three below for the list of CN Stations).

It is unlikely that preserving the Kitimat Station would have any adverse effect on CN’s bottom line. In 2018, CN had revenues of $14.321 billion and an operating income of $5.493 billion. The annual report says the railway carried $250 billion worth of goods in 2018 over 20,000 route miles in Canada and the United States. CN buildings were worth $1.186 billion in 2018, according to the report.  The Kitimat Station is still on the CN books (and accounting for depreciation as reported in the annual report) and is a miniscule asset.

If an agreement is reached with CN, then the heritage group would have to embark on a fund-raising effort. The next step would be to hire an architect, either a local architect or one who specializes in heritage restoration.

The building would also have to be brought up to current seismic standards and meet the current British Columbia building code for public buildings.
To bring it up to code an architect would have to redesign building and coordinate with electrical, mechanical and structural engineers. Structural engineer would have to asses the condition of the trusses and other parts of the building for possible defects and possible needed upgrades.

To restore the building the customary procedure is to ask three local contractors for a realistic estimate of the cost (not a low bid bid). To be sure, the heritage group should also ask for a bid for a contractor who specializes in restoration. A restoration specialist would likely identify hidden costs or unexpected savings.

What’s next?

The heritage group wants to come to an agreement with CN before proceeding to ask the community for financial and volunteer support.

Although the discussion between the heritage group and CN have been fruitful so far, it appears from CN’s insistence that the station be moved that the company has not bothered to fully research either the heritage of the Kitimat Station nor the geography and geology of Kitimat.

If CN had done a thorough appraisal of the situation, they would know that it is unlikely that the station could cross the Haisla Bridge and thus should stay in situ.

The proposed Pacific Traverse Energy propane project would greatly add to the rail traffic in the area –and also add to CN’s revenue. There are two proposed sites for a rail staging yard, one about three kilometres north of the service centre on Crown Land and the second on Rio Tinto owned track close to the station location—which is probably what CN means when it says the site has “revenue potential.” The current estimate is that the project would require 60 tank cars each day to service an export terminal near Bish Cove.

So far,  only pure rumour and speculation have said that the propane project is an impediment to saving the station.

At some point the company should be invited to join the discussion. Since Pacific Traverse Energy has said in its presentation to council that the company is going to embark on a “rigorous program of community engagement” this year and that it is committed to “economic, social, cultural and economical sustainability.” Emphasizing the word cultural means that the company could prove its commitment to the community of Kitimat by taking into consideration the future of the CN Station in any planning and decisions on land use or by helping to pay for station restoration of out a budget of $400 million while ensuring the safety of the station area if the project proceeds.

The cost of restoring the station is likely to be substantial and not only government but corporate funding as well as in kind contributions from local contractors and businesses will be needed to fully restore the station and make it operational as a community centre.

One factor is that the railway line from Terrace and the train station were built by CN on behalf of the then Aluminum Company of Canada, a company that promised CN back in the 50s at least a million dollars a year in revenue. (According to the Bank of Canada inflation calculator one million dollars in 1950 would be 11 million dollars in 2019—which may nor may not reflect how much Rio Tinto actually pays CN). It’s clear that both CN and Rio Tinto have profited from the rail line for the past almost 70 years and it’s time that some of those profits were applied to preserving Kitimat’s heritage.

Kitimat factory town or more?

Most railway heritage buildings and heritage railways around the world are maintained and operated by volunteers usually railway buffs, heritage activists and retired railway employees.  There are few, if any, railway employees retired in Kitimat (although there may be some in Terrace or Prince Rupert). This could prove a problem in Kitimat where the same small group of volunteers are engaged in multiple efforts while others in the community seldom contribute. On the other hand, the restoration of the station and its operation as a community meeting place could bring out new volunteers.

The old CN Station on March 6, 2019. (Robin Rowland)

The bigger picture that Kitimat has to decide on is what kind of town will this be in the future?

Back in the nineteenth century, when those iconic railway stations were built across North America, many mining, smelting and logging towns built equally impressive “opera houses” or other culture landmarks that are still preserved today.

While Kitimat never had a grand opera house, there is the station that marks the town’s early settler history.

The LNG Canada final investment decision approval and the growth of Asian markets for hydrocarbon energy (at least for the next few decades) and quality aluminum, means that the industrial base of Kitimat is assured.

Tourism has always been a low priority and culture has been an almost a zero priority.

So, is Kitimat going to be just an industrial town or is it Kitimat going to be more than that with cultural amenities for its residents and to be more than a tourist draw for mostly aging recreational fishers?

Whatever decision is made on the CN station will help decide the road to that future.

LINK

Kitimat Museum & Archives contact page.

Note 1.

A small boy is seen in the photograph of the station wearing a “coonskin cap.”  The Disney TV series Davy Crockett was broadcast from December 1954 to February 1955.  Two follow up movies starring Fess Parker were Davy Crockett, King of the Wild Frontier, 1955, and Davy Crockett and the River Pirates, 1956. Disney heavily marketed the coonskin cap to small boys, selling at one point 5,000 a day in the United States. Most were made of faux fur.   Although Kitimat did not have television until years later, the cap likely dates the photo to the summer or fall of 1955, the height of the coonskin cap craze.  Wikipedia.

Note 2

CP 2-8-0 3716 at Kettle Valley. (Canadian Model Railroads/Wikipedia)

You can see a Canadian Pacific 2-8-0 steam locomotive similar to the CN loco that made the first trip to Kitimat at the Kettle Valley Steam Railway in Summerland.

Note 3

A list of Canadian National (or affiliate) heritage railway stations protected by the federal government. This list does not include stations owned by VIA Rail, Canadian Pacific or smaller Canadian Railways.  There should be no reason that Kitimat’s station cannot join this list. (The George Little House station in Terrace was not originally a railway station but a heritage house that was moved to the trackside as a VIA station)


British Columbia
Kamloops
Kelowna
McBride
Prince Rupert
Smithers
Vancouver
Alberta
Jasper
Saskatchewan
Biggar
Humboldt
Melville
Moose Jaw
North Battleford
Manitoba
Churchill
Dauphin
Gillam
McCreary
Neepewa
Portage la Prairie
Rivers
Roblin
The Pas
Ontario
Alexandria
Barrie
Auroa
Belleville
Brampton
Brantford
Casselman
Chatham
Cobourg
Comber
Ernestown
Fort Frances
Galt/Cambridge
Georgetown
Guelph
Hamilton
Hornepayne
Kingston
Kitchener
Leamington
Maple
Markham
Nakina
Newmarket
Niagara Falls
North Bay
Orillia
Owen Sound
Parry Sound
Port Hope
Prescott
Sioux Lookout
St. Thomas
Stratford
Toronto Union Station
Woodstock
Quebec
Amqui
Clova
Joliette
Macamic
Matapédia
Mont-Joli
Montréal
New Carlisle
Port Daniel
Saint-Hyacinthe
Saint-Pascal
Sainte-Anne-de-la-Pérade
Sayabec
Senneterre
Shawinigan
Sherbrooke
New Brunswick
Edmunston
Grand Falls
Sackville
Sussex
Nova Scotia
Amherst

Northwest Coast Energy News is only semi-retired

This site has not been that active for the past couple of years.

However, Northwest Coast Energy News is only semi-retired.

The main reason is simple.  It is almost impossible to compete with Facebook.

Facebook and Google have a duopoly controlling almost all the world’s digital advertising.   With even almost all major media losing revenue in catastrophic amounts news coverage is shrinking everywhere.

The situation is worse for small-town media and worst for sole practitioner websites like Northwest Coast Energy News.  No income.

It is logical that advertisers will go to where the “eyeballs” are–in this case Facebook.  But the long term loss of income is creating what are called “news deserts” from big city neighborhoods to small towns.

The second problem is that Facebook sucks up most of the news.  It is no longer practical to produce a “local angle” on a story if everyone is reading the story from wire stories or major media on Facebook.

That said there is still room for local coverage that no one else is covering.

So there will be local stories on this site if the story itself warrants the time and energy I have to put it into the work. It is likely those stories will be few and far between.  However, Northwest Coast Energy News will remain somewhat active for the foreseeable future.

Happy New Year 2019

Kitimat welcomes new BC NDP government LNG policy

UPDATED with District of Kitimat news release

The District of Kitimat is very pleased with the decision that the BC government issued today removing some of the barriers associated with the establishment of an LNG industry in BC. This will promote access for natural gas from BC to be exported as LNG to international markets. This would be a significant boost for the North West, the province, and Canada as a whole.
This is a positive step forward for the LNG industry in BC, and the District of Kitimat is looking forward to working with the BC Government, LNG Canada, First Nations groups, other stakeholders as well as the Federal Government to move toward a positive final investment decision in 2018.

Michael Dewar
Director of Economic Development

 

News release from BC Premier John Horgan on his government’s LNG policy

For Immediate Release

March 22, 2018

Office of the Premier

NEWS RELEASE
New framework for natural gas development puts focus on economic and climate targets

VICTORIA – As part of a new approach to natural gas development, the British Columbia government is overhauling the policy framework for future projects, while ensuring those projects adhere to B.C.’s climate targets, Premier John Horgan announced today.

“Our new approach welcomes investment that puts our province’s people and future first, and rejects the old ways of resource development at any cost,” Premier Horgan said. “Our obligation is to the people who call British Columbia home, and our job is to get the best deal for them and the generations that follow.”

Under the new approach, all projects should:

* Guarantee a fair return for B.C.’s natural resources.

* Guarantee jobs and training opportunities for British Columbians.

* Respect and make partners of First Nations.

* Protect B.C.’s air, land and water, including living up to the Province’s climate commitments.

These four conditions form the basis for government’s discussions with LNG Canada, which is moving toward a final investment decision on a project that, if approved, would be the largest private-sector investment in B.C. history. This project would see the construction of a natural gas pipeline from northeast B.C. to Kitimat, where a new terminal will process and ship LNG to Asian markets. It is expected to create up to 10,000 construction and up to 950 full time jobs in northern B.C.

“No premier or government can dismiss this kind of critical economic opportunity for the people of British Columbia,” Premier Horgan said. “But neither will we turn our back on our commitment to climate targets, or our path to reconciliation with Indigenous peoples.”

At the centre of the discussions with LNG Canada is a revised fiscal framework that is designed to put natural gas development on a level playing field with other industrial sectors, accessing the same fiscal policies and working within the same overall B.C. framework to achieve greenhouse gas (GHG) reductions.

The new framework, to which LNG Canada will be subject, provides:

* Relief from provincial sales tax (PST), in line with the policy for manufacturing sectors, subject to repayment in the form of an equivalent operational payment.

* New GHG emission standards under the Clean Growth Incentive Program, announced in Budget 2018.

* General industrial electricity rates consistent with other industrial users in B.C.

* Elimination of the LNG income tax that had required LNG-specific tax rates.

“The LNG Canada proposal has the potential to earn tens of billions of dollars and create thousands of jobs for British Columbians over the life of the project,” Premier Horgan said. “It’s a private-sector investment that could benefit our province for decades to come, but not at any price – we need to make sure the values British Columbians believe in come first.”

The Premier said his government will also expect the LNG Canada project to fit within the goals of the Province’s climate-change plan and, specifically, its legislated GHG reduction targets.

“We committed, during the election campaign, to reduce our greenhouse gas emissions by 40% below 2007 levels by 2030, and by 80% by 2050. That remains our goal,” Premier Horgan said.

“We cannot achieve the necessary reductions in greenhouse gas emissions and do our part in protecting the global environment without a significant shift to a low carbon economy. The work for all of us – in government, business, labour and beyond – is only just beginning. And all resource development proposals must be considered within the context of our global commitment to protecting our air, land and water.”

With B.C.’s new fiscal framework provided to LNG Canada this week, it is anticipated the company will make a final investment decision sometime before the end of this year.

 

BACKGROUNDER 1
Climate action in British Columbia

On April 1, 2018, the carbon tax will increase by $5 a tonne annually, until 2022.

Increasing the carbon tax meets the requirements set out by the federal government’s pan-Canadian climate framework. Rebates will go to a majority of British Columbians.

However, increasing the carbon tax alone will not enable B.C. to meet its long-term greenhouse gas-reduction goals of 40% below 2007 levels by 2030, and 80% by 2050. Significant new climate-action initiatives will be required in order for B.C. to meet these 2050 legislated targets, while encouraging strong economic growth. To ensure an interim target, new legislated targets for 2030 will be introduced later this year. Specific targets for each of the industrial, transportation and building sectors will also be established.

Meeting climate targets will not be easy and will require a concerted effort across all sectors to make the transition to a low-carbon economy. The addition of emissions from LNG will increase this challenge but government is committed to taking the steps necessary to achieve B.C.’s climate goals.

Specific Measures:

* A portion of the carbon tax revenue, paid by large industry, will fund a rebate program to incent the use of the greenest technology available in the industrial sector, including the natural gas sector, to reduce emissions and encourage jobs and economic growth. Some of the revenue will also go into a technology fund, to help spur new, clean technologies in all sectors, to make sure they fit within B.C.’s climate plan.

* The Climate Solutions Clean Growth Advisory Council (CSCG), established in October 2017, is supporting government’s goal of reducing carbon pollution, preparing for the impacts of climate change and growing a sustainable economy. The CSCG is comprised of community leaders from across British Columbia, including representatives from First Nations, local government, industry, environmental organizations, academia and labour.

* The CSCG is providing advice on actions and policies to achieve significant greenhouse gas reductions, while taking advantage of opportunities for sustainable economic development and job creation.

* Immediate priorities for the CSCG include achieving emissions reductions in the transportation sector, developing pathways to clean economic growth, as well as policies to support the competitiveness of B.C.’s emissions-intensive and trade-exposed industries.

* Government is working to develop a framework for fugitive emissions that match the federal government’s target of a 45% reduction by 2025.

* Government is examining every opportunity to reduce emissions from slash burning by providing alternative economic usage for slash where available.

* Government has initiated a scientific review of hydraulic fracturing aimed at ensuring that industry in B.C. operates according to the highest-possible standards.

More information on the Climate Solutions and Clean Growth Advisory

 

BACKGROUNDER 2
British Columbia establishes new framework for natural gas development

Natural gas has a key role to play to provide clean, reliable, affordable and less-carbon-intensive options to global energy markets.

British Columbia has a vast supply of low carbon-intensive natural gas resources in places like the Montney Basin, and has been developing them to support economic growth and job creation at home for decades. B.C. natural gas is an important transition fuel that can help B.C. move to a lower-carbon economy.

While B.C. has been exporting natural gas to U.S. markets for decades, it has an opportunity to export the same fuel to other jurisdictions. To that end, government will introduce a fiscal framework that will provide fair returns to both British Columbians and investors, as well as a climate strategy that will allow B.C. to meet its legislated climate targets.

To ensure British Columbia does it better than anybody else in the world, the provincial government has four key conditions to ensure British Columbians benefit from any proposed LNG development. They are:

* Guarantee a fair return for B.C.’s natural resources.

* Guarantee jobs and training opportunities for British Columbians.

* Respect and make partners of First Nations.

* Protect B.C.’s air, land and water, including living up to the Province’s climate commitments.

Emerging LNG Proposals

Despite the cancellation of Pacific Northwest LNG, Aurora and Woodside project proposals, several other LNG proponents have expressed renewed interest in developing projects in BC.

LNG Canada

LNG Canada’s proposed Kitimat project, should it proceed, represents a very significant economic opportunity for British Columbia – a project that involves one of the largest private sector developments in B.C. history.

Shell and its joint-venture partners have worked constructively to satisfy the provincial government’s conditions for LNG, and British Columbia expects LNG Canada will continue to do so moving forward.

LNG Canada is also working to achieve global leadership in low-emissions technology and operations.

Kitimat LNG

Chevron and its partners have expressed continued interest in developing its project in northern B.C. and is focusing on the use of new low-emissions liquefaction technology.

These come as the Province is completing a climate-action strategy in place that meets the Province’s greenhouse gas-reduction targets – to reduce B.C.’s greenhouse gas emissions by 40% below 2007 levels by 2030, and by 80% by 2050.

New Framework

The B.C. government has developed a new framework aimed at ensuring British Columbians receive a good return for their natural gas resource and proponents receive a reasonable return on investment.

As part of this work, British Columbia and LNG Canada jointly conducted a financial analysis of the LNG Canada project. This analysis corroborated evidence and information from internationally recognized LNG analysts that B.C. has a competitiveness issue and formed the basis of a mutual understanding upon which the Province is prepared to commit measures that will increase the competiveness of British Columbia’s LNG industry.

These measures provide a framework for other industries in British Columbia in similar circumstances – they are not exclusive to the LNG industry or LNG Canada.

As it pertains to LNG Canada, the measures detailed below will only be implemented if the proponents are able to conclusively decide on or before Nov. 30, 2018, to proceed with the construction of the LNG facility and associated investments. These measures below would apply to the entire LNG sector.

1. New Operating Performance Payments

Under current legislation, proponents constructing significant manufacturing facilities would receive a PST exemption on input costs, whereas those proposing to construct LNG facilities would not.

Under the new framework, The B.C. government will exempt LNG Canada from the provincial sales tax (PST), on the construction of their initial proposed facility. This will be conditional on LNG Canada entering into a separate agreement with the province whereby LNG Canada will pay annual operating performance payments over 20 years, a total amount equivalent to what LNG Canada would have otherwise paid in PST during the initial facility construction period.

This framework will be available to all proponents constructing significant manufacturing facilities in the province.Clean Growth Incentive Program

2. The provincial government recognizes that energy-intensive trade-exposed industries, including the natural gas sector, face unfair competition when competing globally with jurisdictions that do not impose carbon taxes. Proponents who make a final investment decision to proceed will be subject to the new Clean Growth Incentive Program, announced by the provincial government in Budget 2018. A benchmark for world-leading clean LNG production will be established as part of this program, replacing existing requirements under the current Greenhouse Gas Industrial Reporting and Control Act.

3. Industrial Electricity Rates

Proponents who make a positive final investment decision will receive the general industrial electricity rate charged by BC Hydro. This is the same rate paid by other industrial users in British Columbia.

4. Removal of LNG Income Tax

The existing LNG income tax is not the most efficient and effective tool for generating returns to British Columbia. It is cumbersome to administer and has led to uncertainties. Government intends to introduce legislation to repeal this tax and instead government will utilize a number other tax and royalty measures under its new fiscal framework, to ensure that British Columbia gets a fair return for its natural gas resource.

New Approach to LNG

As part of establishing a new fiscal framework, the provincial government will take steps to improve the transparency and consistency with which it assesses industrial development opportunities. To that end, government intends to introduce legislation to repeal the Project Development Agreement Act, passed by the previous government, to tie the hands of future governments with respect to the rules governing LNG projects. These measures effectively indemnified proponents against changes. Government will also review and potentially cancel or repeal other LNG measures established by the previous government.

 

▶ READ MOREEconomy, Energy, Mines and Petroleum Resources, Environment and Climate Change Strategy, Government Operations, Office of the Premier

LNG Canada announces short list firms for procurement and construction contractors

 

LNG Canada today short listed two companies, LNG BC Contractors, a partnership of TechnipFMC plc and KBR, Inc. and the partnership of JGC Corporation and Fluor Corporation on the short list to build the proposed LNG Canada facility in Kitimat.

LNG Canada said their commercial negotiations to commence immediately

LNG Canada news release:

Vancouver, British Columbia, February 2, 2018 – Following a year-long request for proposal (RFP) process, LNG Canada announced it has notified two of its four potential engineering, procurement and construction (EPC) contractors that they have been shortlisted for the chance to build the company’s proposed LNG export facility in Kitimat, British Columbia.

LNG Canada intends to select the preferred EPC contractor sometime in 2018. Negotiations will begin immediately with the two EPC contractors to determine the most commercially competitive proposal.

LNG Canada identified the finalists as the partnership of TechnipFMC plc and KBR, Inc. (LNG BC Contractors), and the partnership of JGC Corporation and Fluor Corporation.

Following a decision to delay a final investment decision in 2016, LNG Canada used the delay period to issue an RFP to identify a preferred EPC contractor willing to build the proposed LNG Canada project on a lump sum basis. LNG Canada prequalified four EPC consortia based on several criteria, including prior experience in LNG design and modularization, track record of project completion, and experience with construction in Western Canada.

“This process is critical in LNG Canada’s pursuit of the level of competitiveness required to support a future final investment decision by our joint venture participants,” said Andy Calitz, CEO of LNG Canada. “A tremendous amount of time and effort has been invested by the four EPC consortia, as well as by LNG Canada’s internal review team, and I thank them all for their contributions to the RFP process thus far.”

LNG Canada’s proposal evaluation criteria included health and safety management, financial strength, technical design, execution plans, contract price and schedule. The proposers also committed to living up to LNG Canada’s values and the commitments it has made to local communities, First Nations, as well as the company’s high standards of social and environmental performance.

“While this is a significant milestone, work remains to be done to deliver a globally cost competitive project that is well positioned to take a final investment decision,” added Calitz. “We look forward to working closely with TechnipFMC plc and KBR, Inc. and JGC Corporation and Fluor Corporation to advance our project in British Columbia that will benefit the regional, provincial and national economy.”

Council votes to create “working group” on riverbank issues, tables plan to gate access

District of Kitimat Council voted Monday five to two to create a “working group” of “concerned citizens and community groups” to consider the future of riverbank camping along the Kitimat river. The working group will consider issues such as access to the river, pollution and how to control extended camping along the river.

That vote came after council split five to two  again to defeat a motion by Councillor Mary Murphy to stop riverside camping altogether.

A proposal from District staff to put access gates at three locations, the Giant Spruce Road, the Sewage Plant and the Pump House was tabled for the time being. However, the councilors and staff marked the pump house gate as a priority for study by the engineering staff due to concerns that “the risk of fuel, oil and other contaminants (i.e. Illegal dumping ) occurring. This is the source water area for the city’s water supply, reducing access reduces contamination risks.” Staff said that unlike other portions of the riverbank, the District does “have authority under drinking water protection act to protect this area.”

Council also voted to close Hirsh Creek park immediately because the roads at the camping area were washed out by the flood last week.

Councillors noted that many people still go to Hirsch Creek after the gates are closed at the end of the season to walk dogs or hike. This results in a parking jam at the front of the gate and on busy times, cars park on Highway 37 which could endanger pedestrians.

District staff will study moving the park gate down further to a point that the road narrows near the first campsite to allow safe access for dog walkers and hikers.

The main problem facing the District of Kitimat is that most popular sites along the riverbank for campers are on provincially owned Crown land. In 2014, the former BC Liberal government passed a regulation that says people can camp on Crown land for up to 14 days. As some councillors pointed out this restriction regularly abused by some campers who stay on the riverbank for weeks, some apparently camping from Victoria Day to Labour Day.

A detail from the DoK map of who owns the riverbank shows that many of the popular camping sports along the Kitimat River are on provincial Crown land (dark green) while the municipality controls the land away from the riverbank including the access roads (brown). (District of Kitimat)

During the debate it was pointed out that often those camp on the riverbank like to “claim” a camping/fishing spot and try to prevent others from using it. “I know of a couple of fistfights,” Murphy told Council.

As Councillor Rob Goffinet pointed out, whether or not the District could place gates on municipal land to stop access to provincial Crown land would require a legal opinion.

Murphy told Council that she had received emails, blaming Kitimat for “almost drowning” some of the campers. She said that her views may be unpopular among some residents, but added, “I don’t care if I’m unpopular, I want to keep people safe.”

Councillor Larry Walker, who pointed out that he likes of fish along the river, who supported Murphy’s motion told his colleagues to get their act together and “do something about the riverbank.” He later proposed that if council does nothing, perhaps Kitimat should hold a referendum on the future use of the river bank.

The majority on Council were more cautious, while acknowledging problems. They pointed out that the many of the campers both on the east bank and on the west bank at Radley Park patronize local businesses during the summer months.

While there was wide discussion on social media before the council meeting, only three people showed up to give their opinions, mostly concerned about permitting access to the river for people with mobility issues or small children.

There were many comments and questions about how other areas police provincial Crown Land, with some saying that some places restrict access to only a couple of days. However, no one either on Council or staff had any idea of what exactly other locations are doing, if anything.

There were no details of how the working group would operate and who would participate. During the debate it was pointed out that as well as the province, participants would have to include Rio Tinto, LNG Canada and DFO. As well, Council did not set a deadline for the working group to report back.

As Murphy pointed out back in 2014, Fisheries and Oceans refused to attend a Council meeting or make a public presentations on its views of the river bank situation. (DFO snubs District of Kitimat Council for a second time )  while offering to meet with staff “they will continue to meet at an operational level to provide information on DFO’s regulatory role.”  That, of course came during the Stephen Harper administration which severely restricted any public participation by the civil service on environmental issues. Whether the Justin Trudeau government has changed that policy remains to be seen.

The campsite road at Hirsch Creek park was washed out in the flood. (District of Kitimat)

Was the rain storm an anomoly?

During the debate, Mayor Phil Germuth, pointed to the sudden onslaught of rain during Sunday and Monday September 10 and 11 and called it “an anomaly” which means that Kitimat should not overreact to the storm.

Environment Canada chart of the spike in the Kitimat River levels, as presented to District Council. (Environment Canada)

However, as The New York Times pointed out after Hurricane Harvey hit Texas, scientists have been warning for years that

Climate science has repeatedly shown that global warming is increasing the odds of extreme precipitation and storm surge flooding. Refusing to acknowledge this impairs our ability to prepare for future extreme weather and endangers American lives and property.

And another opinion article in the Times during Hurricane Harvey noted:

Scientists can now even evaluate how much climate change has increased the odds of individual extreme events, including rainfall and flooding.

As the 2015 American Meteorological Society report quoted by The Times indicates, those  unpredictable and extreme events don’t just include floods but the widespread forest fires in Alaska in 2014 and we all know how bad the fire season has been in British Columbia this year.

Report on extreme weather events

As Noah Diffenbaugh  of Standford University pointed out in The Times

Being smart about managing exposure and vulnerability is critical to reducing risks. But doing so requires acknowledging that global warming is happening, that humans are the primary cause and that the odds of catastrophes like Hurricane Harvey are increasing.

Petronas “will not proceed” with Prince Rupert LNG project

Petronas Tuesday issued the following news release:

PETRONAS AND PARTNERS WILL NOT PROCEED WITH PACIFIC NORTHWEST LNG PROJECT

Malaysia’s energy company remains committed to developing its gas assets in Canada

KUALA LUMPUR, 26 July 2017 – PETRONAS and its partners have decided not to proceed with the Pacific NorthWest LNG project at Port Edward in British Columbia, Canada.

The decision was made after a careful and total review of the project amid changes in market conditions.

PETRONAS’ Executive Vice President & Chief Executive Officer Upstream, Anuar Taib said, “We are disappointed that the extremely challenging environment brought about by the prolonged depressed prices and shifts in the energy industry have led us to this decision.”

“We, along with our North Montney Joint Venture partners, remain committed to developing our significant natural gas assets in Canada and will continue to explore all options as part of our long-term investment strategy moving forward,” added Anuar.

PETRONAS’ commitment in Canada continues through Progress Energy Canada Ltd and its world-class inventory of natural gas resources where the subsidiary plays a key role in supporting PETRONAS’ growth strategy in North America.

PETRONAS and the project’s partners are thankful for the support received from everyone involved, especially the area First Nations, the District of Port Edward, the City of Prince Rupert and their communities for their invaluable involvement and efforts in the project.

 

LNG Canada looks at possible Final Investment Decision in 18 to 24 months

LNG Canada says the Kitimat liquified natural gas project “has been delayed and not cancelled” with a Final Investment Decision possible in the next 18 to 24 months, Director of External Relations Susannah Pierce  told a company sponsored community pizza party at Riverlodge on Tuesday October 18, 2016.

She paid tribute to the support for the project from Kitimat and the Haisla Nation, saying, “Thanks to you we were very close to have our shareholders take the Final Investment Decision in the New Year,” but she then added, “You also know there were some things we couldn’t control like the state of the marketplace.”

LNG Canada Director of External Relations Sussnnah Pierce updates Kitimat residents on the project at Riverlodge, Tuesday Oct. 18. 2016 (Robin Rowland/Northwest Coast Energy News)
LNG Canada Director of External Relations Susannah Pierce updates Kitimat residents on the project at Riverlodge, Tuesday Oct. 18. 2016 (Robin Rowland/Northwest Coast Energy News)

Pierce used the analogy of someone saving up to buy a car and believing that they have enough money in the bank and then the conditions change. “That is what happened to us,” she said. “You still want the car, but you just have to wait a little longer.”

Pierce said that the current program of site preparation will pause for the winter and holidays in mid-December.  After that “work will begin to wind down over the next few months and then we will preserve the site until we are ready to make the Final Investment Decision.” She said LNG Canada is studying ways to make site preservation cost effective.

“We are doing everything we can to keep our pencils sharp and keep the community informed so that when the project is approved we are ready,” she added.

She pointed out that LNG Canada has already built a fisheries habitat offset in preparation for  full development of the site.

LNG Canada and its partner shareholders are keeping a close eye on the developments of the natural gas market in Asia and Pierce said, “We do expect to be sending LNG to the Asian market in the next decade, so 2023 and beyond is what we’re talking about.”

She said that the Final Investment Decision when it comes will bring opportunities for Kitimat, the province and the whole country.

“Everyone in this room and everyone at LNG Canada is working to make this project real,” Pierce said.

“For those who are staying with us, we’re here, we’re not going anywhere and we’re going to be available to the community for an number of events. Let’s make it happen. We do have a shot at making it real but it may not happen as soon as you’d like it.”

Don’t expect a Final Investment Decision on LNG until (or if) Brexit is resolved

Analysis

Monday’s decision by LNG Canada to postpone the all-important Final Investment Decision for the Kitimat liguified natural gas project came as a momentary shock—but no real surprise. After the Brexit vote, you could see the hold button blinking from across the Atlantic.

Andy Calitz CEO of LNG Canada and a long time, experienced, executive with the lead partner, Royal Dutch Shell blamed the current market conditions for natural gas in both a news release and an investors’ conference call. However, the turmoil in the world economy brought about by Britain’s (largely unexpected) vote to leave the European Union made the postponement inevitable.

Immediately after the vote on June 23, when the now not so United Kingdom voted by 52 per cent to 48 per cent, to leave the European Union, financial analysts predicted that given the uncertainty, companies based in the United Kingdom would immediately begin to adjust their long term planning.

The stock market has stabilized and reached new highs, at least for now, but the British pound remains weak.

Most important, according to reports in the business press around the world, many long term projects by companies not only in the UK but everywhere are being re-examined, postponed or cancelled. All due to the long term uncertainty in world markets.

Even without Brexit, the situation with long term planning for the natural gas market is complicated, as LNG Canada’s External Affairs Director Susannah Pierce explained in this interview on CKNW ‘s Jon McComb show.  ( It is an informative interview. Autoplays on opening the page)

“ Postpone investment decisions”

Royal Dutch Shell is one of the world’s largest corporations. It is based in the United Kingdom although its corporate headquarters are in the Netherlands (also a member of the European Union).

From June 24 to July 11 was just enough time for the bean counters and forecasters in London, Vancouver, Calgary, Tokyo and Beijing to crunch the numbers and decide that the prudent move would be to put the LNG Canada project on hold.

Rio Tinto is also a dual national company, listed on both the London and Australian stock exchanges and with its headquarters in London. (More about Rio Tinto later.)

Although both Shell and Rio Tinto are giant transnationals with operations worldwide, the turmoil in the United Kingdom, in the corridors and cubicles of the home offices, is having a psychological and personal, as well as professional, impact, meaning more of the work in those towers of London will be focused on Brexit.

brexitkitimat

The decision doesn’t mean that the LNG Canada Final Investment Decision will be on hold forever. Of all the world’s energy companies, Shell is one of the oldest and it has a solid reputation for better long term planning than some of its competitors.

In the news release, Calitz noted

I can’t say enough about how valuable this support has been and how important it will be as we look at a range of options to move the project forward towards a positive FID by the Joint Venture participants.

The news release goes on to say

However, in the context of global industry challenges, including capital constraints, the LNG Canada Joint Venture participants have determined they need more time prior to taking a final investment decision. decision.

How much time? Well, as Theresa May became the Prime Minister of Great Britain, the New York Times noted, like other media, that investment decisions are on hold:

Ms. May does not plan to depart the union quickly because it could put Britain’s negotiators under pressure, and at a disadvantage…

And the longer Britain drifts, the greater the uncertainty for businesses that could postpone investment decisions until things are clearer, potentially pushing the nation into a recession.

As Don Pittis, business columnist for CBC.ca wrote in the immediate aftermath:

The extrication of Britain from Europe will likely be more in the character of the Greek financial collapse, a seemingly endless process where each event and each piece of news has the power to set off a new round of financial fears.
And like the Greek crisis, each piece of bad news will compound fears in markets that were nervous for other reasons.

So once (and when) Theresa May invokes Article 50 that opens a two year window for Britain to leave the European Union, starting negotiations for Brexit.   Then it gets complicated, if Scotland votes to leave the United Kingdom or if Northern Ireland also demands a dual referendum in both the Republic and the North on a united Ireland (as permitted under the Good Friday Peace Agreement).

Although May says she will continue to the UK`s next fixed date election, what if May calls a snap general election, with an uncertain outcome, perhaps another minority government, with seats split among several parties, including those who advocate remaining in the EU?

The price of oil is still low compared to a few years ago. That price is expected to remain low with all that the Saudis are pumping to retain market share, the Iranians want to recover from sanctions, and according to Pittis in another column, that means everyone else is pumping as well

The main thrust for Canadian producers is to build more pipelines so they can expand capacity and push ever more of their relatively expensive oil into the world supply chain. If that’s the strategy for high-cost producers, how could anyone think the world’s lower-cost producers wouldn’t be doing the same thing?

There is the glut of natural gas currently in Asian markets and no one knows what Brexit will mean.  Unless there’s a drastic change in the marketplace, energy project investment will remain on hold for years to come. (So forget any dreams of a refinery anywhere on the coast. )

Rio Tinto

Brexit is also going to be a problem for London based Rio Tinto—and for the current negotiations with the Unifor local in Kitimat. Rio Tinto’s bottom line is weak because the price of iron ore, its main source of income, has been dropping. After completing the $4.8 billion Kitimat Modernization Project, Rio Tinto is spending huge amounts of money on its Oyu Tolgoi copper and gold and other minerals mine in Mongolia, a project that many analysts believe could provide up to 60 per cent of Rio Tinto profits as commodity markets recover.

Add to that US presidential election. Donald Trump has threatened to halt imports of both steel and aluminum into the United States if he actually gets to sit in the White House.

On June 29, outgoing President Barack Obama also looked at aluminum at the recent “Three Amigos” summit in Ottawa, noting in the news conference.

Given the flood of steel and aluminum on the global markets, however, it points to the fact that free trade also has to be fair trade.

That means if Hilary Clinton becomes president, she will also be looking at the state of aluminum imports to the United States market.

World conditions are a warning for the Unifor negotiating team in Kitimat. One reason for last year’s prolonged municipal strike was that Unifor spent a good deal of time planning for negotiations with the District but failed to adjust its contract demands when the price of oil unexpectedly collapsed, which meant the District had less money and a lot less flexibility.

In its negotiations with Rio Tinto, Unifor cannot make the same mistake again. There were a handful of unexpected layoffs down at Smeltersite on June 30; there could be more layoffs in the future. Mandatory overtime is a major sticking point—but that overtime demand is coming from the bean counters in Montreal and London, calculating that the overtime costs are, in the long term, less expensive than a lot of new hires.
Media reports show that Rio Tinto is in tough negotiations with its employees around the world. With LNG on hold, disgruntled employees can’t just turn off Haisla Boulevard to the old Methanex site before reaching Rio Tinto’s property line. That means Unifor should be tough but very realistic in its talks with Rio Tinto, knowing that the powers that be that hold the strings in London are more worried about what Brexit will do to the company bottom line than any temporary shutdown of the smelter by a strike.

What does this mean for Kitimat?

A We Want LNG Canada lawn sign in Kitimat. (Robin Rowland/Northwest Coast Energy News)
A We Want LNG Canada lawn sign in Kitimat. (Robin Rowland/Northwest Coast Energy News)

So the boom and bust cycle once again moves to bust.

Ellis Ross, chief councillor of the Haisla First Nation, speaking to CBC Radio said Ross said

the Haisla nation has been working to get its people jobs in the construction of the facility and related infrastructure, as well as full-time jobs once the plant opens…This was our first chance as Haisla to be a part of the economy, to be part of the wealth distribution in our area. To witness the wealth generation in our territory for the last six years but to not be a part of it, and now to continue to not be a part of it, is really distressing to us, because we had built up our entire future around this.

Mayor Phil Germuth in the same interview said

There’s no doubt that there’s going to be a little bit of hurt for a while, but we still fully believe that Kitimat is by far the absolute best location anywhere on the West Coast [for] a major LNG export facility… We are absolutely confident that it will come.

There’s time in this bust for everyone in town to recover from the hangover of the past few years of the fight over Northern Gateway and the heady hopes of the LNG rush. Demand for natural gas is not going to go away, especially as climate change raises the pressure to eliminate coal, so it is likely that LNG Canada will be revived.

It’s time to seriously consider how to diversify the Valley’s economy, making it less dependent on the commodity cycle. It’s time to stop chasing industrial pipe dreams that promise a few jobs that never appear.

Like it or not, the valley is tied to globalization and decisions made half way around the world impact the Kitimat Valley.

Who knows what will happen in 2020 or 2025 when the next equivalent of a Brexit shocks the world economy?

Suppose, as some here would wish, that all the opposition to tankers and pipelines suddenly disappeared overnight. Does that mean that the projects would then go ahead?

The corporate planners would decide based on their projections for the world economy and the viability of the project for their profit picture. Enbridge was never really able to secure customers for its bitumen. Chevron had no customers for Kitimat LNG. LNG Canada is a partnership, and the partner customers in Asia decided that at this time, the investment is too risky, even if LNG Canada’s longer term prospects are good.

Promoting tourism should now be the priority for Council, for Economic Development, for the Haisla Nation Council, for the local business.

Beyond tourism, it’s time for some innovative thinking to come up with other ideas that would free Kitimat from the commodity cycle. At the moment there are no ideas on the horizon, but unless everyone starts looking for new ideas, practical ideas,  the commodity cycle will rule.

LNG Canada Kitimat project receives BC facility permit

LNG Canada logoThe Shell-led LNG Canada project in Kitimat has received a facility permit from the B.C. Oil and Gas Commission (OGC), the company said Tuesday.

A news release from LNG Canada says the permit is  one of the key permits required for the construction and operation of the proposed LNG Canada project.

LNG Canada is the first LNG project in British Columbia to receive this permit, which focuses on public and environmental safety, and specifies the requirements the project must comply with when designing, constructing and operating the proposed LNG export facility in Kitimat.

The news release warns “that while today’s announcement is an important step forward for LNG Canada, the project must ensure it is economically viable and meets several other significant milestones including finalizing engineering and cost estimates, supply of labour, and achieving other critical regulatory approvals before making a final investment decision.”

That means that Shell and its partners are still keeping a close eye on factors such as the continuing collapse of the price of oil on world markets,  the volatile natural gas market in Asia and the slowdown in the economy in China.

The news release goes on to  say:

“We have made excellent progress in the past two years, achieving a number of critical milestones,” said Andy Calitz, CEO of LNG Canada. “Receiving our LNG Facility Permit could not have been achieved without the important input we received from the Haisla Nation and the local community of Kitimat. We continue to progress our project and appreciate the ongoing support from First Nations, the local community and other stakeholders.”

“The OGC identified several conditions that must be met by LNG Canada to design, construct and operate the project,” says Calitz. “We have reviewed these conditions and are confident that we will meet these conditions as they are aligned with LNG Canada’s core safety values and commitment to protect the environment, the community and our workers.”

LNG Canada continues to develop a number of important plans to address public safety and minimize the effects on the environment and local community. For example, LNG Canada is working closely with local emergency response organizations, as well as leading safety experts, in the development of an emergency response framework for the proposed project.

“Safety is our first priority. Safety as it relates to people and the environment is embedded into the design and planning of our proposed facility, and will carry into the construction and operation phases of our project should the project go ahead,” said Andy Calitz.

Social and economic benefits from the LNG Canada project include local employment and procurement opportunities, federal, provincial and municipal government revenue and community investments. Since 2012, LNG Canada has distributed more than $1 million to community initiatives, such as emergency services, trades scholarships and community services. LNG Canada has also contributed more than $1.5 million in programs to build awareness and help provide training for trades careers in all industries, and particularly the emerging LNG industry.

LNG Canada is a joint venture company comprised of Shell Canada Energy (50%), an affiliate of Royal Dutch Shell plc, and affiliates of PetroChina (20%), Korea Gas Corporation (15%) and Mitsubishi Corporation (15%). The joint venture is proposing to build an LNG export facility in Kitimat that initially consists of two LNG processing units referred to as “trains,” each with the capacity to produce 6.5 million tonnes per annum of LNG annually, with an option to expand the project in the future to four trains.

 

BC Environment Appeal Board upholds Rio Tinto sulphur dioxide emissions in Kitimat airshed

The British Columbia Environmental Appeal Board has upheld Rio Tinto’s plans for sulphur dioxide emissions in the Kitimat airshed and dismissed the appeal from residents Emily Toews and Elisabeth Stannus.

The 113 page decision was released by the EAB late on December 23. It contains a series of recommendations for further studies and monitoring of the health of Kitimat residents. In effect, the EAB is asking the province (which is all it can do) to spend money and create a new bureaucracy at a time when Kitimat’s medical community is already short staffed and under stress.

By December 31, 2016…. engage with Ministry executive to secure their support for, and action to encourage, a provincially-led Kitimat region health study, based on the development of a feasibility assessment for such a study.

On December 24, Gaby Poirier, General manager – BC Operations
Rio Tinto, Aluminium Products Group released a statement saying:

Based on the evidence and submissions made by each of the parties, the EAB confirmed our permit amendment.
Although it is welcome news for Rio Tinto that the MOE Director’s decision was upheld, and the rigor and cautious approach of the science were confirmed by the EAB, we also recognize that there is more work to do to address community concerns regarding air quality in the Kitimat Valley.
In providing their confirmation, the EAB included a series of recommendations. Over the coming months, we will be working to fully assess them and we will continue to involve the local community including residents, stakeholders and our employees as we do so, noting that some of the recommendations have already started to be implemented.
I would like to take this opportunity to thank the residents of Kitimat, our valued stakeholders and our employees for their support during this process. At Rio Tinto, we are committed to protecting the health and well-being of our employees, the community, and the environment as we modernize our BC Operations.

EAB decision 2013ema007g_010g

Rio Tinto BC Operations statement 20151224 – SO2 appeal decision