Controlling land and pipelines key to Haisla LNG future NEB filing says

The Haisla Nation’s plan for entering the LNG business is based on the idea that “it is anticipated that the Haisla Projects will be developed using a business model based on controlling two components of the value chain: land and pipeline capacity” according to its application to the National Energy Board for a natural gas export licence.

Cedar LNG Development Ltd., owned by the Haisla Nation, filed three requests for export licences with the NEB on August 28, under the names Cedar 1 LNG, Cedar 2 LNG and Cedar 3 LNG.  Another name used in the application is the “Haisla Projects.”

The 25-year export licence request is standard in the LNG business; it allows export of natural gas in excess of projected North American requirements. Thus like the NEB hearings for the Kitimat LNG and LNG Canada projects it is not what is called a “facility” licence which is what Enbridge Northern Gateway requested.

The project anticipates six “jetties” that would load LNG into either barges or ships at three points along Douglas Channel, one where the present and financially troubled BC LNG/Douglas Channel Partners project would be.

A second would be beside the BC LNG project, which may refer to the Triton project proposed by  Pacific Northern Gas parent company Altagas.

Both are on land now owned by the Haisla Nation in “fee simple” land ownership under Canadian law.

Map of Haisla LNG sites
Map from the Haisla application to the NEB showing that the Haisla Projects Region will allow for a total of six LNG jetty sites. One of these, on DL99, is currently ear-marked to be used for a project involving a consortium (BCLNG) One will be situated on the DL309 Haisla fee simple land and the other four jetties are to be  situated on the Haisla leased lands that surround the Chevron-led LNG development at Bish Cove. The map also shows that the Haisla own land at Minette Bay.

The other four would be on land surrounding the current Chevron-led Kitimat LNG project along Douglas Channel and in the mountains overlooking Bish Cove which the Haisla have leased.

Ellis Ross
Haisla Nation Chief Counsellor Ellis Ross at Bish Cove, June 19, 2013. (Robin Rowland/Northwest Coast Energy News)

The move last week and the revelation of the Haisla’s plans for the land are a cumulation of Haisla Nation Chief Counsellor Ellis Ross’s idea of restoring more of the First Nation’s traditional territory by buying or leasing the land using standard Canadian land law and at the same time getting around some of the more restrictive provisions of the Indian Act that apply to reserve land.

Just how the Haisla will go into the pipeline business is not as clear as the First Nation’s acquisition of the land. The application says:

The pipeline capacity required to transport sourced LNG to the Haisla Projects will include a mix of new and existing pipeline and infrastructure. The Haisla are in the advanced stages of negotiating and drafting definitive agreements with the major gas producers and pipeline transmission companies located in the vicinity with respect to securing pipeline capacity. It is expected that the Haisla Projects will rely on the Haisla’s business partners or customers to source gas from their own reserves and the market.

With the Haisla basing their business strategy on land and pipelines, the First Nation’s strategy is looking for  flexibility in what is a volatile and uncertain market for LNG.

The application says the Haisla “are currently in advanced stage discussions and negotiations with a number of investors, gas producers, LNG purchasers, pipeline transmission companies, technology providers and shippers. As such, the particular business models have yet to be finalized. However, it is anticipated that between the various Haisla Projects, multiple export arrangements may be utilized.”

As part of the idea of flexibility, the actual LNG infrastructure will be constructed and operated with potential partners. That is why there are three separate applications so that each “application will represent a separate project with independent commercial dealings with investors, gas producers, LNG purchasers, pipeline transmission companies, technology providers and shippers.”

The Haisla say that they are “working with a number of entities to develop business structures and partnerships to provide transaction flexibility, adequate financing, modern technology, local knowledge, and marketing expertise specific to Asian targets. The separate projects will accommodate expected production and demand and will also allow for a number of midlevel organizations to be involved with the various projects as well as traditional major gas producers and LNG purchasers.”

The Haisla are working with the Norwegian Golar LNG which had been involved in the stalled BC LNG project, using a Golar LNG’s vessels and technology, using a new design that is now being built in Singapore by Keppel Shipyard.

Golar LNG uses PRICO LNG  process technology developed by Black & Veatch,  (Wikipedia entry) “which is reliable, flexible and offers simplified operation and reduced equipment count.”

The filing says the project will “be developed using either barge-based or converted Moss-style FLNG vessels. The terminals will consist of vessel-based liquefaction and processing facilities, vessel-based storage tanks, and facilities to support ship berthing and cargo loading”

The jetties to be used for the Haisla Projects may be either individual FLNG vessels or “double stacked”, meaning that the FLNG vessels are moored side-by-side at a single jetty. The Haisla have conducted various jetty design work and site /evaluation studies with Moffat and Nichol.

The Haisla Projects anticipate that the construction will be in 2017 to 2020, “subject to receiving all necessary permits and approvals” and is expected to continue for a term of up to twenty five years. There is one warning, “The timelines of the Haisla Projects will also depend on the contracts and relationships between the Applicant and its partners.”

The filing goes on to say:

Haisla Nation Council and its Economic Development Committee are committed to furthering economic development for the Haisla. The Haisla’s business philosophy is to advance commercially successful initiatives and to promote environmentally responsible and sustainable development, while minimizing impacts on land and water resources, partnering with First Nations and non-First Nations persons, working with joint venture business partners, and promoting and facilitating long-term development opportunities.

The Haisla Applications will allow the Haisla to be directly involved as participants in Canada’s LNG industry, rather than having only royalty or indirect interests. The Kitimat LNG and LNG Canada projects, and the associated Pacific Trails Pipeline and Coastal Gas Link Pipeline, have increased economic opportunities in the region and the Haisla are very supportive of these projects locating within the traditional territory of the Haisla. The support of the Haisla for these two projects reflects a critical evolution of the Haisla’s economic and social objectives.

You can see the filing on the NEB projects page at http://www.neb-one.gc.ca/clf-nsi/rthnb/pplctnsbfrthnb/lngxprtlcncpplctns/lngxprtlcncpplctns-eng.html

Map from the Haisla Nation application to the NEB showing the proposed LNG developments in relation  to Douglas Channel.
Map from the Haisla Nation application to the NEB showing the proposed LNG developments in relation to Douglas Channel.
Bitumen map
Map from the Enbridge filing with the Joint Review Panel showing the same area with the proposed Northern Gateway bitumen terminal.

 

 

Second floating LNG terminal eyed for Kitimat at Douglas Channel log sort

PNG Pipeline Looping Project map (PNG)
PNG Pipeline Looping Project map (PNG)

A second floating liquified natural gas terminal may be planned for Kitimat, Northwest Coast Energy News has learned.

According to multiple sources in Kitimat, Altagas, the parent company of Pacific Northern Gas plans the terminal at the old log sort site on Douglas Channel, where the barge carrying the liquifaction equipment would likely be moored next door to the already planned BC LNG/Douglas Channel Partners LNG project which would be served by gas delivered by the PNG pipeline system.

Pacific Northern Gas has filed an application with the BC Environmental Assessment Office to construct and operate an approximately 525 kilometre, 610 millimetre (24 inch) diameter natural gas pipeline from the natural gas hub at Summit Lake, near Prince George, to Kitimat that would loop or twin the existing PNG existing natural gas pipeline.

The application to the BCEAO says: “The proposed Project would supply natural gas to proposed liquefied natural gas (LNG) export facilities as well as the Proponent’s existing customers. The proposed Project would include the replacement of four existing compressor stations and would have an initial capacity of 600 million standard cubic feet per day.”

PNG Open House
PNG Pipeline Looping Project Open House at Tamitik. Nov. 26, 2013. (Robin Rowland/Northwest Coast Energy News)

On Tuesday, November 26, Pacific Northern Gas held a sparsely attended open house at Tamitik Arena as part of the BCEAO public comment procedure.

A 38 day public comment period on the application information requirements started on November 25 and will end on January 2, 2014.

At the open house,  PNG officials explained that “looping” means that there would be a second or twin pipeline that would mostly be on a parallel route to the existing pipeline. Since both pipelines would begin at the Summit Lake terminal and end at the Kitimat terminal that is where the term “looping” comes in.

The PNG officials said that the pipeline was initially designed to service the first floating LNG terminal at the old log sort site on Douglas Channel south of Kitimat, but north of the KM LNG site at Bish Cove.

It would be operated by  BC LNG Energy Cooperative, through Douglas Channel Energy Partnership, a partnership with the Haisla Nation and LNG Partners, the energy investors mainly from Texas,

Unlike the bigger project Kitimat LNG or KM LNG, a partnership between Chevron and Apache (and according to reports possibly Sinopec) or the Shell-led partnership LNG Canada, the BC LNG project would allow smaller companies to provide LNG to Asian customers.

At the open house, the PNG officials said the two pipelines could also service “another Kitimat floating LNG project” but declined to give details for confidentiality reasons. The same officials also said the proponent of that project was also looking at Prince Rupert as a possible site for the second floating terminal.

Kitimat sources have confirmed that AltaGas has told them that the company is also considering Prince Rupert as a site for a floating LNG terminal.

However, the current documentation and maps filed with the BCEAO show the PNG looping pipeline terminating at Kitimat, not Prince Rupert.

PNG pipeline map
Detail of the PNG Pipeline Looping proposal. The existing pipeline is shown at the dashed line, the new pipeline is shown in purple. (PNG)

According to the maps filed with the BCEAO and made available at the open house, the new pipeline would not be twinned completely along the existing route across the mountains west of Smithers to Terrace, but would head north at Telkwa parallel to Highway 16 before making its own way through the mountains, crossing the existing pipeline at the Zymoetz River east of Terrace and then taking a westerly route toward Lakelese Lake before joining the existing pipeline corridor along Highway 37.
AltaGas took over Pacific Northern Gas in the fall of 2011.

The Texas-based arm of Douglas Channel Energy partnership, LNG Partners,  is currently in financial difficulty. Reports say that the Texas investors in the company are having difficulty repaying a $22.5 million loan from China’s ENN Group.

The problems currently faced by the Texas group have no affect, at this point, on the Haisla Nation investment in the BC LNG Energy Cooperative. There is already speculation in Kitimat that if the LNG Partners get into further financial difficulty, AltaGas may step in and take over. The would raise the question whether or not there would still be two floating LNG terminals on Douglas Channel, or just the one, as originally planned, but under new ownership.

In it’s project proposal PNG says

The Project will generate approximately 1800-2400 direct person years of employment during construction. Additionally, tax benefits will be generated for Kitimat and the regional districts crossed by the pipeline. PNG anticipates the project will also result in a significant reduction in natural gas transportation rates for its existing customers.

Natural gas transportation costs are a major issue in the northwest, for those costs appear to keep going up while the price of natural gas in North America is generally going down. Natural gas transportation costs in Kitimat spiked after the closure of the Methanex plant and have continued to be quite high, which is just one of the increasing burdens for residents of Kitimat on fixed or low incomes, who are not benefiting as others from the current boom town economy.

Another problem facing PNG is that the new pipeline will cross the traditional territory of the Wet’suwet’en First Nation, where one house, the Unist’ot’en oppose both the Northern Gateway and Pacific Trails Pipeline and have set up a blockade camp on access roads.

The PNG filing with the BCEAO promises consultation with both the Wet’suwet’en Council, and the Office of the Wet’suwet’en, which represents the hereditary chiefs and matriarchs, as well as other First Nations along the proposed route.

 

PNG Open houses for the project are scheduled for:

Vanderhoof
Friendship Centre Hall
Thursday, November 28, 2013

Terrace
Best Western Inn
Monday, December 2, 2013

Smithers
Hudson Bay Lodge
Tuesday, December 3, 2013

Burns Lake
Chamber of Commerce
Wednesday, December 4, 2013

Summit Lake
Community Hall
Thursday, December 5, 2013

 

Golar confirms deal with Douglas Channel LNG

Golar logoBermuda-based Golar LNG has confirmed that it has signed a finalized contract for both feed gas supply and LNG purchase and off-take for train #1 of the Douglas Channel LNG Project, the smallest of the three (so far) proposed LNG projects in Kitimat.

Golar says in a news release:

The contract award for LNG purchase and off-take was made jointly to Golar and LNG Partners, LLC (Houston, TX) (“LNG Partners”) and the contract award for feed gas supply was made to LNG Partners.

The DC Project is being jointly developed by the Haisla Nation and Douglas Channel Gas Services Ltd and is expected to produce approximately 700,000 metric tonnes per annum of liquefied natural gas from the initial planned production facility beginning in the second quarter of 2015.

Golar’s participation in the project and its commitment to the LNG off-take remains subject to the Company reaching agreement with the current proponents of the DC Project for financing of the facilities, and receipt of all permits required for the project to proceed on a firm basis.

 

Golar LNG describes itself on its website as “one of the world’s largest independent owners and operators of LNG carriers.”

At the meeting of District of Kitimat Council on Jan. 21, 2013, Mayor Joanne Mongahan said that the BC LNG – Golar deal would mean enough business to fill about one LNG tanker each month. That volume of gas can be transported over the existing Pacific Northern Gas pipeline, Monaghan said.

Related Douglas Channel Energy signs preliminary deal for two LNG tankers