LNG Canada donates safety school bus for Kitimat high school sports teams

At the ceremonial puck drop at the charity hockey game between the  Vancouver Canucks Alumni and the Kitimat Winterhawks Coaches, Saturday, April 28, 2018, Susannah Pierce  Director External Relations for LNG Canada announced the company will donate a school bus equipped with three point seat belts for  Mt.  Elizabeth Secondary School’s sports teams.

At the ceremony, Pierce noted that the donation was in memory of the Humboldt  Broncos hockey team where team members, coaches and support staff died in a horrific bus crash.

Chester Ronning of the Vancouver Canucks Alumni shakes hands with Kitimat mayor Phil Germuth as Haisla Nation Chief Counsellor Crystal Smith and Susannah Pierce of LNG Canada watch after the ceremonial puck drop. (Robin Rowland)

In a news release, LNG Canada said:

At an event in the Kitimat community on Saturday, April 28th, LNG Canada announced it has purchased a new 2018 Chevrolet Micro Bird G5 School Bus for Kitimat’s Mount Elizabeth Secondary School Sports Team’s use. The new bus can carry up to 24 student passengers plus driver. Importantly, it will be equipped with three-point  seatbelts, increasing transportation safety significantly.

“The importance of seatbelts and road safety was brought home again by the deadly collision on April 6th in Saskatchewan. At LNG Canada, we wear seat belts because we know they save lives and our kids deserve the same level of protection,” says Susannah Pierce, Director External Relations for LNG Canada. “We hope to make a difference in the lives of the people that work and live around LNG Canada and investing in safety will always be our first priority.”

Mount Elizabeth Secondary Students will use the new bus to take full advantage of everything offered at school, including sporting events, collaboration with other schools for peer-to-peer activities, and field trips to explore and enjoy the Kitimat region.

“This donation could not have come at a better time. Our current bus was about to be retired and the prohibitive cost of a new bus was a major concern for us,” says Geraldine Lawlor, Principal Mount Elizabeth Middle Secondary School.  “One of the best things about our new bus will be the three-point seatbelts to help ensure students are transported safely and efficiently to venues outside the school campus.”

A picture of the 2018 Chevrolet Micro Bird G5 School Bus donated to Mount Elizabeth Secondary School (LNG Canada)

The new school bus will be delivered in early September, to coincide with the start of the school year.

Principal Lawlor assures it will be put to good use. “We assure you that we will make good use of this bus and are very appreciative of LNG Canada’s support.”

A drawing of the seatbelts on the new school bus (LNG Canada)

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 postpones Final Investment Decision

LNG Canada has postponed the Final Investment Decision on the Kitimat project citing the “impact of global industry challenges.”  The latest estimates said that the project would cost $40 billion.

The news release says that despite strong community support and regulatory approval,  what LNG Canada called “the context of global industry challenges, including capital constraints” led to the decision. In other words, the continued low price of oil is constraining projects across the energy industry.

LNG Canada’s Joint Venture Participants Delay Timing of Final
Investment Decision

Impact of global industry challenges, despite strong project fundamentals

Vancouver, British Columbia — Today, LNG Canada announces that its joint venture participants –  Shell, PetroChina, Mitsubishi Corporation and Kogas – have decided to delay a final investment decision on LNG Canada that was planned for end 2016.

LNG Canada remains a promising opportunity – it has strong stakeholder and First Nations’ support, has achieved critical regulatory approvals, has important commercial and engineering contracts in place to design and build the project, and through its pipeline partner Coastal Gas Link, has received necessary environmental approvals and First Nations support along the pipeline right-of-way.

“Our project has benefitted from the overwhelming support of the BC Government, First Nations – in particular the Haisla, and the Kitimat community. We could not have advanced the project thus far without it. 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,” said Andy Calitz, CEO LNG Canada.

Through their efforts to build a strong LNG sector for Canada, and a critical, cleaner energy alternative for the world, the governments of British Columbia and Canada have developed sound fiscal and regulatory frameworks for success.

LNG-Canada-Media-Release0716However, 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. At this time, we cannot confirm when this decision will be made.

In the coming weeks, LNG Canada will continue key site preparation activities and work with its joint venture participants, partners, stakeholders and First Nations to define a revised path forward to FID.

LNG Canada Joint Venture Participants are Shell (50%), PetroChina (20%), Mitsubishi Corporation (15%)
and Kogas (15%).

Haisla Nation chief councillor Ellis Ross issued a statement that said:

Haisla Nation Council very firmly believes in the future of liquefied natural gas for the Kitimat Valley and Haisla territory. It is an industry which has the capacity to grow jobs, provide new training opportunities and provide a sustained quality of life for Haisla members. It’s worth remembering that LNG Canada is a relatively new project to the area, and decisions on major projects such as these can take a long time to reach.

Today’s decision was the second time the FID was postponed. Andy Caloz LNG Canada’s CEO was quoted by Bloomberg News as saying that the project hasn’t been canceled. It has all the necessary approvals from regulators in Canada and doesn’t require any more work in the country.

“The whole global LNG industry is in turmoil,” Calitz told a conference call, Bloomberg reported, adding that Western Canada still has advantages including its proximity to customers in Asia. “I’m confident that the Japanese market remains available to LNG Canada.”

BC launching major study of Kitimat River, Kitimat Arm water quality

The Environmental Protection Division of BC’s Ministry of Environment is launching a major study of the water quality in the Kitimat valley, first on the Kitimat River and some of its tributaries and later on the Kitimat Arm of Douglas Channel.

There has been no regular sampling by the province in Kitimat since 1995 (while other organizations such as the District of Kitimat have been sampling).

Jessica Penno, from the regional operations branch in Smithers, held a meeting for stakeholders at Riverlodge on Monday night. Among those attending the meeting were representatives of the District of Kitimat, the Haisla Nation Council, LNG Canada, Kitimat LNG, Rio Tinto BC Operations, Douglas Channel Watch, Kitimat Valley Naturalists and the Steelhead Society.

As the project ramps up during the spring and summer, the ministry will be looking for volunteers to take water samples to assist the study. The volunteers will be trained to take the samples and monitored to insure “sample integrity.” Penno also asked the District, the Haisla and the industries in the valley to collect extra samples for the provincial study and to  consider sharing historical data for the study.

With the growing possibility of new industrial development in the Kitimat valley, monitoring water quality is a “high priority” for the province, Penno told the meeting. However, so far, there is no money targeted specifically for the project, she said.

Fishing and camping on the Kitimat River
Camping and fishing on the Kitimat River. (Robin Rowland/Northwest Coast Energy News)

The purpose of the study is to make sure water in the Kitimat valley meet the provinces water quality objectives, which have the aim of watching for degradation of water quality, upgrade existing water quality or protect for designated uses such as drinking water, wildlife use, recreational use and industrial water supplies as well as protecting the most sensitive areas. It also provides a baseline for current and future environmental assessment. (In most cases, testing water quality for drinking water is the responsibility of the municipalities, Penno said.  The province may warn a municipality if it detects potential problems, for example if a landslide increases metal content in a stream).

Under the BC Environment system, “water quality guidelines” are generic, while “water quality objectives” are site specific.

One of the aims is to compile all the studies done of the Kitimat River estuary by the various environmental impact studies done by industrial proponents.

The ministry would then create a monitoring program that could be effectively shared with all stakeholders.

At one point one member of the audience said he was “somewhat mystified” at the role of Fisheries and Oceans in any monitoring, noting that “when you phone them, nobody answers.”

“You mean, you too?” one of the BC officials quipped as the room laughed.

Water quality objectives

The last time water quality objectives were identified for the Kitimat River and arm were in the late 1980s, Penno told the meeting. The objectives were developed by the British Columbia government because of potential conflict between fisheries and industry at that time. The objectives were developed for the last ten kilometres of the Kitimat River and the immediate area around the estuary and the Kitimat Arm. “The Kitimat is one of the most heavily sport fished rivers in Canada,” she said.

However, the work at that time was only provisional and there was not enough water quality monitoring to create objectives that could be approved by the assistant deputy minister.

There has been no monitoring of the Kitimat River by BC Environment since 1995. “We’ve had a lot of changes in the Kitimat region, with the closure of Methanex and Eurocan, the modernization of Rio Tinto and potential LNG facilities.”

The main designated uses for the Kitimat River at that time were aquatic life, wildlife with secondary use for fishing and recreation.

She said she wants the stakeholders to identify areas that should be monitored at first on the river and the tributaries. Later in the summer, Environment BC will ask for suggestions for the estuaries of the Upper Kitimat Arm.

Participants expressed concern that the water supply to Kitamaat Village and the Kitimat LNG site at Bish Cove as well as Hirsch Creek and other tributaries should be included in the study. Penno replied that the purpose of the meeting was to identify “intimate local knowledge” to help the study proceed.

After a decade so of cuts, the government has “only so much capacity,” Penno said, which is why the study needs the help of both Kitimat residents and industry to both design the study and to do some of the sampling.

The original sampling station in the 1980s was at the Haisla Boulevard Bridge in Kitimat. A new sampling station has been added at the “orange” Kitimat River bridge on Highway 37. There is also regular sampling and monitoring at Hirsch Creek. The aim is to add new sampling points at both upstream and downstream from discharge points on the river.

The people at the meeting emphasized the program should take into consideration the Kitimat River and all its tributaries—if budget permits.

Spring freshette

Last year, the team collected five samples in thirty days in during four weeks in May and the first week in June, “catching the rising river quite perfectly” at previously established locations, at the Haisla Bridge and upstream and downstream from the old Eurocan site as well as the new “orange bridge” on the Kitimat River.

The plan calls for five samples in thirty days during the spring freshette and the fall rain and monthly sampling in between.

The stakeholders in the meeting told the enviroment staff that the Kitimat Valley has two spring freshettes, the first in March during the valley melt and later in May during the high mountain melt.

The plan calls for continued discussions with the industry stakeholders, Kitimat residents and the Haisla Nation.

The staff also wants the industrial stakeholders to provide data to the province, some of it going back to the founding of Kitimat if a way can be found to make sure all the data is compatible. One of the industry representatives pointed out, however, that sometimes data is the hands of contractors and the hiring company may not have full control over that data.

There will be another public meeting in the summer, once plans for sampling in the Kitimat Arm are ready.

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.