KM LNG | Northwest Coast Energy News

TransCanada to build Shell’s “Coastal Gaslink” natural gas pipeline to Kitimat

Shell Canada and its Asian partners have chosen TransCanada Corporation to design, build, own and operate the proposed natural gas pipline to Kitimat, now called the Coastal GasLink project.

The estimated $4-billion pipeline will transport natural gas from the Montney gas-producing region near Dawson Creek, in northeastern British Columbia to the proposed natural gas export facility at Kitimat, BC.

The LNG Canada project is a joint venture led by Shell, with partners Korea Gas Corporation, Mitsubishi Corporation and PetroChina Company Limited.

A news release from TransCanada says “Shell and TransCanada are working toward the execution of definitive agreements on the Coastal GasLink project.”

In the release, Russ Girling, TransCanada president and CEO says:

Our team has the expertise to design, build and safely operate pipeline systems. We look forward to having open and meaningful discussions with Aboriginal communities and key stakeholder groups, including local residents, elected officials and the Government of British Columbia, where we will listen to feedback, build on the positive and seek to address any potential concerns. Coastal GasLink will add value to British Columbians, particularly Aboriginals and communities along the conceptual route, by creating real jobs, making direct investments in communities during construction and providing economic value for years to come.

TransCanada says the company has approximately 24,000 kilometres of pipelines in operation in western Canada including 240 kilometres of pipelines in service in northeast BC. Another 125 kilometres of proposed additions either already having received regulatory approval or currently undergoing regulatory review. These pipelines form an integral and growing part of TransCanada’s NOVA Gas Transmission Ltd. (NGTL) System, which brings natural gas from Alberta to British Columbia to a hub near Vanderhoof.

Girling said in the release:

TransCanada is a leading energy infrastructure company in North America, with a 60-year history of safe, efficient and reliable operation of our assets and a respect for the communities and environments where we operate. We appreciate the confidence that Shell and its partners have placed in us to build, own and operate this natural gas pipeline in British Columbia. We will work collaboratively with them, Aboriginals and other stakeholders as we launch into the initial phases of consultation and regulatory review.

Project parameters

In it’s release TransCanada describes the potential Coastal GasLink pipeline project this way:

Receipt point: Near Dawson Creek, BC
Delivery point: Proposed LNG Canada facility near Kitimat, BC
Product: Natural gas from BC’s abundant Montney, Horn River and Cordova basins and elsewhere from the Western Canada Sedimentary Basin
Length of route: Approximately 700 kilometres of large diameter pipe
Initial pipeline capacity: In excess of 1.7 billion cubic feet of gas per day
Anticipated jobs: Estimated 2000-2500 direct construction jobs over a 2- during construction 3 year construction period
Estimated cost: Detailed cost information will be developed following completion of project scoping and planning. The current estimate is approximately $4 billion
Regulatory process: Applications for required regulatory approvals are expected to be made through applicable BC provincial and Canadian federal processes
Estimated in-service date: Toward the end of the decade, subject to regulatory and corporate approvals

Pipeline route

TransCanada says: “The final pipeline route will take into consideration Aboriginal and stakeholder input, the environment, archaeological and cultural values, land use compatibility, safety, constructability and economics.:

The Pacific Trails Pipeline would go cross country to Kitimat. (PTP)

At this point there are two possible routes for the pipeline west of Vanderhoof. One route would be to follow the existing Pacific Northern Gas route that roughly parallels Highway 16. The second possibility is a cross-country route, which may lead to controversy. The Pacific Trails Pipeline, which would feed the KM LNG partners (Apache, Encana and EOG) goes across the mountains from Smithers. While the PTP project has the approval of most First Nations in the regions, Apache and PTP are still in negotiations with some Wet’suwet’en houses over portions where the pipeline would cross the traditional territory of the houses. The much more controversial Enbridge Northern Gateway pipeline follows a similar cross-country route and faces much stiffer opposition than the Pacific Trails Pipeline, due to the content of that pipeline, mainly diluted bitumen and because, critics say, Pacific Trails managed to secure the most geologically stable cross country route earlier in this decade when the pipeline was originally planned to import, not export, natural gas.

TransCanada says the Coast Gaslink pipeline will also have an interconnection with the existing Nova Gas (NGTL System and the liquid NIT) trading hub operated by TransCanada. The company says:

A proposed contractual extension of TransCanada’s NGTL System using capacity on the Coastal GasLink pipeline, to a point near the community of Vanderhoof, BC, will allow NGTL to offer delivery service to its shippers interested in gas transmission service to interconnecting natural gas pipelines serving the West Coast. NGTL expects to elicit interest in and commitments for such service through an open season process in late 2012.

That means that the Asian customers will not be just dependent on natural gas from northeast British Columbia. Instead the “molecules” of natural gas from Alberta will join the stream heading to Kitimat. “Open season” in the energy industry is an auction where potential customers or transporters bid for use the pipeline.

In the release Girling says:

The potential Coastal GasLink pipeline project will allow British Columbians, and all Canadians, to benefit from the responsible development of valuable natural gas resources and will provide access to new markets for that gas. The project will also create substantial employment opportunities for local, skilled labourers and businesses as part of our construction team,” concluded Girling. “We know the value and benefits that strong relationships in British Columbia can bring to this project and we look forward to deepening those ties as our extensive pipeline network grows to meet market and customer needs.

TransCanada Corp. is no stranger to controversy, the company is the main proponent of the Keystone XL pipeline from Alberta to the US Gulf Coast. Portions of that pipeline were put on hold by President Barack Obama pending further review and Keystone has become a hot issue in the current American presidential election.

Apache expects first LNG cargo from Kitimat in 2016

Map of Apache Corp LNG projects in the Pacific Region — A map of Apache Corp's liquified natural gas projects, including Ktimat, as presented to the UBS conference on May 22, 2012 (Apache)

Apache said Tuesday, May 22, 2012, that it expects the first LNG cargo leave the Kitimat terminal for Asia sometime in 2016, with possible further expansion in the future.

Patrick Cassidy, director of Apache’s Investor relations division, was making a presentation to the UBS Global Oil and Gas Conference in Houston, Texas, on the company’s future plans.

One slide in the Power Point presentation summed up Apache’s Pacific strategy, both at Kitimat and its chief rival, the Wheatstone project in Western Australia.

Apache said the final investment decision for the first train or phase the Kitimat LNG is still expected later this year. Previous reports have indicated the decision will likely come in the fourth quarter as Apache and its partners line up customers in Asia.

Originally the KM LNG partners said the project would start up in 2015, but delays, including the unusually harsh winter in Kitimat, which slowed construction at the Bish Cove site, and the search for customers for the natural gas, has pushed the date back to 2016.

Apache Corp. owns 40 per cent the KM LNG partnership, Canada’sEncana Corp. and EOG Resources each own 30 per cent each.

Two other projects are planned for Kitimat, the smaller BC LNG co-owned by Houston-based investors and the Haisla Nation and a larger project announced last week by Royal Dutch Shell.

LINK: Apache presentation to UBS Conference

Alterra acquires coastal island wind farms to supply LNG plants, but how will it get to Kitimat?

Updated with Alterra comments.
A Vancouver-based energy company, Alterra Power Corp, today, May 18, 2012, announced the acquisition of three wind farm sites off the northernwestern British Columbia coast.

A news release from Alterra notes that the three “early-stage wind farm” sites, on Banks Island, Porcher Island and McCauley Island are “all within 150 kilometres of several proposed power-intensive LNG plant sites at Kitimat.”

The three sites plus one on Vancouver island will have an estimated generation capacity of over 1,000 megawatts for the four sites.

Alterra acquired the sites from English Bay Energy Limited. Alterra says “the sellers will receive royalty payments during the operations phase of the projects, and under certain circumstances the sellers may receive additional compensation of up to 1.34 million Alterra shares.”

The release quotes John Carson, Alterra’s Chief Executive Officer, as saying, “This transaction further positions us to play a major role in B.C.’s clean energy future. We look forward to advancing and ultimately building these wind projects as a part of the continued growth of Alterra and British Columbia.”

Satellite map of BC showing Kitimat and wind farm locations — A satellite image of northwestern BC showing the location of Kitimat and the three islands that are the location of the proposed windfarms to supply to Kitimat’s LNG projects. (Satellite image NASA/MODIS)

When informed of the announcement, Kitimat mayor Joanne Monaghan asked, “How are they going to get it here?”

While the three islands are within 150 kilometres of Kitmat, any transmission lines would have to somehow cross the Inside Passage and its heavy ship traffic, including cruise ships, ferries, fishing vessels and bulk carriers (not to mention potentially tankers), and then also get over some of the most rugged mountain territory in Canada to reach any of the three liquified natural gas sites in Kitimat.

“I know that all of the LNG plants considering coming in here, including Shell, are talking about co-gen [co-generation of electricity using natural gas], because if they don’t do co-generation they’re going to have to bring all of this in from the Site C Dam and that is going to make it totally out of the range of their price,” Monaghan said. She also remarked that the cost of building transmission lines from the three off shore islands could also be prohibitive.

Alterra spokesman Anders Kruus said that supplying power from the islands to Kitimat a major consideration but added it “would not be an insurmountable problem.”

He said the company’s predecessor before a merger, Plutonic Power, had built “the province’s largest run-of-river hydro facility at Toba Inlet not far from Powell River (80 kilometres) and in the process of building that, beause the run-of-river facilty was quite far back, not accessible by roadway, you have to barge in, we built a 120 kilmetre long tranmission line out to Saltery Bay. So we’ve done it over the mountains.” Kruus said.

“It’s early days,” Kruus said and the company now plans to compile more wind data before proceeding. He acknowledged that the “intermittency of the wind” could be a problem with an LNG plant that requires a consistent, balanced power load and so the best “off-taker” (customer) for the wind energy electricity might likely be BC Hydro who could balance the power from the project within its own system before supplying it to customers.

On its website, Alterra Power Corp describes itself as

a leading global renewable energy company, formed in 2011 through the merger of Magma Energy Corp and Plutonic Power Corp. We operate six power plants totaling 570 MW of capacity, including two geothermal facilities in Iceland, a geothermal plant in Nevada, British Columbia’s largest run of river hydro facilities and the province’s largest wind farm. Our 300 MW share of production generates over 1,400 GWh of clean power annually. We have an extensive portfolio of exploration and development projects, a skilled international team of explorers, builders and operators as well as the strong financial capacity to support our aggressive growth plans.

Shell, partners, plan giant liquified natural gas project at Kitimat, mayor sees town growing to 15,000 residents

Shell Canada has confirmed that, with three partners, it is developing a giant proposed liquified natural gas export facility at Kitimat.

The project could see up to 12 million tonnes of LNG exported from Kitimat each year. What the companies are now calling LNG Canada would be built in two “trains” or stages, with each producing six million tonnes. A news release from Shell says there is an option to expand the project beyond the 12 million tonne capacity.

The announcement made international news. The Chicago Tribune said Tuesday. “Kitimat… looks set to become a major supply hub for the Pacific Rim.”

Shell’s partners, Korea Gas Corporation, Mitsubishi Corporation, and PetroChina Company Limited will work to export natural gas, mostly from northeastern British Columbia, combining the “four companies’ extensive development experience, technical depth, financial strength and access to markets required to be the leading LNG developer in Canada.”

The four companies did not say how much money is involved in the project. Reports in the Japanese media said the project could cost as much as $12 billion US.

Shell holds a 40 per cent working interest. The partners KOGAS, Mitsubishi and PetroChina each hold a 20 per cent working interest.

“Our combined expertise, and our focus on technological innovation in delivering safe and environmentally sound LNG projects around the globe, ensures that our LNG Canada project would be well-suited to deliver long-term value for British Columbia and increase access to new export markets for Canada,” says Jose-Alberto Lima, Vice President LNG Americas, Shell Energy Resources Company in a news release.

News releases from both Shell and Petrochina both say:

The proposed LNG Canada project includes the design, construction and operation of a gas liquefaction plant and facilities for the storage and export of liquefied natural gas (LNG), including marine off-loading facilities and shipping. LNG Canada can create significant economic benefit for the province, First Nations, local communities and the region. Such a project can create thousands of jobs during construction and hundreds of full-time, permanent jobs during operations. Such a significant energy project can also bring indirect economic development opportunities to the region.

Shell and PetroChina say:

A decision to move this project into development would be taken after conducting necessary engineering, environmental and stakeholder engagement work with start up around the end of the decade, pending regulatory approvals and investment decisions.
The approval process will begin with a formal consultation process with First Nations and local community residents.

“This project will contribute to a further strengthening of trade relationships between China and Canada and will help China use clean burning natural gas to fuel its economic growth,” Bo Qiliang, Vice President, PetroChina, said in the release.

“We are sitting on the doorstep of a very fast-growing market that actually wants to come to Canada because they see it as long-term stability and a secure source of supply,” Shell Canada president Lorraine Mitchelmore said. “We are now, for the first time in the natural gas industry, very competitive with other countries like Australia.”

Kitimat Mayor Joanne Monaghan said her and the District Council have been working on the project for sometime. “Council have been aware of it and have rolled up their sleeves for almost a year and half to two years,” the mayor said.

Kitimat mayor Joanne Monagahn reads notes on the LNG Canada announcement, May 15, 2012. (Robin Rowland/Northwest Coast Energy News)

One aspect was making sure Kitimat is ready for the project, Monaghan said: “We had to make sure there were hospital facilities, rental facilities, that we had housing available. We were getting all our inventories together. Now we know and now we can go full blast ahead.”

Monaghan hopes that eventually Kitimat will return its population peak of between 10,000 and 15,000 residents. (Since the closure of the Eurocan craft paper mill in 2010, Kitimat’s population dropped to around 8,000 but that number has been growing with the LNG projects and the Rio Tinto Alcan Kitimat Modernization Project, even though the KMP project will eventually mean fewer jobs at the aluminum smelter).

“If they have the five to seven thousand construction workers they’re looking for, they will bring in workers from all over BC, probably all over Canada,” Monaghan said.

Shell purchased the former Methanex plant site and the related Kitimat port terminal last fall, raising worldwide speculation about the LNG project. The Methanex site is now used by Cenovus to transport bitumen condensate by rail from Kitimat to the Alberta oil sands. Much of the old Methanex plant has been decommissioned and is being shipped to a buyer in China.

Most of the natural gas supply will come from the booming Horn River and Montney shale gas formations in northeastern British Columbia.

Reports say that LNG Canada will work with a third party that would build and probably own a pipeline from the northeast to the coat.

The profit picture comes from the fact that LNG prices in Asia, based on a proportion of the world price of oil, are much higher than the price of natural gas in North America, where the shale gas boom has driven gas prices to a record low.

The price boom in Asia could be a windfall for British Columbia, which could receive up to $600 billion in natural gas royalties over the next 25 years.

There is also fierce international competition to send LNG to Asia. The major energy companies are investing heavily in projects in Australia, while traditional suppliers like Qatar and Russia are ramping up their marketing efforts to Asia.

The old Methanex site in Kitimat — The decommissioned Methanex site by the Kitimat River, now owned by Shell. (Robin Rowland/Northwest Coast Energy News)

As of this week, Japan began closing down the last of its nuclear electrical generation capacity. After the March 11, 2011 earthquake, that country became a major customer for current and future liquified natural gas projects.

Since the earthquake last year, two other projects in Kitimat have proceeded. The Kitimat LNG project, a partnership called KM LNG led by Apache Corporation, Encana Corp, and EOG Resources plan to start up a Kitimat LNG plant in 2015, at Bish Cove with an initial capacity of five million tonnes a year. That project has been approved by the National Energy Board but is still waiting for a final go ahead from the boards of the three corporations, expected now in the fourth quarter of 2012.

A second project, called BC LNG, owned by the Haisla Nation in partnership with Houston-based LNG Partners, will act as broker and exporter for other LNG companies, facilitating exports to Asia from a barge based facility at North Cove, with the first shipment expected in 2014 or 2015.

There are also reports that Malaysia’s Petronas in partnership with Calgary-based Progress Energy Resources Corp., which have major stakes in B.C. shale are also looking for a possible LNG terminal on the west coast. As well, Talisman Energy, Nexen and Imperial Oil are also looking at west coast projects.

Related Links

News release from BC Premier Christy Clark Premier Applauds Progress on Kitimat Project: LNG Canada

Mitsubishi news release

BC approves Pacific Trails Pipeline amendments

: A couple from Vancouver, who refused to give their names, unfurl an anti-Pacific Trails Pipeline banner at the British Columbia legislature in Victoria, Sunday, April 15, 2012. The man said he against all pipelines and that he was supporting the Wet’suwet’en First Nation. About 1,000 people marched through downtown Victoria to oppose the Enbridge Northern Gateway pipeline and coastal tanker traffic. (Robin Rowland/Northwest Coast Energy News)

The BC Environmental Assessment Office has approved an application to increase the capacity of the proposed 463 kilometre Pacific Trails Pipeline from the Summit Creek natural gas hub near Prince George to Kitimat.

The $1 billion pipeline project is crucial to the success of the KM LNG liquified natural gas export terminal at Kitimat, a partnership of Apache Corp., Ecana and EOG Resources.

The main thrust of the application was to increase the capacity of the pipeline to 1066.8 mm (42 inch) from the originally proposed 914 mm (36 inch). Pacific Trails will change the location of pump stations since the original proposal was for an import pipeline while now it is for export. There are also minor changes.

The proposal was generally considered pro forma since the main environmental review was completed under the original application approval in 2008 and the BC government was only considering the changes proposed by PTP.

The government report says officials were convinced that Pacific Trails would be able to handle problems with increased traffic and any potential risk involved in drilling under watercourses.

The Haisla submitted a number of technical questions about the impact of the larger pipes. While the BC Assessment office noted in its report that the Pacific Trails Pipeline is generally outside Haisla traditional territory, it is clear from the documentation that one of the Haisla concerns are any impacts on the Kitimat River watershed, as the questions concern the Stuart and Endako Rivers, the Morice and Gosnell Creeks and Weedene and Little Wedeene Rivers. The EAO ruled that the Haisla questions were outside the scope of the amendment or should be addressed in the “permitting process.”

Some Wet’suwet’en houses have been vocal in their opposition to the Pacific Trails Pipeline crossing their traditional territory, The Office of the Wet’suwet’en filed a strong objection to certain parts of the plan.

Given that the Minister of Natural Resources Joe Oliver and the federal government are now working to fast tracking all major resource projects, a comment from David de Wit, Wet’suwet’en natural resources manager is significant:

Fast tracking projects may result in overlooking important details [that] can have detrimental consequences. It is important to point out that the diligence required post-certification to ensure that impacts and effects on important resources are prevented or avoided is not satisfactory. This leaves the burden and legacy of any impacts to be borne by the Wet’suwet’en.

The letter goes on

We have invested considerable time and resources in the BC EAO review only to find that the level of detail required pre-certification leaves far too many unanswered questions critical for ensuring environmental effects and identification of potential infringements to our Title and associated rights from the project are avoided or minimized.

The EAO responded by saying the issues were covered by the original assessment and through the Oil and Gas Commission permit process. The letter from the Wet’suwet’en was, however, passed on to the Executive Director for further consideration

The Pacific Trials Pipeline, also known as the the Summit-to Kitimat pipeline will supply the Kitimat LNG project, a venture of the KM LNG partners, Apache Corp., Encana Corp., Apache Canada and EOG Resources. The $4.5-billion LNG terminal and facility will likely be operational by 2015, depending on how long it takes for the partners to line up Asian buyers.

Documents

BC Environmental Assessment office ruling on Pacific Trails Pipeline (pdf)

Wet’suwet’en submission to the BC EAO (pdf)

Apache posts job for Kitimat LNG construction manager

The Apache Corporation website has a posting for a construction manager for the Kitimat LNG project.

The posting says the job will initially based in Houston, Texas, with the manager coming to Kitimat sometime in the future.

The posting calls for the manager to provide an overall construction plan, co-ordinate and control the construction project from inception to completion aimed at meeting the Project’s requirements in order to produce a functionally and financially viable safe project that will be completed on time within the authorized budget and to the required quality standards.

Some of the job requirements give hints of the project to come:

Previous LNG Project experience including construction
Experience of modular and stick built construction
Working knowledge of safety system and management to maintain world class safety performance
Working knowledge environment system and management to maintain world class environmental performance
Knowledge of logistics in remote sites
Knowledge of heavy haul and lift works
Proven ability with advanced project management principles
Proven ability with people management
Experience in Canadian labor law and have deep experience working with unionized labor
Experience in working through cold weather climates

The site also has a posting for a Contracts and Procurement Manager.

Both postings expire on May 2, 2012.

Although Apache and its partners, Encana and EOG Resources now say that they have postponed the final go-ahead decision on the KM LNG project until the fourth quarter of 2012, as negotiations continue with Asian natural gas customers, the postings are indication that the project is progressing.

Reports say Shell near deal for Kitimat LNG project, as Oliver approves the BC LNG

The Minister of Natural Resources, Joe Oliver, has confirmed the approval of the 20 year export licence for the BC LNG Export Cooperative. The National Energy Board had approved the licence in February.

Earlier the government had also approved the export for the KM LNG project.

In a statement, Oliver said, “This export licence is another example of our Government’s commitment to diversifying our energy export markets and strengthening our trading partnership with Asia. Canada is a safe, responsible, and reliable supplier of energy contributing to global energy security.”

“Canada is well positioned to grow as a global energy superpower. Projects such as this will show the world that we are serious about getting our energy resources to market.”

The liquefied natural gas facility would be located on the west bank of the Douglas Channel at small cove near Kitimat. BC LNG Export Co-operative intends to ship up to 1.8 million tonnes of liquefied natural gas annually to markets in Asia.

Natural gas would be transported to the proposed Douglas Channel terminal on the existing Pacific Northern Gas Pipeline and potentially on the proposed Pacific Trail Pipeline. The proposed liquefied natural gas facility is undergoing an environmental assessment in accordance with the Canadian Environmental Assessment Act. The initial phase of the facility is expected to be in operation by late 2013 or early 2014 and, if it proceeds, would represent the very first liquefied natural gas exports from Canada.

Meanwhile, Reuters quoting the Japanese Nikkei, reported that Royal Dutch Shell together with Mitsubishi Corp, China National Petroleum Corp and Korea Gas Corp are in the final stages of negotiations to build a US$12.35-billion liquefied natural gas (LNG) terminal at Kitimat.
The companies will ship gas from their Canadian fields for the project and expect to begin production around 2020 at an annual rate of 12 million tons, Nikkei reported.

Nikkei said a broad agreement is expected as early as this month, after which the four companies will start seeking approval for the project.

Shell brought the old Methanex site and marine terminal in Kitimat last fall.

Alberta Oil magazine describes Kitimat LNG projects as high stakes poker

It looks like the Chinese curse (and journalist’s blessing) “May you live in interesting times,” has come to Kitimat, especially when it comes to selling LNG to Asia.

In the past months the world liquified natural gas market has become more volatile with increased competition across the globe and, in some cases, political factors adding to the molecule mix.

In the past few days, Alberta Oil magazine has published a series of articles on the Kitimat LNG projects, describing the projects as a high stakes poker game.

The point is that the potential Asian buyers for BC (and US) liquified natural gas want a secure supply and they’re not sure what is going on on this side of the Pacific.

That’s apparently why the first project, KM LNG, has put off the final go ahead project from the first quarter of 2012, as originally expected, to the now likely the fourth quarter of 2012.

That has left a lot of uncertainty in town, despite assurances from two of the KM LNG partners, Apache Corporation and EOG Resources that they are optimistic that there will be a deal with Asian gas buyers, even if it means Asian equity in the KM LNG project.

That uncertainty in Kitimat has led to widespread rumours, none substantiated, that the three proposed projects, by KM LNG, by the Houston-Haisla BC LNG partnership and Shell, may be consolidated in one way or another.

At Kitimat council on Monday, April 2, Mayor Joanne Monaghan said “There has been a rumour around recently that Apache is stopping their working for a year and I talked to the CEO, Tim Wall, yesterday and he assured me that that was not true.”

Work is continuing on the KM LNG site at Bish Cove.

This morning, April 5, 2012, Alberta Oil reported that EOG Resources boss still bullish on Kitimat LNG, quoting a company called Bernstein Research that met with EOG’s top executive, CEO Mark Papa, who told Bernstein that EOG considers its 30 per cent holding in KM LNG as a “core holding.”

In a Thursday research note, Bernstein’s Bob Brackett says EOG is willing to sell some of its stake in the Kitimat project to a buyer (likely of the Asian persuasion) looking for equity in the upstream portion of project. “EOG expects to dilute a portion of its stake for that purpose,” Brackett writes.

A day earlier, Alberta Oil reported in Global LNG players jockey for space on a crowded field noting that Australia’s LNG megaprojects are facing competition from North America and cost inflation as the number of projects increase. At the same, US LNG projects are trapped in the current mire of US politics, with many politicians wary of the energy-starved US exporting natural gas.

In Apache Canada makes global push amid fierce competition, the article that uses the poker analogy, the magazine quotes Asish Mohanty, senior research analyst, global LNG, with Wood Mackenzie

Kitimat is due to start pumping out five million tonnes of LNG by 2015, widely viewed as a market “sweet spot” because it beats a number of major Australian projects – among them Shell’s massive Prelude endeavor – into production. “It’s a bit of a race,” Mohanty at Wood Mackenzie says. “The general impression in the industry is that before these Australasian projects start up it’s going to be a sellers’ market.”

Mohanty also looks at the problem of cost inflation and limited resources, a problem Kitimat already faces with not only the three proposed LNG projects but RTA’s Kitimat Modernization Project.

Companies that specialize in engineering, procurement and construction of liquefaction facilities number fewer than 10 internationally, Mohanty says. He expects many of them will be kept busy by construction of several LNG projects underway in northwest Australia, including ongoing work at the massive Gorgon plant at Barrow Island. The Chevron-led venture is due to begin pumping out 15 million tonnes of LNG annually by 2014-15. “All of these are massive projects,” the analyst says. “What that means is order books are pretty full. There is a scarcity of resources in places like Australia right now.”

The shortfall could potentially squeeze Canadian LNG forays. “The fact that most of the B.C. facilities are going to be ‘green-field’ will not make it easy for them to meet a timeline compared to a lot of others.”

Related CBC News Mackenzie Valley pipeline funding reduced

Kitimat Modernization will create competitive contractors for future energy projects: RTA CEO

Jacynthe Côté, CEO Rio Tinto Alcan — Jacynthe Côté,the CEO of Rio Tinto Alcan, briefs reporters on the progress of the Kitimat Modernization Project,March 8, 2011(Robin Rowland/Northwest Coast Energy News)

The Kitimat Modernization Project, the $3.3 billion upgrade of the Kitimat aluminum smelter will create capable and competitive contractors that can go on to work at the future energy developments in the region, Rio Tinto Alcan CEO Jacynthe Côté said Thursday, March 8.

Côté was in Kitimat to tour the region, a trip that was postponed in December, at the time of the “Notice to Proceed” on the modernization project, when her aircraft was diverted to Prince Rupert by a snow and sleet storm the day of the announcement.

During a dinner on Wednesday night, Côté met with leading contractors, the leaders of the Haisla First Nation, Mayor Joanne Monaghan and members of the District of Kitimat Council.

The prospect of future energy projects, three liquified natural gas terminals to be built by the KM LNG partners, by the BC LNG partnership and by Shell was one factor in Rio Tinto Alcan giving the go ahead for the modernization project, she told local reporters.

“We have seen the critical mass in other parts of the world, “she said. “One of the reason to do full speed in December was to aim that we will be ramping down as the others are ramping up. Of course, I cannot say for the other projects that will be their decision.” Given the current schedules, she said, “we should be out of the way when others pick up.” (Another key reason for the go ahead, according to RTA primary metal vice president Jean Simon, speaking at the launch last December was the growing market for aluminum in Asia)

Côté added that the contractors now have “great abilities that could be redeployed.”

Michel Lamarre, Director of KMP said that despite some delays due to the harsh winter, RTA is still aiming for first concrete at the new potlines on June 1. First new metal is scheduled for the second quarter of 2014. Peak employment, about 2,500 people, is expected to be in the first quarter of 2013.

“We have the ambition to make the project a real showcase, for us, for British Columbia, for Canada,” Côté said. “So we’re pretty proud that 62 per cent of the work done so far has been done by the community in the area., 95 per cent of them in British Columbia, which is absolutely spectacular for a project of that complexity and magnitude.

“It requires a lot of skills, a lot of organization.”

Côté said she stressed RTA’s safety priorities when she met with the local contractors (a point the company made both at the Notice to Proceed gathering in December and at a local meeting for contractors last month). The contractors are very enthusiastic, Côté said. “I’ve seen in other regions as contractor and employees moved to that level of safety performance, it becomes a competitive edge, there’s going to be other projects coming in the region, there’s a lot of discussion around LNG, and it will be an advantage for contractors who have demonstrated superior performance and safety. We’re here to support that. I think they’re going to be more compelling and competitive, I mean it’s good business.”

She says that RTA is spending $3.1 million each day on the modernization project.

Asked about both the prospective LNG projects and the fact that accommodation in Kitimat is now at a premium, she said that “crowding” was a significant part of her discussions with both the Haisla and the District of Kitimat.

Rio Tinto has worked on what she called “disproportionately big” projects at sites compared to local communities around the world. “So we adjust, my message was we adjust.[There are] Different formulas in different parts of the world, depending on the conditions. The model is to bring in as many people from the community as we can.”

Pacific Trails Pipeline holds community meetings

Pacific Trails Pipeline meeting — Hatha Callis, left, of Progressive Ventures Construction, discusses contracting possibilities with the staff of the Pacific Trails Pipeline at a community meeting in Terrace, BC, March 1, 2012 (Robin Rowland/Northwest Coast Energy News)

Pacific Trails, which has proposed to build a natural gas pipeline from Summit Lake, near Prince George, to Kitimat, held four community meetings in Vanderhoof, Burns Lake, Houston and Terrace, to discuss changes to a plan for the pipeline that was approved the BC Environmental Assessment Office in 2008.

Paul Wyke, a spokesman for Apache Corp., one of the main investors in the Kitimat LNG project as well as the Pacific Trails Pipeline, said the companies considered the meetings successful. About a dozen people showed up in Vanderhoof and Burns Lake and about 25 to 30 in Terrace and Houston, perhaps an indication of the lack of controversy, so far, for the PTP, which will follow roughly the same route as the Enbridge Northern Gateway pipeline. Apache and Pacific Trails also took part in a job fair on February 10 in Burns Lake, the town hard hit when a huge explosion flattened the Babine Forest Products sawmill on January 20, killing two, injuring 19 and left about 250 workers jobless.

About half the people showing up at the meetings were interested in job or contracting opportunities while the rest were concerned about environmental issues.

Nathan Hagan-Braun, project assessment manager for the BC Environmental Assessment Office, who also attended the community meetings, said that a decision on approval of the amendments to the PTP plans will likely come in May.

PTP says that once the project adjustments are approved, logging and clearing is scheduled for the summer of 2012, pipeline construction in 2013 and 2014, with the pipeline going into operation in 2015.