Commentary: The earthshaking difference between Enbridge and LNG

Joint Review Panel
The Northern Gateway Joint Review panel, Kenneth Bateman, Sheila Leggett and Hans Matthews, listen to final arguments in Terrace, June 17, 2013. (Robin Rowland/Northwest Coast Energy News)

Buried deep in the LNG Canada environmental assessment application, a reader will find a key difference in attitude with at least one of the group of companies planning liquified natural gas development in the northwest and Enbridge Northern Gateway.

It’s an earthshaking difference, since it’s all about earthquakes.

The documents filed by LNG Canada with the BC Environmental Assessment Office and the Canadian Environmental Assessment Agency acknowledge that there is a possibility of an earthquake (a one in 2,475 year event) at the LNG terminal site.

Northwestern British Columbia was shaken by two major earthquakes in the months before the Joint Review Panel concluded its hearings in Terrace. Both were far from Kitimat, but felt across the District. On October 27, 2012, there was a magnitude 7.8 earthquake on the Queen Charlotte Fault off Haida Gwaii. That quake triggered a tsunami warning, although the actual tsunami was generally limited to the coast of Haida Gwaii. Both landline and mobile phone service in Kitimat was briefly disrupted by both the quake and overloads on the system. Kitimat was also shaken by the 7.5 magnitude earthquake centered at Craig, Alaska a few weeks later on January 9, 2013.

With the exception of one vague reference in its final argument documents presented to the Joint Review Panel, Enbridge has stubbornly refused to consider any seismic risk to the region.

That was the company’s policy long before the October. 27, 2012 Haida Gwaii earthquake and was Enbridge policy after October 27, 2012.

In a public meeting in Kitimat on September 20, 2011, more than a year before the Haida Gwaii earthquake, John Carruthers, Northern Gateway president, insisted to skeptical questioners at a community forum at Mount Elizabeth Theatre that there was no earthquake danger to the proposed Northern Gateway pipeline and bitumen terminal in Kitimat.  One of the questioners, Danny Nunes, of Kitimat, asked could the pipes withstand an earthquake? Carruthers repeated that Kitimat was not in an earthquake zone, that the fault was off Haida Gwaii and so would not affect Kitimat.

After the September, 2011 meeting, I asked Carruthers if Enbridge knew about the March 27,1964 “Good Friday” magnitude 9.2 Alaska earthquake that, because of its high magnitude, had caused major shaking in Kitimat. That earthquake destroyed much of Anchorage and triggered tsunamis that caused damage and death across Alaska and in parts of British Columbia, Oregon and California.

Carruthers promised to get back to me and never did.

On June 17, 2013, six months after the Craig, Alaska earthquake, in his opening summation before the Joint Review Panel, Richard Neufeld, lead lawyer for Northern Gateway, stayed on message track, telling the JRP, referring to pipelines: “The route is not seismically unstable. The seismic risk along the pipeline right-of-way is low, with only a few locations of moderate risk encountered, none of which are within the Haisla territory.”

That brought a gasp from spectators in the room, or at least those who had felt the October and January earthquakes.

The following day, June 18, Murray Minchin of Douglas Channel Watch found an anomaly in the Enbridge documentation, arguing in the group’s summation:

“The Proponent’s written final argument gets on shaky ground regarding design and construction of the storage tanks on a ridge beside Douglas Channel in paragraph 249 where they say:

“‘It also involves the safe construction and operation of the Kitimat terminal in Kitimat Arm in an area subject to seismic activity which encompasses both terrestrial and marine components.’

“Now, that’s interesting because isn’t that the first time — the first admission by the Proponent in a little over 10,000 pages of documents that the area they intend to build their project is in a seismically-active area?

“Haven’t they been telling us all along to this point that the only seismic concerns would be from the distant Queen Charlotte fault off of Haida Gwaii?

“Now, this completely contradicts Mr. Neufeld’s statement yesterday where he described the Project area as not “seismically unstable”. So what is it? This is their final argument and they’re contradicting themselves.”

Minchin went on to quote from the Enbridge argument: “’Seismic conditions in the project area have also been addressed.’

“Well, really? Is that a truthful statement, considering Natural Resources Canada has only submitted a preliminary report concerning a 50-kilometre fault line and massive submarine landslides they accidentally discovered last year in Douglas Channel while doing a modern survey of the Channel for navigation hazards.

“How can the Proponent claim to have adequately addressed seismic forces in their design of this Project when they don’t know what those forces are or for what duration they may be subjected to those forces.

“Has there ever been a paleoseismological study in the Project area to establish past earthquake or tsunami history?

“Wouldn’t it be in the best interest of the Proponent, the Panel and Canadians to know the risks before 1.3 billion litres of liquid petroleum products are allowed to be stored on a low ridge right beside Douglas Channel?”

In his final rebuttal on June 24, Neufeld did not address the contradictions that Minchin had pointed out.

Compare Enbridge’s attitude to the view of LNG Canada, which at very least, appears willing to consider that major events could have adverse consequences on the terminal and liquifaction facilities.

    • The first one is a bit puzzling to Kitimat residents “A 1 in 100 year 24 hour rain event,” after all the town often gets rain for 24 hours straight or more fairly often.
    • The second, 1 in 200 year flood of the Kitimat River. Flooding has always been a concern and will be even more so, because as the pipelines come into town, whether natural gas or bitumen, those pipelines will be close to the river bank.
    • The 1 in 2,475 year seismic event. That figure is probably correct for a local event given the geology of the Kitimat Valley—unless, of course, the fault line discovered by the Geological Survey of Canada on Hawksbury Island proves to be a potential danger.
    • A tsunami.
    • Change in flow of the Kitimat River.
    • Even more interesting is that LNG Canada is willing to consider possible effects of climate change on the project, saying: “Predicted climate change effects during the project lifecycle on sea-level rise, precipitation and temperature. Where relevant and possible, the implications of such climate induced changes to the extreme weather events given above will also be addressed.”

.

Although the hydrocarbon industry as a whole is reluctant to acknowledge climate change, it appears that on a practical level, the LNG Canada partners, if they are about to invest billions of dollars in a natural gas liquifaction plant and marine terminal, will certainly take steps to protect that specific investment from the effects of climate change.

On the other hand, the National Energy Board, as matter of policy and the Northern Gateway Joint Review Panel, both still stubbornly refuse to even consider any effects of climate change, even possible effects locally on a specific project application.

The Joint Review Panel decision on the Northern Gateway is expected sometime in the next three weeks. While most reports seem to indicate that the decision will be released after Christmas before the Dec. 30 deadline, there has been recent media speculation that the decision could be released next week.

In the meantime, Enbridge has pulled out all stops in a public relations campaign to build support for the Northern Gateway. While a recent poll indicates that advertising campaign may be having some success in the Lower Mainland, the same poll showed that 65 per cent of northern BC residents oppose or strongly oppose the Northern Gateway.

The problem for Enbridge is that the new public relations campaign is repeating the blunders that began when they first proposed Northern Gateway in 2005. There have been meetings across the northwest, but those meetings have been invitation only affairs at chambers of commerce and community advisory boards, with possible opponents or skeptics and media perceived as critical of Enbridge not invited. So Enbridge still wants to control the message and will only talk to friendly gatherings.

Then there are the television spots featuring Janet Holder, the Enbridge vice president in charge of Northern Gateway, supposedly showing her commitment to wilderness. Those commercials would have had more credibility if the agency had produced the ads with actual video of Holder walking through the bush, rather than shooting the spots in front of a green screen in a studio, with pristine wilderness stock video in the background, and Holder acting as if she was a model for an adventure clothing company rather than  vice president of a pipeline company.

Right-wing business columnists in Toronto and the countless Albertans fume at the so-called “hypocrisy” of British Columbians who support LNG and oppose bitumen.

Of course, those critics didn’t feel the earth move under their feet.  The critics don’t see the difference between natural gas and bitumen, differences very clear to the people of British Columbia.

It’s more than the fact, that so far, the LNG projects have been relatively open and willing to talk to potential adversaries,  as Chevron has done on the controversial Clio Bay project; more than the fact that if even a fraction of the LNG projects go ahead, the money coming into northwestern BC means that the handful of permanent jobs promised by Enbridge will be literally a drop in a bucket of warm bitumen.

Although there are many other environmental issues on the Northern Gateway project, the fact the potential for earthquakes in Kitimat is brushed off by Enbridge while LNG Canada is at least willing to consider the problem, sums it all up.

 

Updated with link to Sept. 2011  questions and answers

 

 

 

 

 

 

 

KOGAS selling stake in Kitimat’s LNG Canada

Reuters is reporting that the Korean Gas Corp is selling part of its stake in the Shell-led LNG Canada project in Kitimat.

Reuters says KOGAS CEO Jang Seok-hyo told the World Energy Congress that the company is considering selling 5 to 10 per cent of its stake in the LNG Canada project. It currently holds 20 per cent.

The sale is apparently an effort to improve the company’s bottom line.  The South Korean government recently began a review of state-owned oil and gas investments with are suffering from poor profits.

Kogas, which is the world’s largest corporate buyer of LNG, is also considering selling part of its 15 per cent holding in the $18.5 billion Gladstone LNG (GLNG) project in Australia.

One of the Kitimat LNG projects plans to self-generate power for liquefaction plant

At least one of the two large liquified natural gas projects in Kitimat is, at least at this point, planning to self-generate the power required using a gas-fired, steam-driven electrical generation system.

A job ad posted this weekend by the headhunting firm Fircroft is seeking a Lead Project Engineer, Power Plant for “Our client, a major international owner/operating company, requires expertise for their LNG mega-project in Western Canada.”

The job, which requires 20 years and more experience, would be located in Calgary for eighteen months, then move to Kitimat for the remainder of a four year contract paying from $1650 to $1850 per day.

By Fircroft describing the job as a “mega-project” means that the client is either Shell’s LNG Canada project or the Chevron and Apache KM LNG project, since the much smaller BC LNG project could not be described as a “mega-project.”

As well as the standard qualifications for a senior engineer, the job posting lists:

• Power Plant design, operation and construction experience required.
• Boiler design, construction, operation, and commissioning experience required.
• Heat Recovery Steam Generation (HRSG) design, processes, construction, operation, and commissioning experience required.
• Integrates inherent safety in design and operability in concept selection and development for gas resource opportunities.

Providing the power for the Kitimat and other northwestern LNG projects is becoming controversial. The power is needed to cool the natural gas so it can be loaded onto tankers for shipment to customers.

The BC government recently announced a $650,000 study of the cumulative effect on air quality for the planned industrial expansion in the Kitimat area, including the Rio Tinto Alcan Kitimat modernization project, which would increase the amount of sulphur dioxide emissions, combined with as many as three LNG projects and the associated increase in tanker traffic, as well as the possible and even more controversial Enbridge Northern Gateway project.

At the time of the BC announcement, the Globe and Mail reported:

If natural gas is used either for direct-drive or combined-cycle electricity generation to produce the energy required for the proposed Shell LNG facility at Kitimat, approximately 300 million cubic feet of natural gas would be burned. The proposed Chevron Apache LNG facility could burn approximately 140 million cubic feet of natural gas.

The other alternative for powering the LNG plants is to use hydro-electricity, and BC Hydro at the moment doesn’t have the capacity to supply the LNG projects with power. One possibility is the controversial Site C dam project in the Peace River basin, which is also under review by the BC government. 

Although the job is restricted to Canadian citizens or permanent residents, it is clear that the engineer will have to also answer to the project’s overseas partners since one requirement is to conduct:  “Overseas VIP workshops, including Value Engineering, Process Simplification, Process Optimization and Design to Capacity.”

Kitimat in “horse race” with Australian LNG project Chevron says

Gorgon project in Australia
The Gorgon LNG project in Western Australia. Chevron says  Gorgon Project work continues to progress with the installation of the second of three amine absorbers, two condensate stabilization modules and a recycled gas compression module. (Chevron Australia)

Kitimat LNG is in a “horse race” with an LNG project in Western Australia–and at this point, according to the Australian media–Kitimat is winning, even though the Australian Gorgon project is much further ahead while the Kitimat LNG project at Bish Cove hasn’t really started.

The Australian reports come from the same conference call Chevron held with financial analysts last week, when the company said the final investment decision for Kitimat LNG has been postponed to 2014.

The Brisbane Times  is quoting Chevron as saying that expansion of the Gorgon “will be in direct competition with exports from North America, which have a cost advantage.”

Chevron has a 47.3 per cent stake in Gorgon. Shell which is developing its own project at Kitimat, LNG Canada, has a 25 per cent stake in Gorgon. ExxonMobil holds 25 per cent.

”In the case of Gorgon train four … we are happy to see both of them move forward,” Chevron vice-chairman George Kirkland told analysts late last week, referring to the competition with Kitimat. ”[There is] a bit of a horse race between them at this point.”

Shipping gas to north Asia from Canada is cheaper than exports from Australia, he said, although the challenge is to find markets for the gas. ”The development cost at Kitimat … may end up being less than in the case of Gorgon,” he said, which ”has the benefit of [being a] brownfield development on the plant side”.

”We’re going to offer volumes … and interest in the plant as a combination,” Mr Kirkland said of the Kitimat marketing plans. ”We think that’s a big advantage.

”Our goal is to maintain our … first-mover advantage … We have had some initial discussions with Asian buyers.”

The Gorgon project in the northwestern area of Western Australia. (Chevron Australia)
The Gorgon project in the northwestern area of Western Australia. (Chevron Australia)

According to Wikipedia, the Gorgon area of Western Australia is the site for a number of liquified natural gas projects. The projects are off shore and close to the export terminals, much different from British Columbia where the gas fields are in the Peace River district in the northeast of the province.

Wikipedia says

The Gorgon field is centered about 130 kilometres (81 mi) off the north-west coast of Western Australia, where the water depth is approximately 200 metres (660 ft). Other fields in the group lie to the north, such as Jansz-Io, which covers an area of 2,000 square kilometres (770 sq mi), in a water depth of 1,300 metres (4,300 ft).

Chevron says

It is one of the world’s largest natural gas projects and the largest single resource development in Australia’s history.
The Gorgon Project is developing the Gorgon and Jansz-Io gas fields, located within the Greater Gorgon area, between 130 and 220 kilometres off the northwest coast of Western Australia.
It includes the construction of a 15.6 million tonne per annum (MTPA) liquefied natural gas (LNG) plant on Barrow Island and a domestic gas plant with the capacity to supply 300 terajoules of gas per day to Western Australia.
Gorgon LNG will be off loaded via a 2.1 kilometre long loading jetty for transport to international markets. The domestic gas will be piped to the Western Australian mainland.
The Gorgon joint venture is investing approximately $2 billion in the design and construction of the world’s largest commercial-scale CO2 injection facility to reduce the project’s overall greenhouse gas emissions by between 3.4 and 4.1 million tonnes per year. The Australian Government has committed $60 million to the Gorgon Carbon Dioxide Injection Project as part of the Low Emissions Technology Demonstration Fund.

Gorgon project wharf
A view of construction on the 2.1-km (1.3-mile ) LNG wharf with 24 caissons in place. (Chevron Australia)

 

In May, Reuters reported that the $52 billion Gorgon liquefied natural gas (LNG) development was 60 per cent complete. At the time, Reuters said Chevron planned to start engineering and design work for an expansion by the end of the year.

Parts of the Gorgon project are in an environmentally sensitive area, Barrow Island, which has been a nature reserve in Australia since 1910.

Wikipedia says

Barrow Island’s ecology. The island is a Class A nature reserve, and home to theflatback turtle (classified as a vulnerable species) and numerous other animals not found on the Australian mainland. Other concerns are related to the adequacy of quarantine procedures on Barrow Island to protect against the introduction of non-endemic species, and risks associated with geological sequestration of CO2.It was reported in November 2011 that native animals on Barrow Island had been accidentally killed daily with a known total of 1550 since construction began.

Chevron says

The Gorgon Project is being undertaken in accordance with strict environmental standards to preserve the island’s ecology.
Central to the Gorgon Project’s commitment to protect the conservation values of Barrow Island is the Quarantine Management System (QMS), which directs
the Project’s quarantine operations. The QMS is the largest non-government quarantine initiative in the world and was considered to be “likely world’s best practice” by the Western Australian Environmental Protection Authority. The Project’s gas processing facilities are being constructed within a 300 hectare ground disturbance limit, which represents 1.3 percent of Barrow Island’s uncleared land area.

Gorgon Project Overview Chevron document pdf

Gorgon-Progress Update August 2, 2013 pdf

Shell’s LNG Canada holds open house for Kitimat

The Shell LNG Canada project officially opened its Information Centre at the old Methanex site offices in Kitimat on Tuesday, June 25, 2013.  About  180 people attended the event, which included a barbeque, kids activities with face painting,  a tour  of the office/information centre and a chance to  community to meet the LNG Canada project team. Shell’s partners in LNG Canada are Mitsubishi, PetroChina and Korea’s Kogas.

 

Sammy Robinson

Samuel “Sammy” Robinson, Chief Jassee of the Haisla Nation, offered an opening prayer and welcoming remarks on behalf of the Haisla for the project in Haisla traditional territory (Robin Rowland)

Rob Seeley

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LNG Canada project Director Rob Seeley makes opening remarks. “We are confident that the Shell-led LNG Canada Project Team has the combined expertise to safely and successfully design and operate this project. We thank you for welcoming us to your community and look forward to working together to develop a project that we can all benefit from and be proud of.” (Robin Rowland)

Craig Jackson

LNG Canada’s Craig Jackson explains shipping issues to Kitimat residents touring the LNG Canada open house. (Robin Rowland)

Seiichi  Tsurumi

LNG Canada’s Seiichi Tsurumi speaks to Kitimat residents touring the information centre. (Robin Rowland)

Watching video

Kitimat residents touring the information centre watch a video on LNG tankers. (Robin Rowland)

 

LNG Canada building Kitimat

The LNG Canada information centre and office building during the open house. (Robin Rowland)