natural gas | Northwest Coast Energy News

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.

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.

Joint Review Panel refuses to consider possible Enbridge plans for a natural gas Northern Gateway

The Joint Review Panel has ruled that it doesn’t have to include possible plans by Enbridge to add a natural gas pipeline to to the Northern Gateway project in its consideration of the bitumen pipeline.

Since the JRP has no evidence at the moment to suggest that Enbridge has such a project “in sufficient planning stages to warrant inclusionwithin Northern Gateway’s cumulative effects assessment,” the Panel considers that it is inappropriate to consider a possible natural gas pipeline. If Enbridge did want to build a natural gas pipeline along the route, it would be subject to new and separate hearings.

Last fall there were reports in the media that Enbridge CEO Pat Daniel (who is now about to retire) wanted to join the natural gas rush to the Pacific coast by adding a natural gas pipeline to the Northern Gateway bitumen project (there was also some speculation that Enbridge might want to replace the bitumen pipeline with a natural gas pipeline).

One of the JRP intervenors, Dr. Josette Weir of Smithers filed a motion in December with the JRP asking that the Joint Review Panel:
.

a. order Northern Gateway Pipelines Limited Partnership (“NGPLP”) to confirm if it plans a gas pipeline in the same right-of-way as the tar sands and condensate proposed pipelines;
b. order NGPLP to confirm if such gas pipeline is planned to be constructed during the same time as the two proposed pipelines under review;

Weir also asked the JRP to include possible plans for a gas pipeline in its overall assessment of the cumulative affects of the Northern Gateway pipeline.

In response to the motion, Ken MacDonald Vice President, Law and Regulatory Northern Gateway Pipelines Limited Partnership replied that Gateway confirms that it is not currently proposing to construct a gas pipeline in the right-of-way that would be required for the construction of the Northern Gateway Project and, making a legal point, called an Enbridge natural gas pipeline along the same route as “hypothetical.”

However, the next sentence in MacDonald’s letter could be a problem for the existing Pacific Trails Pipelines plans for their own natural gas pipeline, which some in the region fear is paving the way for the Northern Gateway pipeline. The letter reads: “Northern Gateway
has been attempting to engage the proponents of the Pacific Trails Pipeline for an extended
period of time regarding collaboration on routing, construction and access management, and will
continue to do so in the future.”

Last fall, members of the Wet’suwet’en First Nation blockaded an Apache/Pacific Trails Pipeline survey crew and one reason for the blockade was the possible use of the Pacific Trail survey for the Northern Gateway. PTP and Apache, both in a report to the BC Environmental Assessment Office, and at a public meeting in Terrace on Thursday, March 1, say they continue to consult with the Wet’suwet’en houses and the Office of the Wet’suwet’en on the issue.

MacDonald’s letter to the JRP goes on to complain about the time it is taking for the review process

The project inclusion list for the Northern Gateway cumulative effects assessment was determined at the time of finalizing the Terms of Reference established for the Project’s environmental assessment. This was more than 2-years ago. Northern Gateway’s Application has been under review for over a year and a half with the information request phase of the proceeding on the Application having been completed. It would be impossible to ever complete an environmental assessment for a major project if the project proponent had to continually update its cumulative effects assessment for projects announced during the course of the review
proceedings on regulatory applications. In the case of the Northern Gateway Pipeline Project, it may end up taking four years to complete the regulatory approvals process. During such an extended period of time, new projects will inevitably be planned and announced. Northern Gateway cannot be expected to revise its cumulative effects assessment to take into account projects announced during the course of the current regulatory review.

Enbridge pointed to earlier legal rulings on “hypothetical projects”

with respect to other projects to consider in a cumulative environmental effects assessment, the NEB has ruled in the past that the other projects considered in a cumulative effects assessment cannot be hypothetical. The Courts have said that the decisions of RAs are not required to “consider fanciful projects by imagined parties producing purely hypothetical effects”. The Board is of the view that EBPC’s methods for identifying other projects for consideration in the cumulative effects assessment were appropriate.
Northern Gateway submits that, at this point, any natural gas pipelines beyond the Pacific Trails Pipeline are hypothetical. Requiring Northern Gateway to include such hypothetical projects in its cumulative environmental impact assessment would be inconsistent with previous practice and NEB decisions and would result in further delay to what has already become a protracted regulatory process.

The Joint Review Panel agreed, ruling

The Panel acknowledges the media statements by Enbridge that you noted in your motion. However, based on Northern Gateway’s comments and the fact that the Panel has no other evidence to indicate that such a project is in sufficient planning stages to warrant inclusion within Northern Gateway’s cumulative effects assessment, the Panel is of the view that it would not be appropriate to order Northern Gateway to do so. Further, the Panel notes that should Northern Gateway or any other proponent propose a gas pipeline to the west coast in the future,
that project would be subject at that time to the relevant environmental assessment and regulatory requirements.

Panel Commission Ruling on Enbridge natural gas pipeline

Northern Gateway Pipelines response to motion

More pipeline debate coming to the Northwest: Changes to the Pacific Trails natural gas Pipeline

Pacific Trail Pipelines map — The Pacific Trails Pipeline map as of Feb. 2012. (PTP/BCEAO)

Another pipeline debate is about to open in the northwest. This time for changes to the Pacific Trails (natural gas) Pipeline, that will run from Summit Lake, just outside Prince George, to Kitimat.

Public information meetings will be held in Terrace, Houston, Burns Lake and Vanderhoof in the next couple of weeks.

The PTP runs entirely within British Columbia, and so comes under the jurisdiction of the Environmental Assessment Office of British Columbia. The application to build the PTP was filed in 2005 and approved in 2008 which means the process for the amendments will go much faster than the current Northern Gateway Joint Review hearings for the Enbridge twin bitumen/condenseate pipeline which are expected to last at least another eighteen months.

Pacific Trails is asking to

Change the location of the compressor station;
Establish two new temporary stockpile sites;
Make pipeline route modifications

The period for commenting on the Pacific Trails Pipeline amendments opens on February 27 and closes March 28. The public meeting on the changes to the compressor station were held in Summit Lake last September.

The documents filed with the BCEAO say that Pacific Trails Pipelines is in ongoing negotiations with First Nations where the PTP will cross their traditional territory.

The natural gas project has general support in northwestern BC, and the relations between First Nations and PTP, and Apache, the main backer of the Kitimat LNG project are much better than those with Enbridge. (The PTP would supply the liquified natural gas terminals in Kitimat)

Significantly, the documents show that the PTP is trying to enter separate negotiations with the Wet’suwet’en houses that are now objecting to the pipeline route through their traditional territory.

The filing says:

In addition, PTP is now consulting, or making all reasonable efforts to consult, with one of the 13 Wet’suwet’en Houses as a discrete entity. PTP was informed in February 2011 that Chief Knedebeas’s House, the Dark House, was no longer part of the Office of the Wet’suwet’en although the latter still maintains responsibility for the welfare of all Wet’suwet’en lands and resources. Consultation that took place prior to this year with the Office of the Wet’suwet’en included consultation with the Dark House. PTP has been diligent in seeking to consult with the Dark House since April 2011. The spokesperson for Chief Knedebeas of the Dark House, Freda Huson, states that she also represents a group called Unist’ot’en.

But it’s Enbridge that is the sticking point, and could bring controversy to this amendment request. The Wet’suwet’en houses that blockaded a PTP survey crew last fall said they were worried that the Northern Gateway pipeline follows roughly the same route as the PTP. The PTP application was filed and approved long before the controversy over the Enbridge Northern Gateway began to heat up.

One reason is that original approval was for a pipeline to import natural gas before the shale gas boom changed the energy industry. As PTP says in the application to change the compressor station.

When the original purpose of the PTP Project was to transport natural gas from an LNG import facility at Kitimat to the Spectra Energy Transmission pipeline facilities at Summit Lake, the design called for the installation of a mid-point compressor station to enable the required throughput of natural gas. This compressor station was sited at the hydraulic mid-point of the pipeline. The location of the compressor station in 2007 was south of Burns Lake and just east of Highway 35.

Now that the PTP Project is designed to move natural gas from Summit Lake to Kitimat, or east to west, a compressor station is required at Summit Lake rather than at the hydraulic mid-point of the pipeline. The new Summit Lake compressor station is required in order to increase the pressure of the natural gas from where it is sourced at the Spectra Energy Transmission pipeline facilities.

The EAO will hold open house meetings on the pipeline route changes from 4 pm to 8 pm at each location at

Monday, February 27, 2012
Nechako Senior Friendship Centre, 219
Victoria Street East
Vanderhoof, BC

Tuesday, February 28, 2012
Island Gospel Gymnasium
810 Highway #35
Burns Lake, BC

Wednesday, February 29, 2012
Houston Senior Centre
3250 – 14th Street W
Houston, BC

Thursday, March 1, 2012
Best Western Plus Terrace Inn
4553 Greig Avenue
Terrace, BC

The EAO says: Displays containing information on the proposed amendments will be available for public viewing. The EAO will be available to answer questions on the amendment process. The Proponent will be available to answer questions on the Project and proposed amendments.

The documents show there are route changes to the pipeline route along the Kitimat River, but those are considered “minor route adjustments” so no meetings are planned for Kitimat.

Documents

PTP meeting schedule

Complete filing documents from PTP are available on the BCEAO site here.

Pacific Trails Pipeline

Three new powerful players said to join the BC West Coast LNG export rush

The race to ship liquified natural gas to Asia is getting hotter with three new powerhouses joining the scramble for west coast export terminals.

The Prince Rupert Port Authority announced Tuesday, Feb. 7, that it is working with an energy powerhouse BG Group, on a feasibiity study for an LNG terminal at Ridley Island.

At the same time The Globe and Mail reports that there are rumours that Exxon Mobile is “examining LNG options” in the northwest. The paper also quotes sources as saying the Japanese firm Itochu is looking to export gas via Kitsault, where there is an abandoned molybdenum mine, town and port.

British Gas was once the retail domestic supplier of natural gas to the UK market. The company split in two in 1997, with BG Group becoming an international exploration and energy production company.

Itochu is a 150-year old Japanese company which began as Chibou Itoh’s one man linen trading company, later adding drapery shops and over more than a century expanding operations to become a major international conglomerate with strong interests in the energy sector. According to the company website, Itochu is also a player in the solar energy and bio-ethanol fields.

“The Prince Rupert Port Authority has engaged with the BG Group to consider Prince Rupert for a potential LNG export facility. The BG Group is number two in the world in LNG, next to Shell and they are number two depending on what measurements you look at, so they are already a big player in that industry” according to Shaun Stevenson, vice-president of Marketing and Business Development for the Prince Rupert Port Authority.

“We have an agreement signed to provide them a site and to secure that site to examine the suitability of it and the feasibility of the facility…We have given them a period of time to conduct the feasibility and suitability study, and if it is determined to be viable from the preliminary work that is done then we will look at further development,” he said.

David Byford, spokesman for the BG Group in Houston, confirmed the deal has been signed but cautioned “Prince Rupert is one of the areas we are looking at, and we are in the very early feasibility study stage.”

“The west coast of Canada is certainly advantageous for LNG export, and there is a lot of natural gas in BC as well.”

Prince Rupert port spokesperson Michael Gurney says it will be 12 to 24 months before there’s a clear commitment on the project.

A spokesman with Itochu declined comment when contacted by The Globe and Mail. Kitsault, near Alice Arm, in the traditional territory of the Nisga’a nation, was the site of a short lived molybedenum venture by the Phelps Dodge company. After the mine was abandoned, the town was bought by Indo-American businessman Krishnan Suthanthiran and is now promoted as a nature and wilderness retreat, called Heaven on Earth.

The Globe and Mail also quotes sources as saying that Exxon Mobil Corp., which has substantial natural gas reserves in northeastern B.C., has also been examining LNG options. Pius Rolheiser, a spokesman with Canada’s Imperial Oil Ltd., which is majority-owned by Exxon, said in a statement to the Globe and Mail: “Imperial continuously reviews a variety of opportunities to increase value to our shareholders. As a matter of practice, and for competitive reasons, we do not discuss specific strategies.”

CIBC analyst speculates on one big natural gas pipeline to Kitimat as rumours persist that Apache decision on KM LNG will come next week

There is increasing speculation in the financial and energy markets that Apache Corporation, the lead investor in KM LNG partners, who propose to build the Kitimat LNG project will announce the investment decision next week. If the decision is positive, and it is expected to be positive, that means the work underway at the Bish Cove site will ramp up to full construction.

The speculation is heightened by the fact that the two other partners in KM LNG, Encana and EOG, report the following morning. Rumours on the Kitimat announcement began after Encana delayed its announcement by a week from its normal time in early February. (At that time one energy market analyst who follows NWCEN on Twitter contacted this site to ask if there were rumours here. At that time, there were none)

Apache has scheduled a fourth quarter report conference call and webcast from its headquarters in Houston, Texas, Feb. 16, 2012, at 1 pm Central Time.

Apache has always said that the go/no-go decision on the Kitimat project would come in the first quarter of 2012.

The market speculation, however, may not be entirely good news. That’s because this morning, Andrew Potter, of CIBC World Markets, told a conference call that the rush to export liquified natural gas from northeastern BC and Alberta to Kitimat would mean building one or two large natural gas pipelines, instead of several small ones, to reach the terminal projects.

Reuters quoted Potter as saying: “There is no logic at all to seeing three to five facilities built with three to five independent pipelines,” he said.

At the moment, the just approved BC LNG project, a cooperative of 13 energy companies, plans to utilize the existing Pacific Northern Gas facilities which already serve northwestern British Columbia. The PNG pipeline roughly follows the communities it serves along Highway 16. KM LNG is in partnership with the Pacific Trails Pipeline project, which would take that pipeline across country.

The third LNG project, by Shell, is still in the planning stages, but it, too, would need pipeline capacity.

Although there is general support for the LNG projects in northwestern BC, and less controversy over natural gas pipelines, last fall, members of one Wet’suwet’en First Nation house blocked a survey crew for Apache and Pacific Trail Pipelines who were working near Smithers on that house’s traditional territory. The survey project was then stood down for the winter.

The fear among some First Nations leaders and environmentalists is that the Pacific Trails Pipeline could, intentionally or unintentionally, open the door to much more controversial Enbridge Northern Gateway bitumen pipeline, since the PTP and Northern Gateway could follow the same cross country route.

Whether or not Potter intended to stir up a hornet’s nest, he likely has. What appears to be logical and economic for a CIBC analyst in a glass and steel tower, one or two giant natural gas pipelines, is now likely going to be fed in to, so to speak, and amplify the controversy over the Northern Gateway pipeline.

Potter also told the conference call that together the natural gas projects do not have enough gas in the ground to support the export plans. That means, Potter said, more acquisitions and joint venture deals in the natural gas export sector. Bob Brackett of Bernstein Research, quoted by Alberta Oil magazine, also says there will likely be consolidation of Kitimat LNG projects, since there was similar consolidation in Australia.

Apache Corp. Fourth quarter reporter webcast page.

PNG System map — The existing Pacific Northern Gas Pipeline follows Highway 16 (PNG)

The Pacific Trails Pipeline (yellow and black) would go cross country to Kitimat. The existing PNG pipeline, seen in the above map, is marked in red on this map. (PTP)

The Northern Gateway Pipeline also goes cross country, on a similar route to the proposed Pacific Trails Pipeline. (Enbridge)

PetroChina looks to Kitimat as it spends $1 billion for Shell shale gas in northeastern BC

PetroChina has bought a 20 per cent stake in Shell Canada’s Groundbirch shale-gas project in north eastern BC, leading to media reports that PetroChina is also investing in Shell’s planned Kitimat liquified natural gas export terminal in Kitimat.

The Groundbirch “play” in the northeastern BC shale gas fields produces 180 million cubic feet of gas a day form 250 wells.

A Hong Kong website, FinanceAsia, reported that PetroChina is paying $1 billion for the stake in the northeast BC shale gas operation.

China Daily confirmed the story, quoting Mao Zefeng, the Beijing-based spokesman of PetroChina, who declined to give the value of the transaction.

China Daily said Shell and PetroChina’s parent agreed in June to increase cooperation in energy exploration in China, estimated to hold the world’s largest reserves of shale gas. The semi-official newspaper says Petro China is looking to Canada to obtain drilling technology and expertise.

“It’s a continuation of our cooperation in China, and we can learn about shale-gas exploration and production by being a partner in the Canadian shale-gas project,” Mao said. “The project will also bring us good investment returns.”

Barron’s also reported that China is looking to get more experience shale gas, quoting Benchmark analyst Mark Gilman who told Dow Jones Newswires. “They are trying to learn about this business, on the basis of their belief that it will better position them to assess and develop similar resources within China,” he said. In fact, Shell and PetroChina are exploring for shale together in China, so the Canadian deal may be a “quid pro quo” gesture to Shell, he added.

Shell executives said at a meeting in London on Thursday that the company has invested $400 million in shale gas exploration in China, funding 15 wells with more in the future.

Last fall, Shell purchased the old Methanex site and the Methanex marine terminal in Kitimat.

Both The Globe and Mail and Postmedia News are tying the investment directly to Shell’s Kitimat LNG export project.

The Globe and Mail says that PetroChina as well as Japan’s Mitsubishi and Korean Gas are stakeholders in the Shell Kitimat LNG project.

PetroChina’s had agreed with Encana, a partner in the KM LNG project to invest $5.4-billion in the company’s shale gas operations in British Columbia. That deal collapsed last fall after the two companies could not agree on finances.

PetroChina is also a heavy investor in the Alberta bitumen sands.

The deal between PetroChina and Shell came on the same day that National Energy Board approved the BC LNG project, the second one to be proposed for Kitimat. The first, approved in October, is the Kitimat LNG project owned by the KM LNG partnership.

It also comes a few days before Prime Minister Stephen Harper begins an official visit to China.

NEB approves BC LNG, second Kitimat LNG project

The National Energy Board has approved a 20-year-export licence for Kitimat’s second LNG project, known as BC LNG. A NEB news release says:

The export licence authorizes BC LNG to export 36 million tonnes of LNG, which is equivalent to approximately 47.9 billion m³ of natural gas, over a 20 year period.

The maximum annual quantity allowed for export will be 1.8 million tonnes of LNG, which amounts to approximately 2.4 billion m³of natural gas.

A co-operative comprised of natural gas producers, marketers and LNG buyers is a central feature of BC LNG’s export proposal, where members of the co-operative will submit bids to provide natural gas to be liquefied or purchase LNG.

A committee will review the bids and choose those that will yield the greatest margin to the co-operative. Membership in the co-operative is currently comprised of thirteen parties, and additional members may join upon request.

BC LNG’s export model permits smaller natural gas market participants in Canada to play a part in exporting LNG. In approving BC LNG’s application, the Board satisfied itself that the quantity of gas to be exported is in excess of the requirements to meet the foreseeable Canadian demand.

The Board also determined that the volumes of natural gas proposed to be exported are not likely to cause Canadians difficulty in meeting their energy requirements at fair market prices.

The Board acknowledged the potential economic benefits associated with BC LNG’s project. In particular, the Board noted the benefits for the Haisla Nation, including an interest in BC LNG, and employment opportunities resulting from the development and operation of the liquefaction facility.

BC LNG Map — Map showing the BC LNG site in Kitimat harbour (NEB)

The Haisla Nation has a 50 per cent stake in the project through the Hasila Nation Douglas Channel Limited Partnership.
The NEB says the Haisla say the new revenue source would allow the First Nation to support health, education, community development and the many other needs of the First Nation and its members. The Haisla say that business and
employment opportunities associated with the development of the LNG terminal and associated
facilities would be available for Haisla members and businesses.

The NEB also says that the Haisla indicated
that a number of other Aboriginal persons, businesses and nations would see economic spinoff benefits from the development.

The NEB decision says there will be two “liquefaction trains” on barges in Kitimat harbour. The
first train is scheduled to commence in 2013-14 and the second train in 2016-18. Each train will
have a daily volume requirement of 3.5 million cubic metres a day (125 MMcf/d) of natural gas. After completion of both trains, the terminal will have an annual liquefaction capacity of 1.8 million tonnes of LNG.

LNG from the Terminal will be pumped directly into an LNG tanker berthed adjacent to the barge. It will take about 30 days to fill a typical LNG tanker and approximately 25 days to make the roundtrip between Kitimat and markets in Asia.

Talisman Energy Inc. and Tenaska Marketing Canada both have a stake in the project.

The NEB approved the first project, known as Kitimat LNG, operated by the KM LNG partnership on October 13, 2011.

That export licence authorized KM LNG to export 200 million tonnes of LNG (equivalent to

BC LNG pipeline map — Map of pipelines that will feed the BC LNG project (NEB)

approximately 265 million 10³m³ or 9,360 Bcf of natural gas) over a 20 year period. The maximum annual quantity allowed for export will be 10 million tonnes of LNG (equivalent to approximately 13 million 10³m³ or 468 Bcf of natural gas). The supply of gas will come from producers located in the Western Canada Sedimentary Basin. Once the natural gas has reached Kitimat by way of the Pacific Trail Pipeline, the gas would then be liquefied at a terminal to be built in Bish Cove, near the Port of Kitimat.

A third LNG project by Shell Canada, which will use the old Methanex site in Kitimat and the old Methanex marine terminal in Kitimat harbour is currently in the preliminary planning stages.

The NEB hearings on the LNG projects are different from the current Joint Review Panel hearings on the Enbridge Northern Gateway Pipeline. The JRP hearings are a “facility hearing” and cover the entire project, including environmental impacts. Since neither LNG project actually crosses a provincial boundary, the NEB’s jurisdiction is limited to granting the export licence.

Not just energy: Asia’s demand for aluminum brings $2.7 billion upgrade for RTA Kitimat smelter

Aluminum
Rio Tinto Alcan president primary metals, Jean Simon, announces the go-ahead for the Kitimat Modernization Project at ceremony at the plant in Kitimat, Dec. 1, 2011. (Robin Rowland/Northwest Coast Energy News)

“It’s a go.”

The “go” meant that the Rio Tinto Alcan board had finally approved spending $2.7 billion for the long awaited Kitimat modernization project that would update the 60-year old aluminum smelter, increasing production capacity by 48 per cent to 420,000 tonnes a year.

Rio Tinto Alcan primary metal president Jean Simon made the announcement Thursday, Dec. 1, 2011 to cheers at a theatre (converted from the dining hall) at the new construction camp at the Kitimat smelter.

That money is in addition to expenditures already approved, bringing the total investment in the modernization project to $3.3 billion US.

“This will help us put Kitimat and Canada at the forefront of the 21st century global aluminum industry,” Simon said. “It is a truly transformational project.” He said it was in line with RTA’s long term strategic objective of long life, large scale, low cost assets. The project, Simon said, will take advantage of Rio Tinto Alcan’s competitive advantages: clean self generated hydro power and leading edge technology.

If all goes as expected, the first new metal will be poured in the first of half of 2014.

The new smelter will use a RTA proprietary smelting technology that reduce carbon dioxide emissions by 50 per cent.

The long planned project had been put on hold in 2008 as the world weathered the financial meltdown.

Kitimat mayor Joanne Monaghan said at the ceremony, “This is something our community has been waiting a very long, long time for….Kitimat has suffered through some very had economic times over the last several years and this announcement means we have the certainty that the aluminum business will be here for the next 35 to 50 years… We’ve seen a lot of industry disappear from Kitimat over the past few year and its been hard on our community. In fact, with Methanex leaving, with Eurocan leaving I felt like the mayor of doom. And then, all of a sudden, all of these things are happening. And I feel like the mayor of boom.

“We know the importance of that first initial investment to show that Kitimat is the strategic place to invest. And when RTA began its expansion, and its construction camp, then all of a sudden three LNG plants came on stream. We had a biomass plant ready to come in. So thank you Alcan for starting that whole trend for people coming into our community.”

It is Asia is fueling Kitimat’s new boom, and not just in natural gas, but also in aluminum. When Kitimat was planned and built 60 and more years ago, Asia, China, Japan, Korea were in ruins, devastated by the Second World War. Now it is Asia, and the short great circle route from Kitimat harbour to the market ports, that is one reason that the Kitimat modernization project was approved.

“Most of the aluminum is going into Asia. Korea, Japan and other countries,” Simon said in a post-ceremony news conference. “We’ve been producing here for 60 years and Kitimat has always been recognized as a very solid, reliable and good quality producer of aluminum so our customers from Asia are demanding the metal from Kitimat. So this is good news for them too.”

Paul Henning, RTA vice president of BC operations, is not only a corporate manager. He was the very entertaining master of ceremonies for the announcement. (Robin Rowland/Northwest Coast Energy News).

Paul Henning, VP BC Operations and strategic projects Western Canada, was asked if Kitimat can handle the demand and possible bottle necks with, as well as Kitimat modernization, three LNG projects, possibly the Enbridge Northern Gateway pipeline and perhaps other projects in the coming couple of years.

“The good news is that we’re first,” Henning said. “The folks who grab the ball usually have a chance. We’re working with those folks. People availability will be the key. I think there’s a lot of common sense going on, these are mega projects. Mega projects need lots of people. I wouldn’t call it coordination, but there is an understanding. They understand our timing, we understand their timing.

“All being equal we’re not competitors. It’s going to be an extended boom for the region. And of course, the projects are stacked, all trying to happen at the same time.

“It’s challenging, just for resources and infrastructure. If they can be spread, it’s a win, win, win. At the end of the day Our business drives what we do in the timing. Their business care drives their timing. At the end of the day, we’re first in.”

Thursday wasn’t the best day to show Kitimat off to the world, with a cold wind driving sleet, snow and rain all at the same time. BC Premier Christy Clark’s plane was turned back from Terrace Kitimat airport and a second aircraft with RTA CEO Jacynthe Cote was redirected to Prince Rupert.

RTA employees and guests watch a slideshow of historic photos of the early days of Kitimat before the official ceremony announcing the go-ahead for the Kitimat modernization project. (Robin Rowland/Northwest Coast Energy News)

As the audience and guests waited for the arrivals that were not to come, there was a slideshow of historic photos on giant LED screens, showing the early days of Kitimat, the construction of the dam, transmission lines, townsite and the potlines.

Then the elaborate ceremony began, with Paul Henning acting as master of ceremonies, introducing the Haisla Spirit of the Kitlope drummers before Simon made the “go” announcement.

It was good community relations that helped the RTA board give the go-head, Simon said.

“We will also honour the landmark Haisla Nation, Rio Tinto Alcan Legacy Agreement and are proud of this partnership to provide opportunities and training and that is resulting in increasing numbers of Haisla Nation members working on the project,” said Simon.

Haisla chief councillor Ellis Ross had been flying up with Christy Clark, so Councillors Henry Amos, Alex Grant and Keith Nyce were at the ceremony on behalf of the Haisla. “On behalf of the Haisla Nation, we offer you a warm welcome to our Traditional Territory. The Haisla Nation has worked very closely with RTA and supported the reality of this important and exciting decision. Together with RTA, our Nation is very proud of the legacy agreement we have reached.” Nyce said.

The Haisla are not only our closest neighbours but our best friends,” Henning said at the news conference. “It hasn’t always been like that. I think leadership from the Haisla, starting with Steve Wilson, transferring to Ellis Ross. Ellis has taken it to another level. The recognition of wanting to engage in the future was the key. We had to recognize and respect that past, to learn how to work together and build for the future.

“It’s actually a cohesive joint approach to economic development and sustainability within the Haisla First Nation and the plant. It actually betters the plant because we have employees that live here, work here, there are 120 Haisla folks who are working within the operation. That to me is sustainability in real time.”

Henning is also confident that the company will successfully negotiate a new contract with the Canadian Auto Workers local. Henning said that 2007 contract was designed to get the company through to first hot metal but then the financial crisis struck.”The good news gives us certainty.”Henning said. “We know what we have to drive for. We’ll get a contract, we’ll get a contract, we always do. Some are prettier than others. The confidence from this is a great start. The union were here today, I am confident that we will get through and get a contract that really fits this program.”

After he took the podium, Michel Lamarre, director of the Kitimat Modernization Project joked. “We often say that when we get married, and it’s raining, the marriage is very strong and I think this is going to be the case for the KMP project.” He said Kitimat management had made a very solid case for a very solid project to the RTA board.

Michel Lamarre, director of the Kitimat modernization project, talks about the challenges of the next two years until first metal in 2014. (Robin Rowland/Northwest Coast Energy News)

“We are building a state of the art facility which will be a jewel. This is something we can all be proud of… The next two years will be very busy and very exciting. Let’s build the project with zero harm, zero harm to the people who are building it and zero harm to the environment.”

The weather was just too nasty for an official ground breaking ceremony at the construction site, so it was moved indoors, with RTA executives and employees, the Haisla representatives and Mayor Monaghan turning the shovels into a ceremonial pile of dirt.

The indoor groundbreaking ceremony marking the approval of the Kitimat modernization project. Left to right Michel Lamarre, director KMP, RTA operations employee Ron Leibach, Brent Hegger, VP major projects, Kitimat mayor Joanne Monaghan, Jean Simon, RTA president primary metals, Paul Henning, VP BC operations and Henry Amos, Councillor, Haisla Nation. (Dwight Magee/RTA)