A report issued by Ernst & Young, The Global LNG Report, says that there will be strong demand for liquified natural gas over the next 10 to 20 years. At the same time LNG buyers will increasingly push back from “price-sensitive buyers who are likely to be less willing to pay supply security premiums.
That means that the pricing for LNG in Asia will move away from the link to the price of oil, which, so far, has been driving the potential profit picture of Kitimat’s LNG projects.
Ernst & Young says:
Even with reasonably strong demand growth, this implies growing supply-side competition and upward pressures on development costs and downward pressures on natural gas prices. Nevertheless, the very positive longer-term outlook for natural gas is driving investment decisions, both in terms of buyers’ willingness to sign long-term contracts and sellers’ willingness to commit capital to develop the needed projects.
The report says there have been three waves of LNG development.
The first wave was dominated by Algeria, Malaysia and Indonesia, while the second wave has been dominated by Qatar and Australia. The third wave could come from as many as 25 other countries, many of which currently have little or no capacity; but by 2020, these countries could provide as much as 30 per cent of the world’s LNG capacity.
The accounting and consulting firm says the most important LNG exporters will be those in western Canada and the United States “where the source gas is likely to be priced on a spot basis, unlike gas elsewhere in the world which is generally priced (wholly or partially) on an oil-linked basis.”
The report, and the charts that accompany it, show that Kitimat appears to be well positioned in the new LNG market. That’s because the capital cost of developing LNG projects in Kitimat, when
compared to potential return, is a lot lower than in many competing countries.
The one problem Kitimat may face in the future is competition from U.S. “brownfield” developments that could turn import terminals into export terminals.
Ernst and Young says that country most cited as Kitimat’s competition Australia, is facing problems.
LNG project proposals are growing faster than industry’s capabilities to develop them. Generally at the high-end of the cost curve, with development bottlenecks and spiraling construction costs, Australian projects are typically under the most pressure. Sanctioned projects are generally less significantly impacted, but projects still seeking contracted off-take are at substantial risk.
One advantage for Kitimat may be that buyers, worried about the volatility of the market, may be more inclined to sign long term contracts.
Overall Ernst & Young concludes:
The proposed North American LNG export projects are particularly well-positioned, even though the US Gulf Coast projects will give up some of their Free On Board (FOB) cost advantage with higher shipping costs. As substantial volumes of lower-cost LNG move into Asian markets, projects at the high end of the supply curve – namely, many of the Australian projects – will become increasingly vulnerable.
Going forward over the medium-to-longer-term, Ernst & Young expects to see a gradual but partial migration away from oil-linked pricing to more spot or hub-based pricing. LNG sellers are reluctantly facing realities and are offering concessions in order to remain competitive.
Dale Nijoka, Ernst & Young’s Global Oil & Gas Leader concludes: “LNG prices are unlikely to collapse, simply because the cost to supply is high and incentives to develop new capacity must be maintained.”
The Panama registered bulk carrier Azuma Phoenix is seen tied up at Kitimat harbour on the afternoon of Jan 9, 2012. In March 2013. the federal government announced it was making the private port of Kitimat into a public port. (Robin Rowland)
When the story of the Stephen Harper government is told, historians will say that the week of March 17 to 23, 2013, is remembered, not for the release of a lacklustre federal budget, but for day after day of political blunders that undermined Harper’s goal of making a Canada what the Conservatives call a resource superpower.
It was a week where spin overcame substance and spun out of control.
The Conservative government’s aim was, apparently, to increase support for the Enbridge Northern Gateway pipeline project with a spin campaign aimed at moving the middle ground in British Columbia from anti-project to pro-project and at the same time launching a divide and conquer strategy aimed at BC and Alberta First Nations.
It all backfired. If on Monday, March 17, 2013, the troubled and controversial Enbridge Northern Gateway project was on the sick list, by Friday, March 23, the Enbridge pipeline and tanker scheme was added to the Do Not Resuscitate list, all thanks to political arrogance, blindfolded spin and bureaucratic incompetence. The standard boogeymen for conservative media in Canada (who always add the same sentence to their stories on the Northern Gateway) “First Nations and environmentalists who oppose the project” had nothing to do with it.
Stephen Harper has tight control of his party and the government, and in this case the billion bucks stop at the Prime Minister’s Office. He has only himself to blame.
All of this happened on the northern coast of British Columbia, far out of range of the radar of the national media and the Ottawa pundit class (most of whom, it must be admitted, were locked up in an old railway station in the nation’s capital, trying interpret Finance Minister Jim Flaherty’s spreadsheets).
The story begins early on that Monday morning, at my home base in Kitimat, BC, the proposed terminal for Northern Gateway, when a news release pops into my e-mail box, advising that Natural Resources Minister Joe Oliver would be in nearby Terrace early on Tuesday morning for an announcement and photo op.
I started making calls, trying to find out if anyone in Kitimat knew about Oliver’s visit to Terrace and if the minister planned to come to Kitimat.
Visitors to Kitimat
I made those calls because in the past two years, Kitimat has seen a parade of visitors checking out the town and the port’s industrial and transportation potential. The visitors range from members of the BC provincial Liberal cabinet to the staff of the Chinese consulate in Vancouver to top executives of some of the world’s major transnational corporations (and not just in the energy sector). Most of these visits, which usually include meetings with the District of Kitimat Council and District senior staff as well as separate meetings with the Council of the Haisla Nation, are usually considered confidential. There are no photo ops or news conferences. If the news of a visit is made public, (not all are), those visits are usually noted, after the fact, by Mayor Joanne Monaghan at the next public council meeting.
It was quickly clear from my calls that no one in an official capacity in Kitimat knew that, by the next morning, Oliver would be Terrace, 60 kilometres up Highway 37. No meetings in Kitimat, on or off the record, were scheduled with the Minister of Natural Resources who has been talking about Kitimat ever since he was appointed to the Harper cabinet.
I was skeptical about that afternoon’s announcement/photo op in Vancouver by Transport Minister Denis Lebel and Oliver about the “world class” tanker monitoring.
After all, there had been Canadian Coast Guard cutbacks on the northwest coast even before Stephen Harper got his majority government. The inadequacy of oil spill response on the British Columbia coast had been condemned both by former Auditor General Sheila Fraser and in the United States Senate. The government stubbornly closed and dismantled the Kitsilano Coast Guard station. It’s proposing that ocean traffic control for the Port of Vancouver be done remotely from Victoria, with fixed cameras dotted around the harbour. Leaving controllers in Vancouver would, of course, be the best solution, but they must be sacrificed (along with any ship that get’s into trouble in the future, on the altar of a balanced budget).
The part of the announcement that said there would be increased air surveillance is nothing more than a joke (or spin intended just for the Conservative base in Alberta, Saskatchewan and the Toronto suburbs,that is not anyone familiar with BC coastal waters). Currently the Transport Canada surveillance aircraft are used on the coasts to look for vessels that are illegally dumping bilge or oil off shore. As CBC’s Paul Hunter reported in 2010, Transport Canada aircraft were used after the Gulf of Mexico oil disaster to map where the oil was going after it erupted from the Deepwater Horizon.
Given the stormy weather on the west coast (when Coast Guard radio frequently warns of “hurricane force winds”) it is highly unlikely that the surveillance aircraft would even be flying in the conditions that could cause a major tanker disaster. Aerial surveillance, even in good weather, will never prevent a tanker disaster caused by human error.
I got my first chance to look at the Transport Canada website in late afternoon and that’s when a seemingly innocuous section made me sit up and say “what is going on?” (I actually said something much stronger).
Public port
Public port designations: More ports will be designated for traffic control measures, starting with Kitimat.
(Transport Canada actually spelled the name wrong—it has since been fixed—as you can see in this screen grab).
Kitimat has been one of the few private ports in Canada since the Alcan smelter was built and the town founded 60 years ago (the 60th anniversary of the incorporation of the District of Kitimat is March 31, 2013).
The reasons for the designation of Kitimat as a private port go back to a complicated deal between the province of British Columbia and Alcan in the late 1940s as the two were negotiating about electrical power, the aluminum smelter, the building of the town and the harbour.
For 60 years, Alcan, later Rio Tinto Alcan, built, paid for and operated the port as a private sector venture. For a time, additional docks were also operated by Eurocan and Methanex. After Eurocan closed its Kitimat operation that dock was purchased by the parent company Rio Tinto. The Methanex dock was purchased by Royal Dutch Shell last year for its proposed LNG operation.
The announcement that Kitimat was to become a public port was also something that the national media would not recognize as significant unless they are familiar with the history of the port. That history is known only to current and former residents of Kitimat and managers at Rio Tinto Alcan.
The port announcement came so much out of left field; so to speak, that I had doubts it was accurate. In other words, I couldn’t believe it. I went to Monday evening’s meeting of District of Kitimat Council and at the break between the open and in-camera sessions, I asked council members if they had heard about Kitimat being redesignated a public port. The members of the district council were as surprised as I had been.
Back from the council meeting, I checked the Transport Canada news release and backgrounders. I also checked the online version of Bill C-57, the enabling act for the changes announced earlier that day. There was no mention of Kitimat in Bill C-57.
Tuesday morning I drove to Terrace for Joe Oliver’s 9 am photo op and the announcement at Northwest Community College (NWCC) that the government had appointed Douglas Eyford as a special envoy to First Nations for energy projects, an attempt on the surface to try and get First Nations onside for the pipeline projects, an appointment seen by some First Nations leaders as an attempt by the Harper government to divide and conquer.
As an on site reporter, I got to ask Oliver two questions before the news conference went to the national media on the phones.
In answer to my first question, Oliver confirmed that the federal government had decided to make Kitimat a public port, saying in his first sentence: “What the purpose is to make sure that the absolute highest standards of marine safety apply in the port of Kitimat.” He then returned to message track saying, “we have as I announced yesterday and I had spoken about before at the port of Vancouver we have an extremely robust marine safety regime in place but we want to make sure that as resource development continues and as technology improves, we are at the world class level. As I also mentioned there has never been off the coast of British Columbia a major tanker spill and we want to keep that perfect record.”
For my second question, I asked Oliver if he planned to visit Kitimat.
He replied. “Not in this particular visit, I have to get back [to Ottawa] There’s a budget coming and I have to be in the House for that but I certainly expect to be going up there.”
The question may not have registered with the national media on the conference call. For the local reporters and leaders in the room at Waap Galts’ap, the long house at Terrace’s Northwest Community College, everyone knew that Kitimat had been snubbed.
Back in Kitimat, I sent an e-mail to Colleen Nyce, the local spokesperson for Rio Tinto Alcan noting that Joe Oliver had confirmed that the federal government intended to make the RTA-run port a public port. I asked if RTA had been consulted and if the company had any comment.
Nyce replied that she was not aware of the announcement and promised to “look into this on our end.” I am now told by sources that it is believed that my inquiry to Nyce was the first time Rio Tinto Alcan, one of Canada’s biggest resource companies, had heard that the federal government was taking over its port.
The next day, Kitimat Mayor Joanne Monaghan told local TV news on CFTK the Kitimat community was never consulted about the decision and she added that she still hadn’t been able to get anyone with the federal government to tell her more about the plan.
Who pays for the navigation aids?
Meanwhile, new questions were being raised in Kitimat about two other parts of the Monday announcement.
New and modified aids to navigation: The CCG will ensure that a system of aids to navigation comprised of buoys, lights and other devices to warn of obstructions and to mark the location of preferred shipping routes is installed and maintained. Modern navigation system: The CCG will develop options for enhancing Canada’s current navigation system (e.g. aids to navigation, hydrographic charts, etc) by fall 2013 for government consideration.
Since its first public meeting in Kitimat, in documents filed with the Northern Gateway Joint Review Panel, in public statements and advertising, Enbridge has been saying for at least the past four years that the company would pay for all the needed upgrades to aids to navigation on Douglas Channel, Wright Sound and other areas for its tanker traffic. It is estimated that those navigation upgrades would cost millions of dollars.
Now days before a federal budget that Jim Flaherty had already telegraphed as emphasizing restraint, it appeared that the Harper government, in its desperation to get approval for energy exports, was going to take over funding for the navigation upgrades from the private sector and hand the bill to the Canadian taxpayer.
RTA not consulted
On Thursday morning, I received an e-mail from Colleen Nyce with a Rio Tinto Alcan statement, noting:
This announcement was not discussed with Rio Tinto Alcan in advance. We are endeavoring to have meetings with the federal government to gain clarity on this announcement as it specifically relates to our operations in Kitimat.
On Friday morning, Mayor Monaghan told Andrew Kurjata on CBC’s Daybreak North that she had had at that time no response to phone calls and e-mails asking for clarification of the announcement. Monaghan also told CBC that Kitimat’s development officer Rose Klukas had tried to “get an audience with minister and had been unable to.” (One reason may be that Oliver’s staff was busy. They ordered NWCC staff to rearrange the usual layout of the chairs at Waap Galts’ap, the long house, to get a better background for the TV cameras for Oliver’s statement).
Natural Resources Minister Joe Oliver (front far right) answers questions after his news conference at the Northwest Community College Long House, March 19, 2013. (Robin Rowland)
Monaghan told Kurjata, “I feel like it’s a slap in the face because we’re always being told that we’re the instrument for the whole world right now because Kitimat is supposed to be the capital of the economy right now. So I thought we’d have a little more clout by now and they’d at least tell us they were going to do this. There was absolutely no consultation whatsoever.”
By Friday afternoon, five days after the announcement, Transport Canada officials finally returned the calls from Mayor Monaghan and Rose Klukas promising to consult Kitimat officials in the future.
Monaghan said that Transport Canada told her that it would take at least one year because the change from a private port to a public port requires a change in legislation.
Transport Canada is now promising “extensive public and stakeholder consultation will occur before the legislation is changed,” the mayor was told.
On this Mayor Monaghan commented, “It seems to me that now they want to do consultation….sort of like closing the barn door after all of the cows got out!”
Blunder No 1. Pulling the rug out from Northern Gateway
Joe Oliver and the Harper government sent a strong political signal to Kitimat on Tuesday; (to paraphrase an old movie) your little town doesn’t amount of a hill of beans in this crazy world.
There are a tiny handful of people in Kitimat openly in favour of the Northern Gateway project. A significant minority are on the fence and some perhaps leaning toward acceptance of the project. There is strong opposition and many with a wait and see attitude. (Those in favour will usually only speak on background, and then when you talk to them most of those “in favour” have lists of conditions. If BC Premier Christy Clark has five conditions, many of these people have a dozen or more).
Oliver was speaking in Terrace, 60 kilometres from Kitimat. It is about a 40 to 45 minute drive to Kitimat over a beautiful stretch of highway, with views of lakes, rivers and mountains.
Scenic Highway 37 is the route to the main location not only for the controversial Northern Gateway pipeline but three liquefied natural gas projects, not to mention David Black’s proposed refinery half way between Terrace and Kitimat.
Why wouldn’t Kitimat be a must stop on the schedule for the Minister of Natural Resources? In Terrace, Oliver declared that Kitimat was to become a public port, run by the federal government. Although technically that would be the responsibility of Denis Lebel, the Minister of Transport, one has to wonder why the Minister of Natural Resources would not want to see the port that is supposedly vital to Canada’s economy? You have to ask why he didn’t want to meet the representatives of the Haisla Nation, the staff and council of the District of Kitimat and local business leaders?
Oliver has been going across Canada, the United States and to foreign countries promoting pipelines and tanker traffic, pipelines that would terminate at Kitimat and tankers that would send either bitumen or liquefied natural gas to customers in Asia.
Yet the Minister of Natural Resources is too important, too busy to take a few hours out of his schedule, while he is in the region, to actually visit the town he has been talking about for years.
He told me that he had to be in Ottawa for the budget. Really? The budget is always the finance minister’s show and tell (with a little help from whomever the Prime Minister is at the time). On budget day, Oliver would have been nothing more than a background extra whenever the television cameras “dipped in” on the House of Commons, between stories from reporters and experts who had been in the budget lockup.
According to the time code on my video camera, Oliver’s news conference wrapped at 9:50 a.m., which certainly gave the minister and his staff plenty of time to drive to Kitimat, meet with the representatives of the District, the Haisla Nation and the Chamber of Commerce and still get to Vancouver for a late flight back to Ontario.
On Tuesday, Joe Oliver’s snub pulled the political rug out from under the Northern Gateway supporters and fence sitters in Kitimat. Oliver’s snub showed those few people in Kitimat that if they do go out on a limb to support the Northern Gateway project, the Conservatives would saw off that limb so it can be used as a good background prop for a photo op.
Prince Rupert, Terrace and Smithers councils have all voted against the Northern Gateway project. Kitimat Council, despite some clear divisions, has maintained a position of absolute neutrality. Kitimat Council will continue to be officially neutral until after the Joint Review report, but this week you could hear the air slowly leaking out of the neutrality balloon.
Oliver may still believe, as he has frequently said, that the only people who oppose Northern Gateway are dangerous radicals paid by foreign foundations.
What he did on Tuesday was to make the opposition to Northern Gateway in Kitimat into an even more solid majority across the political spectrum.
Blunder No 2. Rio Tinto Alcan
It doesn’t do much for the credibility of a minister of natural resources to thoroughly piss off, for no good reason, the world’s second largest mining and smelting conglomerate, Rio Tinto. But that’s just what Joe Oliver did this week.
I am not one to usually have much sympathy with rich, giant, transnational corporations.
But look at this way, over the past 60 years Alcan and now Rio Tinto Alcan have invested millions upon millions of dollars in building and maintaining the Kitimat smelter and the port of Kitimat. RTA is now completing the $3.3 billion Kitimat Modernization Project. Then without notice, or consultation, the Conservative government—the Conservative government—announces it is going to take over RTA’s port operations. What’s more, if what Transport Canada told Mayor Joanne Monaghan is correct, the federal government is going to start charging RTA fees to use the port it has built and operated for 60 years.
Too often RTA’s London headquarters acts like it is still the nineteenth century and the senior executives are like British colonialists dictating to the far reaches of the Empire on what do to do.
No matter what you think of RTA, it boggles the mind, whether you are right wing, left wing or mushy middle, that the federal government simply issues a press release–a press release– with not even a phone call, not even a visit (even to corporate headquarters) saying “Hey RTA, we’re taking over.”
There’s one thing that you can be sure of, Rio Tinto Alcan’s lobbyists are going to be earning their fees in the coming weeks.
(One more point, even if there wasn’t a single pipeline project planned for Kitimat you would think that the Minister of Natural Resources would want to see what is currently the largest and most expensive construction project in Canada, a project that comes under his area of political responsibility).
It took five days, from the time of the minister’s news conference on Monday until Friday afternoon, for officials in Transport Canada to return phone calls from Mayor Joanne Monaghan and Rose Klukas, to explain what was going to happen to the Port of Kitimat.
This week was yet another example of the decay of Canadian democracy under Stephen Harper. Executives from Tokyo to Houston to the City of London quickly return phone calls from the District of Kitimat, after all Kitimat is where the economic action is supposed to be. At the same time, the federal government doesn’t return those calls, it shows that something really is rotten in our state.
Blunder No 5. LNG
There are three liquefied natural gas projects slated for Kitimat harbour, the Chevron-Apache partnership in KM LNG, now under construction at Bish Cove; the Royal Dutch Shell project based on the old Methanex site and the barge based BC LNG partnership that will work out of North Cove.
None of these projects have had the final go ahead from the respective company board of directors. So has the federal government thrown the proverbial monkey wrench into these projects? Will making Kitimat a public port to promote Enbridge, help or hinder the LNG projects? Did the Ministry of Natural Resources even consider the LNG projects when they made the decision along with Transport Canada to take over the port?
And then there’s…..
Kitimat has a marina shortage, especially since RTA closed the Moon Bay Marina. The only one left, the MK Bay Marina, which is straining from overcapacity, is owned by the Kitimat-Stikine Regional District. That means there will be another level of government in any talks and decisions on the future of the Kitimat harbour. There are also the controversial raw log exports from nearby Minette Bay.
Although Transport Canada has promised “extensive public and stakeholder consultation,” one has to wonder how much input will be allowed for the residents of Kitimat and region, especially the guiding and tourism industries as well as recreational boaters. After all, the Harper government is determined to make Kitimat an export port for Alberta and the experience of the past couple of years has shown that people of northwest count for little in that process. Just look at the Northern Gateway Joint Review, which more and more people here say has no credibility.
Big blunder or more of the same?
I’ve listed five big blunders that are the result of the decision by the Harper government to turn Kitimat into a public port.
Are they really blunders or just more of the same policies we’ve seen from Stephen Harper since he became a majority prime minister?
This is a government that has muzzled scientific research and the exchange of scientific ideas. The minister who was in the northwest last week, who has demonized respect for the environment, is now squeezing the words “science” and “environment” anywhere into any message track or speech anyway he can.
That’s just the point. Joe Oliver’s fly-in, fly-out trip to Terrace was not supposed to have any substance. Changing the chairs at the Waap Galts’ap long house showed that it was more important to the Harper government to have some northwest coast wall art behind Joe Oliver for his photo op than it was to engage meaningfully with the northwest, including major corporations, First Nations and local civic and business leaders.
Joe Oliver’s visit to Terrace was an example of government by reality television. The decision to change the private port of Kitimat into a public port was another example of Harper’s government by decree without consulting a single stakeholder. The problem is, of course, that for decades to come, it will be everyone in northwest British Columbia who will be paying for those 30 second sound bites I recorded on Tuesday.
Epilogue: Alcan’s legacy for the socialist Prime Minister, Stephen Harper
If an NDP or Liberal government had done what Harper and Oliver did on Monday, every conservative MP, every conservative pundit, every conservative media outlet in Canada would be hoarse from screaming about the danger from the socialists to the Canadian economy.
That brings us to the legacy left by R. E. Powell who was president of Alcan in the 1940s and 50s as the company was building the Kitimat project.
As Global Mission, the company’s official history, relates, in 1951, Alcan signed an agreement with the British Columbia provincial government, that “called upon the company to risk a huge investment, without any government subsidy or financial backing and without any assured market for its product.”
According to the book, Powell sought to anticipate any future problems, given the tenor of the times, the possible or even likely nationalization of the smelter and the hydro-electric project.
So Powell insisted that the contract signed between Alcan and the province include preliminary clauses acknowledging that Alcan was paying for Kitimat without a single cent from the government:
Whereas the government is unwilling to provide and risk the very large amounts of money required to develop those water powers to produce power for which no market now exists or can be foreseen except through the construction of the facilities for the production of aluminum in the vicinity and….
Whereas the construction of the aluminum plant at or near the site of the said waterpower would accomplish without risk or to the GOVERNMENT the development power, the establishment of a permanent industry and the new of population and….
(Government in all caps in the original)
…the parties hereto agree as follows (the agreement, water licence and land permit)
Powell is quoted in the book as saying:
I asked the political leaders of BC if the government would develop the power and sell the energy to Alcan and they refused. We had to do it ourselves. Someday, perhaps, some politician will try to nationalize that power and grab it for the state. I will be dead and gone but some of you or your successors at Alcan may be here, and I hope the clauses in the agreement, approved by the solemn vote of the BC legislature, will give those future socialists good reason to pause and reflect.
In the late 1940s and early 1950s, the federal government had very little to do with the Kitimat project. With the declaration that Kitimat will be a public port, the federal government comes to the party 60 years late. But one has to wonder if the late Alcan president, R.E. Powell, ever considered that the “future socialists” he hoped would “pause and reflect” would be members of Canada’s Conservative party, Stephen Harper, Joe Oliver and Denis Lebel?
Minister of Natural Resources Joe Oliver answers a reporter’s question during a news conference in Terrace, March 19, 2013 (Robin Rowland)
Joe Oliver, the Minister of Natural Resources, has confirmed that the federal government intends to make Kitimat a public port.
Oliver was in Terrace, March 19, 2013, to announce the appointment of Vancouver lawyer Douglas Eyford as “Special Federal Representative on West Coast Energy Infrastructure.” Eyford’s job will be to “engage aboriginal communities in British Columbia and Alberta that are most likely to have an interest in West Coast energy infrastructure.”
Oliver replied: “The news release was accurate. What the purpose is to make sure that the absolute highest standards of marine safety apply in the port of Kitimat. And we have as I announced yesterday and I had spoken about before at the port of Vancouver we have an extremely robust marine safety regime in place but we want to make sure that as resource development continues and as technology improves, we are at the world class level. As I also mentioned there has never been off the coast of British Columbia a major tanker spill and we want to keep that perfect record.”
No visit to Kitimat
Oliver was also asked if he intended to visit Kitimat during his visit to the northwest (Kitimat is a 40 minute drive from Terrace). Oliver replied, “Not in this particular visit, I have to get back [to Ottawa] There’s a budget coming and I have to be in the House for that but I certainly expect to be going up there.”
The federal budget will be released on Thursday.
At Monday’s meeting of District of Kitimat council, some members quietly expressed frustration, to say the least, that Oliver, the man responsible for pushing the Northern Gateway pipeline through British Columbia to Kitimat had not bothered to include the town in his visit to the northwest.
Members of the District of Kitimat council, which on paper at least, is responsible for the port of Kitimat (even though it is really run by Rio Tinto Alcan) also expressed frustration that no one in Ottawa gave the council advance notice of the government decision to take the port public.
Asked for comment on Oliver’s statement, Rio Tinto Alcan officials in Kitimat also seemed unaware of the government announcement and promised a statement in the near future.
Oliver’s announcement in Vancouver Monday about a “world class” marine safety system and today’s announcement about the appointment of Douglas Eyford, appear to be a campaign by the Harper government to establish a stake in the middle ground in the pipeline debates, in hopes of undermining the opponents of the projects.
Skeena Bulkley Valley MP Nathan Cullen, in a news release, expressed reservations about Eyford’s appointment.
“The primary concern with the appointment, Cullen said, is that Mr. Eyford will report to the Prime Minister, not to Parliament or the public. “So, if Mr. Eyford’s report is in any way unfavourable to the Conservative pipeline agenda, what assurances do we have that his report will make its way into the public eye?
“It is also unclear how the appointment would affect Eyford’s work as the chief government negotiator for the federal government’s comprehensive land claims process, and what kind of effect his absence will have on that process.”
Ron Link of KM LNG addresses District of Kitimat Council on a building permit for the work camp. (Robin Rowland)
District of Kitimat Council tonight (March 4, 2013) approved building permits for the KMLNG work camp at the old West Fraser Eurocan paper mill site.
The first phase of the camp, called 1A will have 155 beds, followed by a second camp, called 1B with 145 beds. Council also approved a second phase, Camp 2, which will have an additional 300 beds. The camp will consist of single-storey, 44 bed dormitories, similar to those now being used at the Rio Tinto Alcan Kitimat Modernization project, a couple of kilometres away.
“This camp will support the construction of the LNG terminal,” KM LNG’s Ron Link told council, “the focus right now is a 600 man camp. Beyond that, if the final investment decision is approved, it will eventually grow to 2,800.
To build the camp KMLNG will have to demolish some of the remaining blow pipes and chip screening facilites that are there.
“Under the regulations it is a contaminated site and we have a company called Constega Rovers that are participating in sampling the site. It is certainly our attention to clean it up.
If the full 2,800 bed camp is built, the remaining part of the facility will be directly west of the current proposed campsite.
Later in the meeting council continued to debate the contenious issue of an over all camp policy for the District of Kitimat and voted to instruct district staff to “bring back a calendar with the process and dates for discussing camp policy.”
Staff would prepare a document indicating where camps are presently permitted within the District of Kitimat followd by a committee of the whole meeting dedicated to the pros and cons of camps within the district and perferred locations, services provided by the district and size limits.
There will likely be both a public town hall and a “public meeting” of council to discussion the issues later in the spring,
The debate was prompted bya proposal from the PTI Group to build a large “lodge style” work camp within the boundaries of the residential part of Kitimat, near the hospital and City Centre Mall. The PTI proposal would require amendments to both zoning and the Official City Plan. The KMLNG and RTA camps are in areas zoned for industrial use and would not be affected by a change to the official plan for the residential area.
As part of the strengthened and modernized Canadian Environmental Assessment Act, 2012 (CEAA 2012) put in place to support the government’s Responsible Resource Development Initiative, the Canadian Environmental Assessment Agency must decide whether a federal environmental assessment is required for the proposed Pacific Northwest LNG Project in British Columbia. To assist it in making its decision, the Agency is seeking comments from the public on the project and its potential effects on the environment.
Progress Energy Canada Ltd. is proposing to construct and operate a liquefied natural gas (LNG) facility and marine terminal near Prince Rupert, within the District of Port Edward. The Pacific Northwest LNG facility would be located on Lelu Island. The proposed project would convert natural gas to LNG for export to Pacific Rim markets in Asia.
The agency says written comments must be submitted by March 11, 2013.
The CEAA says it will post its decision on the website if a federal environmental assessment is required.
It goes on to say:
If it is determined that a federal environmental assessment is required, the public will have three more opportunities to comment on this project, consistent with the transparency and public engagement elements of CEAA 2012.
Projects subject to CEAA 2012 are assessed using a science-based approach. If the project is permitted to proceed to the next phase, it will continue to be subject to Canada’s strong environmental laws, rigorous enforcement and follow-up, and increased fines.
By “CEAA 2012,” the agency is referring to the omnibus bill, best known as C-38, which actually weakened the CEAA’s ability to review projects. “Science-based approach” has become a stock phrase used by the government of Stephen Harper on resource issues, while it weakened environmental review procedures, terminated the jobs of hundreds of scientists and restricted those who are left in the government from speaking to the media or commenting on issue.
Both the Conservative government of Stephen Harper and Enbridge Northern Gateway have “poisoned the well” against industrial developers in the northwest of BC and that is increasing resistance to all projects, Skeena Bulkley Valley MP and NDP House Leader told reporters Thursday, February 14.
Cullen was speaking during a regular conference call held with northwest BC media and was promoting his current Renewal Northwest tour of the riding.
“[There is a] huge amount of investment in the northwest,” Cullen said. The Renewal Northwest tour, he said, is intended to “bring the public into it, knowing good from bad, right from wrong.because some of these projects that will be excently suited for the northwest and others pose far too many risks. And how do you make that decision?”
“It’s a conversation a lot of people have been itching to get at.” Cullen said because in northern British Columbia a significant number of people have resisted development, whether it’s the proposed Northern Gateway pipline or fracking in the Sacred Headwaters of the Skeena, Stikine and Nass Rivers.
“Once you get past the conversation of what you don’t want, comes the conversation of what we do want.” Cullen said. “That means good jobs that fit in with our local ecology and our own values. It’s never been really been brought altogether.”
“To be honest most of the developers I talk to, most ofthe people looking to do mining or a gas pipeline or some other project are also looking for those same guidelines. What is it that the northwest wants? How is it that we can the social licences we call it to operate here?
“I’ve spoken to a number of these proponents and a lot of them realize that the well has been poisoned in part by the Harper government who has tried to bully people and call them names and shut down their voices. People get their backs up when they do that. It’s won them no friends.” Cullen said.
“In the case of Enbridge, a lot of those proponents will privately talk to you about how much harder it is to have a conversation in a community after Enbridge has been through town and offended people or just presented something in such a way that people get very resitant.
“I think that there has to be some repair work that has to be done. People do not have faith in the Harper government to protect some of these other values.
“Some of these companies have an up hill struggle based on recent community experience from which the likes of Enbridge has made them quite aware.
“A lot of them are picking up best practices.which is ‘don’t do what Enbridge did,’ do something smarter, more inclusive, and less abrasive. So people are learning there’s a path. We just have to describe what that path looks like.”
(An executive of one company planning an LNG development told Northwest Coast Energy News some months ago, “We’re looking at what Enbridge did and doing the opposite.”)
On the other hand, Cullen believes Enbridge is continuing to go in the opposite direction.
“Enbridge has been learning from the Harpter government doing these omnibus revisions to their pipeline and routing plans, dumpng huge amounts of paper, including increasng the amount of bitumen increasing the threat. All the time the federal government doesn’t seem to mind, Consistently British Columbia residents remain opposed and consistently opposed, with very at all supportive, I think the last poll had 11 per cent strongly support the project.”
“This is a continuation of a pattern from this government, they are now trying to muzzle people , they don’t actually control and folks are resisting cause it goes against every princple of what good science is you put it out into the public sphere for debate and learning,” Cullen said. “It shows that the government isn’t interested in those facts.
“So it gets worse and worse. It goes back to an earlier question about what it’s like to work in the northwest , the well is poisoned by the Harper government when it comes to any of these questions because thy do things like this and people lose any confidence that the government’s impartial. Well, it’s obviously not, It’s only looking for one answer with anything to do with oil and gas in particular. Anyone who presents anything like science or evidence to the contrary is just shut down and muzzled and I am glad to see the scientific community shows backbone and resists.”
Chevron is accepting online applications for the position of Kitimat Plant Logistics Manager located in Houston, TX through February 19, 2013 at 11:59 p.m. (Eastern Standard Time).
The Kitimat LNG project is located in Western Canada and includes 1) construction of the 2 x 5.5 MTPA Kitimat LNG Plant and 2) the Pacific Trails Pipeline.
Responsibilities for this position may include but are not limited to:
Responsibility for overseeing and managing the entire plant logistics program including module, equipment and bulk cargo logistics throughout the overall supply chain. Development of the necessary organizational capability within the Kitimat team, Engineering, Procurement & Construction (EPC) Re / Engineering, Procurement and Construction (Management) (EPCM) Contractor organization, and selected logistics contractors’ organizations
Assist in the development of contract ITB templates and scopes of work for project logistics contracts for (a) Heavy module marine/road transport and (b) General cargo transport from worldwide locations to module yards and Kitimat, freight forwarding services, and in-country transport, including development of criteria to evaluate bids.
Oversee the selected logistics contractors’ performance of project logistics, focusing primarily on the movement of prefabricated modules from multiple locations to ports near Kitimat.
The National Energy Board has approved an application by Shell Canada’s LNG Canada Development Inc. (LNG Canada) a licence to export liquefied natural gas from a proposed terminal near Kitimat.
The export licence will authorize LNG Canada to export 670 million tonnes of LNG (approximately equivalent to 32.95 trillion cubic feet of natural gas) over a 25-year period. The maximum annual quantity allowed for export will be 24 million tonnes of LNG (approximately equivalent to 1.18 trillion cubic feet of natural gas). The daily equivalent of these exports is 3.23 billion cubic feet per day.
In approving the application, the Board satisfied itself that the quantity of gas to be exported does not exceed the surplus remaining after due allowance has been made for the reasonably foreseeable requirements for use in Canada, having regard to the trends in the discovery of gas in Canada.
The Haisla Nation, the federal government and the province of British Columbia have signed an agreement that opens the way for liquified natural gas development on Haisla territory on Douglas Channel.
The federal government also announced new regulations under the the First Nations Commercial and Industrial Development Act (FNCIDA). The regulations are necessary because First Nations are still governed by provisions of the century old Indian Act and reserve land is outside of provincial jurisdiction.
The agreement was announced at a news conference in Vancouver today, January 22, 2013. At this point it mainly concerns the Kitimat LNG project (also known as KM LNG)
The tripartite agreement with the Government of Canada, Government of British Columbia and Haisla Nation “ensures administrative, monitoring and compliance activities for the LNG facility are performed and enforced by provincial officials.”
The news release also quotes Haisla Chief Counsellor Ellis Ross as saying: “Kitimat LNG offers new, important and sustainable economic opportunities which the Haisla people are eager to embrace. We have seen new jobs, business opportunities, and skills training come to our people since KM LNG signed its agreement with us, and we know that the agreement signed today with Canada and BC is a milestone in making the project a reality. On behalf of the 1,700 Haisla people, I thank both governments for their commitment to this important agreement and the better future it is bringing our people.”
The federal news release goes on to quote BC Community, Sport and Cultural Development Minister Bill Bennett as saying: “The BC Government is working with industry and First Nations to foster economic growth through the expansion of our province’s natural gas sector. I would like to thank the Government of Canada and the Haisla Nation for working with us to move the Kitimat LNG facility another step forward.”
The federal release also quotes executives from both major companies involved in the Kitimat LNG project, Apache and Chevron. Chevron recently took over operating control of the project from Apache when that company had difficulty finding customers in Asia for the LNG.
The Government of Canada, Government of BC and the Haisla Nation have shown exceptional leadership and support towards BC’s new LNG industry” said Tim Wall, President of Apache Canada. “This regulatory agreement builds on the many other agreements with the Haisla that has led to jobs, training, education and economic development in Kitimaat Village.”
“I want to congratulate the Haisla First Nation, the Governments of Canada and British Columbia, and Apache Canada for their shared leadership in finalizing the regulations governing the Kitimat LNG facility site,” said Jeff Lehrmann, president, Chevron Canada Limited. “We look forward to working with the Haisla First Nation, both governments, other First Nations and local communities to realize the project’s long-term economic potential.”
In remarks prepared for the meeting Canada’s Aboriginal Affairs minister John Duncan was quoted as saying
The proposed project will provide Canada’s energy producers with a doorway to overseas markets, in addition to creating jobs and economic development opportunities not just for the Haisla First Nation, but the entire northwest region of British Columbia.
That’s good news for members of the Haisla Nation, good news for British Columbia, and good news for all Canadians.
These regulations are passed under the First Nations Commercial and Industrial Development Act, known as FNCIDA, which allows the federal government to develop regulations for complex commercial and industrial development projects on reserve in partnership with First Nations and Provincial governments.
For First Nations, FNCIDA can remove the barriers they face in pursuit of economic development opportunities, while providing the certainty investors require, and assuring the community that the necessary oversight measures are in place.
Together with the Province of British Columbia and the Haisla Nation, the Government of Canada has also signed an agreement which ensures administrative, monitoring and compliance activities for the facility are performed and enforced by provincial officials who have the necessary experience and expertise.
As a result, the regulatory pieces are now in place for project to proceed.
Duncan added:
To protect the environment as it relates to natural gas production, together with the Province of British Columbia we have completed an environmental assessment pursuant to the Canadian Environmental Assessment Act. With our partners, we will ensure that the LNG plant is designed and built to industrial safety standards and that the operation is properly regulated
Bermuda-based Golar LNG has confirmed that it has signed a finalized contract for both feed gas supply and LNG purchase and off-take for train #1 of the Douglas Channel LNG Project, the smallest of the three (so far) proposed LNG projects in Kitimat.
The contract award for LNG purchase and off-take was made jointly to Golar and LNG Partners, LLC (Houston, TX) (“LNG Partners”) and the contract award for feed gas supply was made to LNG Partners.
The DC Project is being jointly developed by the Haisla Nation and Douglas Channel Gas Services Ltd and is expected to produce approximately 700,000 metric tonnes per annum of liquefied natural gas from the initial planned production facility beginning in the second quarter of 2015.
Golar’s participation in the project and its commitment to the LNG off-take remains subject to the Company reaching agreement with the current proponents of the DC Project for financing of the facilities, and receipt of all permits required for the project to proceed on a firm basis.
Golar LNG describes itself on its website as “one of the world’s largest independent owners and operators of LNG carriers.”
At the meeting of District of Kitimat Council on Jan. 21, 2013, Mayor Joanne Mongahan said that the BC LNG – Golar deal would mean enough business to fill about one LNG tanker each month. That volume of gas can be transported over the existing Pacific Northern Gas pipeline, Monaghan said.
A report issued by Ernst & Young, The Global LNG Report, says that there will be strong demand for liquified natural gas over the next 10 to 20 years. At the same time LNG buyers will increasingly push back from “price-sensitive buyers who are likely to be less willing to pay supply security premiums.
the new LNG market. That’s because the capital cost of developing LNG projects in Kitimat, when
