Apache is considering selling liquified natural gas shipped to Asia from Kitimat at North American prices, a industry-watching news site reports from an energy conference in Miami.
Argus Media says that Apache and its partners in KM LNG, EOG and Encana are still finding little interest in the original idea of selling the LNG at the Asian base price, called Japan Cleared Customs price, which is a percentage of the price of oil. The idea at that time was that profit would come from the difference between North American market price and the higher Asian price.
That was undercut when another group, Cheniere Energy, decided to sell natural gas to Asia from its Sabine Pass export terminal in Louisiana based on the “Henry Hub” North American market price for natural gas, plus a 15 per cent surcharge and a reservation fee.
Argus says Encana’s president for US operations Jeff Wojahn told investors at a Bank of America Merrill Lynch Global Energy Conference in Miami that the Kitimat developers are now considering “options typical for the Gulf coast export projects.”
Argus also quotes Apache manager of investor relations Castlen Kennedy as saying: ““Kitimat is progressing and we will announce a final investment decision (FID) soon. The local government is very supportive of us.”
Argus quotes Encana’s Wojahn as saying the FIB will come in the first quarter of 2013, using their own natural gas supplies. “All three of the partners have assets in the Horn River so it’s a natural area of development for the play. And the Horn River basin is a world-class shale gas basin, it’s waiting for an LNG pump, so it’s really positioned well.”
At the District of Kitimat Council meeting on Monday, October 1, as part of Mayor Joanne Monaghan’s regular “good news” briefing, she told council that the Kitimat LNG project continues to “progress positively.” The news from Calgary on Tuesday, however, was not as promising.
Both Bloomberg News and the Calgary Herald reported that Apache, which owns 40 per cent of the KM LNG partnership is worried about a recent decision by a rival gas company to sell natural gas to world markets at low North American prices rather than, as been customary up until now, as percentage of the world oil price. That differential gives the North American gas companies a profit in Asia and it is that profit difference that makes Kitimat attractive for LNG projects.
At the council meeting, Monaghan reported, quoting Apache’s Apache’s Manager of Public and Government Affairs Natalie Poole-Moffatt, as saying that Kitimat LNG will be opening a full time community office in downtown Kitimat near the City Centre mall in the near future. Apache says renovations are nearly complete and they will be holding an open house in the near future.
Monaghan said that work on the Kitimat LNG site at Bish Cove continues with blasting to create proper elevation, crushing and sorting of rock and constructing an access route to the forest service road. This summer work began on the two year $25 million upgrades to the old forest service road “which will improve conditions on the road.”
However, in Calgary, the Herald quoted KM LNG vice-president David Calvert as saying “things are going so well that it has been decided to risk spending on clearing ground before completion of the front end engineering and development study and final investment decision.”
But according to several media reports, Calvert told an Energy Roundtable in Calgary on Tuesday that a final go-ahead for Kitimat LNG is not a done deal. the Herald quoted Calvert as saying: “We remain convinced that oil-linked pricing is critical to the viability of our Canadian LNG industry.”
Bloomberg reported that a recent deal by Cheniere Energy Inc. to sell liquefied natural gas based on North American pricing (also known as Henry Hub pricing) means that it is difficult for Apache to find Asian customers to sign the long term LNG contracts needed to make the Kitimat project viable. (Asian LNG prices are based on the “Japan Customs Cleared Price” set by the Japanese government as a percentage of the price of crude oil).
Bloomberg quoted Calvert as saying: “It created quite a ripple through the marketplace,” and Bloomberg said, the Cheniere deal has created “unrealistic expectations.”
Cheniere is less sensitive to prices given its role as a middleman, while Apache, Encana and EOG are producers, for whom the price is very important. One advantage of Kitimat is its west coast location, but that is only a minor cost advantage over Gulf Coast facilities.
The clock is ticking on Kitimat. It sounds like Asian buyers are sitting on the sidelines waiting for lower prices. Right now the U.S. government is sitting on future LNG approvals pending the release of a study around year-end. If the U.S. approves the pending applications, a proverbial flood of LNG will come to market with Henry Hub-based pricing. At that point Kitimat’s owners will be in a tough spot. Kitimat is vital to B.C., but the economics might not work.
In a report to District of Kitimat Council, Apache’s Manager of Public and Government Affairs, Natalie Poole-Moffatt, also reported that on September 19, an oil leak was spotted on a piece of heavy equipment at Bish Cove. The report says;
WestCoast Marine was notified and booms were deployed as a preemptive measure in Bish Cove, no machine oil has migrated to Bish Cove. Environmental crews are on site executing a remediation plan. Both the [BC] Provincial Emergency PLan (PEP) and Aboriginal and Northern Affairs Canada were notified of the incident.
The piece of equipment is currently being repaired and will undergo operational tests to ensure the equipment can function without further concern. Environmental staff will remain on the site 24/7 until remediation is complete.
Shell Canada and its Asian partners have chosen TransCanada Corporation to design, build, own and operate the proposed natural gas pipline to Kitimat, now called the Coastal GasLink project.
The estimated $4-billion pipeline will transport natural gas from the Montney gas-producing region near Dawson Creek, in northeastern British Columbia to the proposed natural gas export facility at Kitimat, BC.
The LNG Canada project is a joint venture led by Shell, with partners Korea Gas Corporation, Mitsubishi Corporation and PetroChina Company Limited.
A news release from TransCanada says “Shell and TransCanada are working toward the execution of definitive agreements on the Coastal GasLink project.”
In the release, Russ Girling, TransCanada president and CEO says:
Our team has the expertise to design, build and safely operate pipeline systems. We look forward to having open and meaningful discussions with Aboriginal communities and key stakeholder groups, including local residents, elected officials and the Government of British Columbia, where we will listen to feedback, build on the positive and seek to address any potential concerns. Coastal GasLink will add value to British Columbians, particularly Aboriginals and communities along the conceptual route, by creating real jobs, making direct investments in communities during construction and providing economic value for years to come.
TransCanada says the company has approximately 24,000 kilometres of pipelines in operation in western Canada including 240 kilometres of pipelines in service in northeast BC. Another 125 kilometres of proposed additions either already having received regulatory approval or currently undergoing regulatory review. These pipelines form an integral and growing part of TransCanada’s NOVA Gas Transmission Ltd. (NGTL) System, which brings natural gas from Alberta to British Columbia to a hub near Vanderhoof.
Girling said in the release:
TransCanada is a leading energy infrastructure company in North America, with a 60-year history of safe, efficient and reliable operation of our assets and a respect for the communities and environments where we operate. We appreciate the confidence that Shell and its partners have placed in us to build, own and operate this natural gas pipeline in British Columbia. We will work collaboratively with them, Aboriginals and other stakeholders as we launch into the initial phases of consultation and regulatory review.
Project parameters
In it’s release TransCanada describes the potential Coastal GasLink pipeline project this way:
Receipt point: Near Dawson Creek, BC
Delivery point: Proposed LNG Canada facility near Kitimat, BC
Product: Natural gas from BC’s abundant Montney, Horn River and Cordova basins and elsewhere from the Western Canada Sedimentary Basin
Length of route: Approximately 700 kilometres of large diameter pipe
Initial pipeline capacity: In excess of 1.7 billion cubic feet of gas per day
Anticipated jobs: Estimated 2000-2500 direct construction jobs over a 2- during construction 3 year construction period
Estimated cost: Detailed cost information will be developed following completion of project scoping and planning. The current estimate is approximately $4 billion
Regulatory process: Applications for required regulatory approvals are expected to be made through applicable BC provincial and Canadian federal processes
Estimated in-service date: Toward the end of the decade, subject to regulatory and corporate approvals
Pipeline route
TransCanada says: “The final pipeline route will take into consideration Aboriginal and stakeholder input, the environment, archaeological and cultural values, land use compatibility, safety, constructability and economics.:
The Pacific Trails Pipeline would go cross country to Kitimat. (PTP)
At this point there are two possible routes for the pipeline west of Vanderhoof. One route would be to follow the existing Pacific Northern Gas route that roughly parallels Highway 16. The second possibility is a cross-country route, which may lead to controversy. The Pacific Trails Pipeline, which would feed the KM LNG partners (Apache, Encana and EOG) goes across the mountains from Smithers. While the PTP project has the approval of most First Nations in the regions, Apache and PTP are still in negotiations with some Wet’suwet’en houses over portions where the pipeline would cross the traditional territory of the houses. The much more controversial Enbridge Northern Gateway pipeline follows a similar cross-country route and faces much stiffer opposition than the Pacific Trails Pipeline, due to the content of that pipeline, mainly diluted bitumen and because, critics say, Pacific Trails managed to secure the most geologically stable cross country route earlier in this decade when the pipeline was originally planned to import, not export, natural gas.
TransCanada says the Coast Gaslink pipeline will also have an interconnection with the existing Nova Gas (NGTL System and the liquid NIT) trading hub operated by TransCanada. The company says:
A proposed contractual extension of TransCanada’s NGTL System using capacity on the Coastal GasLink pipeline, to a point near the community of Vanderhoof, BC, will allow NGTL to offer delivery service to its shippers interested in gas transmission service to interconnecting natural gas pipelines serving the West Coast. NGTL expects to elicit interest in and commitments for such service through an open season process in late 2012.
That means that the Asian customers will not be just dependent on natural gas from northeast British Columbia. Instead the “molecules” of natural gas from Alberta will join the stream heading to Kitimat. “Open season” in the energy industry is an auction where potential customers or transporters bid for use the pipeline.
In the release Girling says:
The potential Coastal GasLink pipeline project will allow British Columbians, and all Canadians, to benefit from the responsible development of valuable natural gas resources and will provide access to new markets for that gas. The project will also create substantial employment opportunities for local, skilled labourers and businesses as part of our construction team,” concluded Girling. “We know the value and benefits that strong relationships in British Columbia can bring to this project and we look forward to deepening those ties as our extensive pipeline network grows to meet market and customer needs.
TransCanada Corp. is no stranger to controversy, the company is the main proponent of the Keystone XL pipeline from Alberta to the US Gulf Coast. Portions of that pipeline were put on hold by President Barack Obama pending further review and Keystone has become a hot issue in the current American presidential election.
An anonymous group opposing the Enbridge Northern Gateway pipeline is calling for a demonstration at the site of an oil and gas export conference in Vancouver on May 30 and 31 and asking participants to wear the red square that has become symbolic of the Quebec student protests first against tuition fee hikes and later against Bill 78 aimed at controlling demonstrations in the province.
A notice posted on the website Infoshop News, which describes itself as an anarchist news service, calls for the demonstration at the Four Seasons hotel in Vancouver, site of the Canada Oil and Gas Export Summit. The notice is being widely circulated on Twitter.
The notice adds: “Don’t forget your red squares. Let’s bring the Maple Spring to BC and join Quebec students in opposing the 1% agenda of austerity and environmental destruction.”
Calling the demonstration, “Green Jobs, Not Oil Spills,” the notice says: “On May 30th/31st the 1% are meeting at the Four Seasons hotel for a two day conference to plot their strategy for Exporting raw tar sands bitumen across BC and overseas to China via pipelines and super tankers.”
The website for the Canadian Oil and Gas Export Summit, says “The oil and gas industry is at a critical crossroads and now is the time to take a hard look to alternative outlets for Canadian oil and gas,” meaning alternative markets to the United States. The energy companies are worried about the future of their American market share due to the effect of political gridlock on the US economy and the growing exploitation of American shale gas deposits which are cutting into Canadian export markets.
The site says the conference highlights include:
The latest updates on opening new market opportunities – Moving Canada oil and
gas exports beyond U.S. markets
The impact of the U.S. pipeline decision on the Canadian oil and gas sector
The benefits for Canadian producers to tap into Asian markets and
addressing the perceptions of the two markets
The most cost effective strategies of getting to market in light of opposition
Infrastructure requirements necessary for accessing Canada’s East and West Coast
The legal and regulatory issues surrounding west coast energy corridors, terminals and
shipping in British Columbia
The conference speakers will tackle a large number of hot button issues in BC, from the energy industry point of view: Paul Fisher, vice present, Commercial, Western Access for Enbridge Pipelines speaks on “Exploring Canada’s Ability to Compete in a Global Marketplace.” Gordon Houlden, Director of the China Institute at the University of Alberta, has a talk touching on “Balancing the complexities of unresolved land claims, environmental and infrastructure issues and the economic development of Western Canada.” Tracy Robinson, Vice President Marketing & Sales, Canadian Pacific Railway, speaks on exporting crude by rail. Douglas Ford, of Communica Public Affairs Inc. handles a large number of issues from the PR point of view, including “the regulatory processes related to British Columbia coastal development,” “the complexity of project development in BC vis a vis First Nations,” with advice on “How to effectively engage community, NGOs, and aboriginal stakeholders.” Van Zorbas of Deloitte Canada speaks about the problems from the current labour shortage.
A map of Apache Corp's liquified natural gas projects, including Ktimat, as presented to the UBS conference on May 22, 2012 (Apache)
Apache said Tuesday, May 22, 2012, that it expects the first LNG cargo leave the Kitimat terminal for Asia sometime in 2016, with possible further expansion in the future.
Patrick Cassidy, director of Apache’s Investor relations division, was making a presentation to the UBS Global Oil and Gas Conference in Houston, Texas, on the company’s future plans.
One slide in the Power Point presentation summed up Apache’s Pacific strategy, both at Kitimat and its chief rival, the Wheatstone project in Western Australia.
Apache said the final investment decision for the first train or phase the Kitimat LNG is still expected later this year. Previous reports have indicated the decision will likely come in the fourth quarter as Apache and its partners line up customers in Asia.
Originally the KM LNG partners said the project would start up in 2015, but delays, including the unusually harsh winter in Kitimat, which slowed construction at the Bish Cove site, and the search for customers for the natural gas, has pushed the date back to 2016.
Apache Corp. owns 40 per cent the KM LNG partnership, Canada’sEncana Corp. and EOG Resources each own 30 per cent each.
Two other projects are planned for Kitimat, the smaller BC LNG co-owned by Houston-based investors and the Haisla Nation and a larger project announced last week by Royal Dutch Shell.
Shell Canada has confirmed that, with three partners, it is developing a giant proposed liquified natural gas export facility at Kitimat.
The project could see up to 12 million tonnes of LNG exported from Kitimat each year. What the companies are now calling LNG Canada would be built in two “trains” or stages, with each producing six million tonnes. A news release from Shell says there is an option to expand the project beyond the 12 million tonne capacity.
The announcement made international news. The Chicago Tribune said Tuesday. “Kitimat… looks set to become a major supply hub for the Pacific Rim.”
Shell’s partners, Korea Gas Corporation, Mitsubishi Corporation, and PetroChina Company Limited will work to export natural gas, mostly from northeastern British Columbia, combining the “four companies’ extensive development experience, technical depth, financial strength and access to markets required to be the leading LNG developer in Canada.”
The four companies did not say how much money is involved in the project. Reports in the Japanese media said the project could cost as much as $12 billion US.
Shell holds a 40 per cent working interest. The partners KOGAS, Mitsubishi and PetroChina each hold a 20 per cent working interest.
“Our combined expertise, and our focus on technological innovation in delivering safe and environmentally sound LNG projects around the globe, ensures that our LNG Canada project would be well-suited to deliver long-term value for British Columbia and increase access to new export markets for Canada,” says Jose-Alberto Lima, Vice President LNG Americas, Shell Energy Resources Company in a news release.
The proposed LNG Canada project includes the design, construction and operation of a gas liquefaction plant and facilities for the storage and export of liquefied natural gas (LNG), including marine off-loading facilities and shipping. LNG Canada can create significant economic benefit for the province, First Nations, local communities and the region. Such a project can create thousands of jobs during construction and hundreds of full-time, permanent jobs during operations. Such a significant energy project can also bring indirect economic development opportunities to the region.
Shell and PetroChina say:
A decision to move this project into development would be taken after conducting necessary engineering, environmental and stakeholder engagement work with start up around the end of the decade, pending regulatory approvals and investment decisions.
The approval process will begin with a formal consultation process with First Nations and local community residents.
“This project will contribute to a further strengthening of trade relationships between China and Canada and will help China use clean burning natural gas to fuel its economic growth,” Bo Qiliang, Vice President, PetroChina, said in the release.
“We are sitting on the doorstep of a very fast-growing market that actually wants to come to Canada because they see it as long-term stability and a secure source of supply,” Shell Canada president Lorraine Mitchelmore said. “We are now, for the first time in the natural gas industry, very competitive with other countries like Australia.”
Kitimat Mayor Joanne Monaghan said her and the District Council have been working on the project for sometime. “Council have been aware of it and have rolled up their sleeves for almost a year and half to two years,” the mayor said.
Kitimat mayor Joanne Monagahn reads notes on the LNG Canada announcement, May 15, 2012. (Robin Rowland/Northwest Coast Energy News)
One aspect was making sure Kitimat is ready for the project, Monaghan said: “We had to make sure there were hospital facilities, rental facilities, that we had housing available. We were getting all our inventories together. Now we know and now we can go full blast ahead.”
Monaghan hopes that eventually Kitimat will return its population peak of between 10,000 and 15,000 residents. (Since the closure of the Eurocan craft paper mill in 2010, Kitimat’s population dropped to around 8,000 but that number has been growing with the LNG projects and the Rio Tinto Alcan Kitimat Modernization Project, even though the KMP project will eventually mean fewer jobs at the aluminum smelter).
“If they have the five to seven thousand construction workers they’re looking for, they will bring in workers from all over BC, probably all over Canada,” Monaghan said.
Shell purchased the former Methanex plant site and the related Kitimat port terminal last fall, raising worldwide speculation about the LNG project. The Methanex site is now used by Cenovus to transport bitumen condensate by rail from Kitimat to the Alberta oil sands. Much of the old Methanex plant has been decommissioned and is being shipped to a buyer in China.
Most of the natural gas supply will come from the booming Horn River and Montney shale gas formations in northeastern British Columbia.
Reports say that LNG Canada will work with a third party that would build and probably own a pipeline from the northeast to the coat.
The profit picture comes from the fact that LNG prices in Asia, based on a proportion of the world price of oil, are much higher than the price of natural gas in North America, where the shale gas boom has driven gas prices to a record low.
The price boom in Asia could be a windfall for British Columbia, which could receive up to $600 billion in natural gas royalties over the next 25 years.
There is also fierce international competition to send LNG to Asia. The major energy companies are investing heavily in projects in Australia, while traditional suppliers like Qatar and Russia are ramping up their marketing efforts to Asia.
The decommissioned Methanex site by the Kitimat River, now owned by Shell. (Robin Rowland/Northwest Coast Energy News)
As of this week, Japan began closing down the last of its nuclear electrical generation capacity. After the March 11, 2011 earthquake, that country became a major customer for current and future liquified natural gas projects.
Since the earthquake last year, two other projects in Kitimat have proceeded. The Kitimat LNG project, a partnership called KM LNG led by Apache Corporation, Encana Corp, and EOG Resources plan to start up a Kitimat LNG plant in 2015, at Bish Cove with an initial capacity of five million tonnes a year. That project has been approved by the National Energy Board but is still waiting for a final go ahead from the boards of the three corporations, expected now in the fourth quarter of 2012.
A second project, called BC LNG, owned by the Haisla Nation in partnership with Houston-based LNG Partners, will act as broker and exporter for other LNG companies, facilitating exports to Asia from a barge based facility at North Cove, with the first shipment expected in 2014 or 2015.
There are also reports that Malaysia’s Petronas in partnership with Calgary-based Progress Energy Resources Corp., which have major stakes in B.C. shale are also looking for a possible LNG terminal on the west coast. As well, Talisman Energy, Nexen and Imperial Oil are also looking at west coast projects.
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.
Kinder Morgan, of Houston, Texas, said Thursday, April 12, 2012, it plans to proceed with expansion of the Trans Mountain pipeline system from Alberta to the BC Lower Mainland. The company made the announcement after what the energy industry calls an “open season,” a search for customers where it received “strong binding commitments” from existing and new shippers. They pledged commercial support to an additional 660,000 barrels per day of bitumen sands crude from the pipeline. Demand has been high and reports say Kinder Morgan has had to ration petroleum products for its existing customers.
The 20 year commitment from the customers means the pipeline capacity would increase to 850,000 barrels per day from 550,000 barrels. That would make the eventual capacity of the Kinder Morgan pipeline much larger than Enbridge Northern Gateway’s proposed 525,000 barrels per day.
In a release, Ian Anderson, president of Kinder Morgan Canada said, “We are extremely pleased with the strong commercial support that we received through the open season, which reinforces the appeal of our project and our approach. This strong commercial support shows the market’s enthusiasm for expanding market access for Canadian crude by expanding an existing system.”
Now Kinder Morgan has to get approval from the National Energy Board and acceptance from the local communities along the pipeline route from the Alberta bitumen sands to the terminals and refineries in Vancouver and in Washington state and for tanker export.
“This support from the market better defines the project and enables Kinder Morgan Canada to fully engage the local communities. We are still early in the engagement process of the project,” Anderson said in the release. “We share respectful, open relationships with many communities and organizations interested in our business. We are committed to an 18 to 24 month inclusive, extensive and thorough engagement on all aspects of the project with local communities along the proposed route and marine corridor, including First Nations and Aboriginal groups, environmental organizations and all other interested parties. We will also consider providing financial support to local communities for environmental initiatives. We have been planning for this day for many years and we are keen to start in depth engagement this summer.”
Kinder Morgan says the preliminary scope of the proposed project includes:
Projected capital cost of approximately $5 billion.
Twinning the existing pipeline within the existing right-of-way, where possible.
Adding new pump stations along the route.
Increasing the number of storage tanks at existing facilities.
Expanding the Westridge Marine Terminal.
Anderson added, “We anticipate filing a facilities application initiating a regulatory review with the National Energy Board in 2014. If our application is approved, construction is currently forecast to commence in 2016 with the proposed project operating by 2017.”
In addition to extensive engagement, the company will conduct traditional land use and environmental and socio-economic studies, and undertake detailed engineering and design studies, the release says.
The Trans Mountain proposal, like the Enbridge Northern Gateway pipeline is a “facilities application,” and one uncertainty facing the company will be the highly controversial decision by Stephen Harper’s Conservative government to speed up all future project applications of that type. Environmental groups have already expressed strong opposition to the speed up, while the energy industry has said faster application approval is long over due.
As well as the facilities application, Kinder Morgan says it will file “a commercial tolling application to review the company’s proposed commercial structure for the expansion. This filing, which is anticipated in summer 2012, will seek National Energy Board approval on how the company will charge its customers for transporting their product through the proposed expanded pipeline.”
Kinder Morgan says that for almost 60 years, the 1,150-km Trans Mountain pipeline system has been safely and efficiently providing the only west coast access for Canadian oil products, including about 90 percent of the gasoline supplied to the interior and south coast of British Columbia.
Last June, Kinder Morgan also proposed the building of second pipeline from the bitumen sands to the west coast, roughly following the route of the Northern Gateway pipeline to Kitimat. There was no mention of that project in today’s announcement.
Reuters and Bloomberg both report from China that Prime Minister Stephen Harper has said in Guangzho that his government is “committed to ensuring” that the Northern Gateway project went ahead.”
The Toronto Star took a slightly different approach, headlining, Harper in China: PM blasts foreign money in oilands debate while welcoming China Harper used a keynote speech…. to slam the “foreign money and influence” behind critics of Canada’s oil sands even as he welcomed Chinese investment in Canada’s energy sector.
The Bloomberg story also quotes Harper on foreign influence, but far down in the story, reporting Harper as saying: “Will we uphold our responsibility to put the interests of Canadians ahead of foreign money and influence that seek to obstruct development in Canada.”
Reuters casts doubt on the integrity of the Joint Review Panel process by saying: “An independent energy regulator — which could in theory reject the project — last month started two years of hearings into the pipeline. In remarks that appeared to cast some doubt on the regulator’s eventual findings, Prime Minister Stephen Harper said it had become “increasingly clear that it is in Canada’s national interest to diversify our energy markets”.
China frustrated
Earlier The Globe and Mail quoted Enbridge CEO Pat Daniel as saying: “Chinese oil executives are growing frustrated with regulatory delays in plans for the Northern Gateway pipeline… Daniel said despite keen interest here in Canadian oil and gas reserves, this seemingly made-in-heaven match is threatened by delays in the company’s efforts to establish a $5.5-billion, 1,177-kilometre pipeline to carry bitumen from Alberta’s oil sands to a deep sea port at Kitimat, B.C. “They’re frustrated, as we are, in the length of time it takes…They’re very anxious to diversify their supply, they’re very dependent on the Middle East for crude.
According to The Edmonton Journal, the Conservative MP for Fort MacMurray, Brian Jean “called for federal legislation that would both block foreign funding of the “radical” Canadian environmental movement and lessen the possibility outsiders are directly paying aboriginal chiefs to oppose major projects, such as the Northern Gateway pipeline.” See Alta. MP wants law to block foreign funding of environmentalists
Why did I write about this? I’ve heard completely unsubstantiated allegations relating to the efforts made to advance and oppose Enbridge Inc.’s pipeline. This was the first time I heard a politician raise this publicly, and I decided to write a story about it. I asked him if he’d be surprised if the Chinese government, which has a huge interest in Northern Gateway going ahead, might also be tossing money at First Nations to support the project. He wouldn’t touch that one.
The upshot? I think Jean’s assertion brings some whispers out of the shadows. And I think his comments might play well to the Conservative base. One of my most abrasive fans accused me of being a “shameless shill for big oil” because I quoted Jean on the matter.
