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Kitimat, B.C.: Ground zero in the race to fuel Asia: Globe and Mail

Energy Environment

The Globe and Mail Report on Business has a major report on Kitimat, LNG and pipelines

Kitimat, B.C.: Ground zero in the race to fuel Asia

A green light for the Kitimat LNG project could see the rapid establishment of a regional export hub, one that major global energy players are keen to join. By the end of this decade, three billion cubic feet a day of gas could flow through Kitimat – equal to all of B.C.’s current production and close to 20 per cent of Canada’s current output.

Editorial: Lawyers have a lot to be thankful for this weekend

Editorial

As lawyers from Vancouver Island to Calgary and on to Ottawa sit down for Thanksgiving dinner on Monday, they will be counting their blessings and adding up their billable hours thanks to the surprise announcement by Enbridge that the company is getting into the west coast LNG rush.

On Thursday, Enbridge CEO Pat Daniel told Reuters that Enbridge is interested in joining one of the two proposed Canadian LNG projects to ship natural gas to Asia. Reuters reported that “‘Enbridge plans to build a natural gas pipeline along the route of the proposed Gateway oil line, which would transport natural gas from Horn River and other natural gas fields to the coast by 2016,’ Daniel said.”

Thursday was also the deadline for public to register for the Joint Review Panel to make oral statements about the Northern Gateway bitumen pipeline.

Now everything has apparently changed.

That brings to mind the quote from Abraham Lincoln who told an audience in the 1864 presidential campaign, “An old Dutch farmer… remarked to a companion once that it was not best to swap horses when crossing streams.”

That has now been generally shortened to “Don’t change horses in midstream.”

Which is sort of ironic, since Enbridge just bought what the energy industry calls a “midstream” natural gas plant in northeastern British Columbia as part of its plans to get into the LNG “play.”

So what happens now, that it appears that one way or another the LNG and Northern Gateway pipeline projects could be combined?

How does this affect the Joint Review Panel on the bitumen pipeline and the hearings that begin in January?

Is is fair that registration for public comment participation is closed now that suddenly the pipeline situation is changing almost daily?

The National Energy
Board hearings on an export licence on the KM LNG project have concluded. If Enbridge buys into the KM LNG project and Kitimat LNG is now connected, one way or another, with the
Northern Gateway, how does that affect the pending National Energy Board decision?

As the hearings here in Kitimat showed, National Energy Board hearings are often mystifying to the public and the rules of procedure narrower than the kind you would find in a full public inquiry.

Environmental activists are determined to stop the bitumen pipeline. First Nations are saying they haven’t been consulted properly on the bitumen pipeline. There are whole new questions arising: if there is a twinned natural gas and bitumen pipeline along the Northern Gateway route, how does that change the environmental and safety studies by government, Enbridge and the environmental groups?

In the lawyers’ homes on Monday as the lawyers say “pass the turkey,” they will be contemplating two words: “Court challenge.”

Bitumen or no bitumen? That is the question in the pipeline

Energy

On Thursday, Enbridge CEO Patrick Daniel told Reuters that the company “would prefer to supply natural gas to the Kitimat liquefied natural gas plant in British Columbia over any other export project in western Canada.”

That immediately raised a question in the northwest is Enbridge thinking of replacing the Northern Gateway bitumen pipeline with a natural gas pipeline? Or is it planning two pipelines?

So far Enbridge has not responded to a request from Northwest Coast Energy news for clarification.

This afternoon, Jeff Lewis writing on Alberta Oil’s website in Another suitor sidles up to Kitimat LNG says:

No word yet on whether Tim Wall, the CEO of Apache Canada Ltd., is keen to take on another partner for the massive development. (The Reuters report has Enbridge building a natural gas line in conjunction with its proposed Northern Gateway line, which is to be twinned with a pipe for importing bitumen-thinning condensate from the coast; there’s no mention of sending natural gas west on the Gateway website).

But the question still remains. The Reuters report actually isn’t that clear on whether it will be a bitumen pipeline twinned with a natural gas pipeline or a natural gas pipeline substituted for the bitumen pipeline.

Here is what Reuters said.

Enbridge plans to build a natural gas pipeline along the route of the proposed Gateway oil line, which would transport natural gas from Horn River and other natural gas fields to the coast by 2016, Daniel said.

There is already speculation and rumour in Kitimat about the Enbridge announcement. Environmental activists have long feared that there would be a twinning of the two projects, while many people sitting on the fence were willing to accept liquified natural gas but not bitumen.

If there is any truth to the rumours circulating in Kitimat, there may be more corporate announcements after the Thanksgiving holiday weekend that will make the situation a little clearer.

Enbridge buys natural gas plant from Encana

Energy

Canadian Press reports that Enbridge has bought a natural gas plant from Encana, one of the partners in the Kitimat LNG project.

Enbridge buys stake of Cabin Gas Plant in British Columbia from Encana

Encana Corp. has sold its stake in the Cabin gas plant in B.C. to Enbridge Inc…

Enbridge …will buy Encana’s 52 per cent interest in the plant, plus additional holdings from other partners for a total 57.6 per cent stake….

“Northeast B.C. is going to be a very important source of growth long-term for natural gas out of Western Canada, so it makes a lot of sense for us to build a position there,” Al Monaco, who is in charge of Enbridge’s natural gas business, said in an interview…

“We believe there is going to be the need for LNG exports off the West Coast, and that’s simply because the value of world gas prices, especially in Asia, far exceeds North American prices,” Monaco said.

The purchase announcement comes a day after Enbridge CEO Pat Daniel told Reuters that an LNG pipeline to the west coast is priority for the company.

Marketwatch (news release) Encana agrees to sell interest in Horn River Basin’s Cabin Gas Plant for approximately C$220 million
Enbridge news release: Enbridge Enters Canadian Midstream Business with $900 Million Investment in Cabin Gas Plant Development

Enbridge plans natural gas pipeline along Northern Gateway route

Enbridge CEO Pat Daniel has told Reuters in New York that the company would prefer to supply natural gas through Kitimat to Asia “over any other export project” and that Enbridge plans to build a natural gas pipeline along the route of the
proposed Northern Gateway bitumen pipeline.

Pat Daniel was interviewed by Reuters reporter Edward McAllister. In a story with a New York place line the agency reports:

Pipeline operator Enbridge Inc
would prefer to supply natural gas to the Kitimat liquefied natural gas
plant in British Columbia over any other export project in western
Canada, the company’s chief executive told Reuters on Thursday.

Enbridge is interested in joining one of two proposed Canadian LNG
projects to ship natural gas to Asia, it said this week, as ample North
American supply pushes gas prices far below global levels.

But the location of Kitimat has attracted Enbridge more than Royal Dutch Shell’s potential project in Prince Rupert, also in British Columbia, company head Patrick Daniel said in an interview.

“Kitimat is the preferred project. Pipelining into Kitimat is
relatively straight forward compared to Prince Rupert, which is the
other proposed port,” Daniel said, though talks continue with both
projects…..

Enbridge plans to build a natural gas pipeline along the route of the
proposed Gateway oil line, which would transport natural gas from Horn
River and other natural gas fields to the coast by 2016, Daniel said.

A window of opportunity opens in Japan for Canadian LNG: Alberta Oil

Energy

Alberta Oil magazine says in A window of opportunity opens in Japan for Canadian LNG

Nuclear outages in Japan continue to stoke demand for delivering Canadian gas to the Far East. Look for oil- and natural gas-fired generation to offset a precipitous drop in atomic capacity as maintenance work at plants, combined with public safety pressures, keeps a fleet of 54 reactors from running at full capacity, the International Energy Agency (IEA) says. Japan’s nuclear reactors normally account for 27 per cent of the country’s electricity demand, but only 16 were online in August, five months after a massive earthquake rocked the coastal city of Sendai and sent officials scrambling in search of alternatives to the atom.

The country is one of several potential sales destinations for a suite of liquefied natural gas (LNG) terminals taking shape on Canada’s West Coast at Kitimat, British Columbia. Two of the most advanced proposals, including a 10-million-tonne capacity project led by Apache Canada Ltd. and another, smaller co-operative that would ship 1.8 million tonnes abroad annually, are both seeking 20-year export licenses from the National Energy Board….

Not enough bitumen production to support both Northern Gateway and Keystone XL consultant says

Energy

Bloomberg news reports that a Calgary based energy research company believes Enbridge’s Oil Sands Project Is Years Early

Enbridge Inc., Canada’s largest pipeline operator, wouldn’t need to build the Northern Gateway project to export Alberta’s oil-sands crude for almost a decade if TransCanada Corp.’s Keystone XL is approved this year, according to IHS CERA, an energy research company.

The 732-mile (1,177-kilometer) Northern Gateway pipeline would pump 525,000 barrels a day from near Edmonton, Alberta, to the port of Kitimat, British Columbia, where crude would be loaded on tankers bound for Asia. The line, scheduled to start in 2017, would reduce Canadian dependence on U.S. markets and compete with the Keystone XL, designed to pipe 700,000 barrels a day to refineries in Texas along the Gulf of Mexico by 2013.

Jackie Forrest, a director of global oil at IHS CERA, said there won’t be enough oil sands production to support Northern Gateway’s launch even if, as she expects, Keystone XL approval helps the output double in 10 years to 3 million barrels a day.

The Bloomberg article goes on to quote one analyst who believes the Northern Gateway fight will get a lower profile than the Keystone XL.

Northern Gateway faces opposition from environmentalists and Indian groups because it passes through the Great Bear Rainforest and raises the risk of supertanker oil spills in the Douglas Channel. However, the Canada-only route may make the project less prominent than Keystone XL, which has drawn protests from celebrities such as Daryl Hannah and Margot Kidder, who played Lois Lane in several Superman movies.

“Northern Gateway would be an all-Canadian fight and thus perhaps could be less sensational and muscular, think Canadian Football League vs. U.S. NFL, but nonetheless might get very contentious,” Judith Dwarkin, chief energy economist for ITG Investment Research, wrote in an e-mail from Calgary.

Approval of the Keystone XL may not be the slam dunk that some in the Calgary oil patch believe. As Konrad Yababuski reports in The Globe and Mail in Keystone XL: More about the politics than the petroleum

Proponents of the TransCanada Corp. project, which would double the amount of Alberta crude flowing south, now fear that President Barack Obama will give in to pressure from the base of the Democratic Party to nix the pipeline.

With Mr. Obama’s approval rating sliding to a record low – leading more than half of Americans to think for the first time that he will be a one-term President – the White House needs to bring every stray Democrat it can find back into the fold before the 2012 election.

The progressive wing of the Democratic Party has been feeling particularly unloved by this White House. Killing the Keystone XL project would be a powerful way for the administration to show its renewed affection.

Which means of course if President Barack Obama does kill Keystone XL to keep his base happy, there will be more than enough bitumen sands for the Northern Gateway pipeline.

Editor’s note: Disclosure. I have always liked the CFL game, with three downs and the bigger field over the NFL, so the analogy is probably apt in describing the contentious Northern Gateway debate, a more wide open and interesting struggle.

Seattle cod trawler wastes 114 tons of Alaska halibut: Alaska Dispatch

Environment Fishery

The Alaska Dispatch reports that a Seattle cod trawler wastes 114 tons of Alaska halibut

The Seattle-based trawler Alaska Beauty recently had a great week of halibut fishing… Only one problem: Alaska Beauty wasn’t supposed to be fishing halibut; it was supposed to be fishing cod.

Despite that, 43 percent of its catch was halibut. All of that halibut, by law, must be dumped back into the sea. Most of it goes back dead. Some Alaskans are starting to get angry at this sort of large “by-catch” of halibut by Pacific Northwest and Kodiak-based trawlers at a time when the species’ stocks are declining, and Alaska charter and commercial longline fisheries are locked in a bitter battle over every flatfish.

An anonymous blogger who goes by the name of Tholepin says “228,800 pounds of halibut wasted by draggers just last week,” Tholepin notes in the latest post. “Value? In cash terms to longliners, about $1.6 million. In lost reproductive potential, in lost growth potential, in long-term resource damage; all unknowns ..

As Joint Review deadline looms, more complaints about lack of information for the public

Energy Environment

Environmental groups are saying that the Northern Gateway Joint Review Panel and Enbridge haven’t given the public enough notice that the Thursday is the deadline for registration to participate in the hearings, which begin in January.

In Smithers, Pat Moss, with the Friends of the Wild Salmon says neither the
National Energy Board, or Enbridge had done much to let people know they
need to register this far in advance.

In Kitimat, Douglas Channel Watch distributed a leaflet door to door warning about the pending deadline.

Those who wish to make oral statements have until October 6 to apply to make an oral presentation to the Joint Review Panel. Applications can be made on the JRP website:

While the hearings are scheduled to begin on January 10, 2012, locations are still uncertain. The JRP website says

Have you made a decision on specific hearing locations?
No. Based on the comments received, the Panel intends to conduct oral hearings in locations close to the pipeline and marine components of the project. The list of oral hearing locations will be announced at a later date.

Moss says this lack of firm dates and locations for those hearings is likely a hindrance to some people who wish to participate, since they cannot know this far in advance where they will be when the hearings come to their area, “We’re very concerned that there
will be a lot of people who will only realize that the hearings are
being held much later, after the National Energy Board announces the
locations and dates for the hearings, and by then it’s long after the
deadline,” Moss says.

The environmental groups say the Joint Review Panel should have had a more aggressive campaign in newspapers, online and in the broadcast media to make people in northern BC aware of the looming deadline.

Enbridge says it is joining LNG export rush

Energy links

Reuters and the energy media are reporting that Enbridge told an investor conference call this morning the company is joining the liquified natural gas export rush.

In Enbridge eyes Canada LNG exports, Reuters reports:

Enbridge Inc said on Tuesday it is in talks with potential producers to export overseas liquefied natural gas from Canada, joining a lengthening list of North American companies looking to tap thirsty markets in Asia.

Enbridge would be interested in existing projects being developed in Canada, executive vice president Al Monaco said at a presentation, just as ample supply pushes North American natural gas prices to 11-month lows.

“We would certainly be interested in LNG exports, right from the midstream pipeline side, right up to the LNG export facility itself,” Monaco said at the company’s investor day in Toronto, which was webcast.

“We are in discussions with potential producers. That is probably a little bit longer term,” he added.

Both Reuters and the industry news site Upstream Online report that Enbridge would consider buying into an existing project.

Heavy oil pipeline in Columbia

Upstream Online also reports that Enbridge is considering a heavy oil pipeline from the interior of Columbia to the Pacific coast of South America.

“Over the past few months we’ve been discussing a possible project to access tidewater off the western coast,” Monaco said. “The line would provide direct access to the Pacific markets which have an appetite for heavy crude and provide takeaway capacity for the growing volumes that are coming from central Colombia.”

Monaco said the producers have confirmed their interest in the project, dubbed Oleoducto al Pacifico, and provided Enbridge with the money to carry out a feasibility review to determine the line’s route, capacity and costs.

Kitimat is the terminal point for the KM LNG and BC LNG points as well as the proposed Enbridge Northern Gateway project that would carry bitumen from Alberta to the terminal. All project contemplate exporting to the hungry markets of Asia.