Business | Northwest Coast Energy News

Alaska governor meets with three energy CEOs to push North Slope LNG exports to Asia

Alaska Governor Governor Sean Parnell met with the chief executive officers from BP, ConocoPhillips and Exxon Mobil on January 5, 2012, to discuss alignment between the three companies on commercializing the North Slope’s vast natural gas reserves.

A news release from the governor’s office says Parnell asked “the three companies – the major lease holders for natural gas reserves on the North Slope – to work together on developing a liquefied natural gas (LNG) project that focuses on exporting Alaska North Slope gas to Asia’s growing markets.”

The release says that governor is targeting LNG exports to Asia to serve the growing demand for natural gas. That would make an Alaska LNG export terminal a rival to the three projects at Kitimat and another proposed project in Oregon.

Parnell and the CEOs – Bob Dudley of BP, Jim Mulva of ConocoPhillips and Rex Tillerson of Exxon Mobil – met for two hours. During the meeting, the governor’s release says, the CEOs briefed the governor on the extensive work they’ve been doing in response to his request. After meeting with the governor, the three CEOs briefed members of the Alaska state legislature.

Alaska governor meets with Energy CEOs — Governor Sean Parnell met in Anchorage Jan. 5, 2012, with the chief executive officers from BP, ConocoPhillips and Exxon Mobil to discuss alignment between the three companies on commercializing the North Slope’s natural gas reserves.(Alaska governor's office)

“I appreciate the willingness of the chief executives to come to Alaska to discuss the important topic of commercializing North Slope gas,” Parnell said. “For a gas project to advance, all three companies need to be aligned behind it. This meeting is an important step, but much work remains.”

The Associated Press reports that Parnell wants the companies to unite under the framework of the Alaska Gasline Inducement Act, which gave TransCanada Corp. an exclusive state license to build a pipeline and up to $500 million in state incentives.

AP says TransCanada has been working with Exxon Mobil to advance the project but has yet to announce any agreements with potential shippers.

TransCanada has focused most of its attention on a pipeline that would deliver gas to North American markets through Alberta to Canada and the Lower 48 states. TransCanada has also proposed a smaller pipeline that would allow for liquefied natural gas exports through a terminal at the oil export port of Valdez. A rival project, a joint effort of BP and ConocoPhillips that also would have gone through Canada, folded last year.

The Alaska Journal of Commerce reports BP and ConocoPhillips believe a major liquefied natural gas project is the best option for marketing North Slope gas, quoting the chief executive officers of the two companies Robert Dudley of BP and James Mulva of ConocoPhillips.

“Given the outlook with shale gas in the Lower 48, it looks like LNG has the best potential. We’re not saying the pipeline (to Canada) is impossible,” but a pipeline to southern Alaska to an LNG plant appears to have the best prospects, BP CEO Dudley told reporters following the meetings with Parnell and legislators.
ConocoPhillips’ Mulva agreed with Dudley. “We believe LNG is the best alternative for North Slope gas, far better than any alternatives,” Mulva said.

West Coast Environmental Law responds to Ethical Oil’s attack ads

West Coast Enviromental Law, the first target of the attack ads by the Ethical Oil activist group has responded in a statement from Executive Director and Senior Counsel, Jessica Clogg who said: “Our campaigns are not dictated by the sources of our funding. Rather, we seek funding to support the environmental initiatives we decide on as a British Columbia organisation with deep roots in communities around the province.”

The Alberta based pro bitumen sands lobby group Ethical Oil, using figures from Vancouver blogger Vivian Krause are attacking any group opposing the bitumen sands and pipelines who may receive backing from foundations or other groups based outside of Canada.

“Our funding to support ordinary Canadians in keeping our magnificent north Pacific Coast free from the threat of oil tankers and oil spills is dwarfed by that of oil producers and refiners, which put up $100 million to promote the Northern Gateway project and push it through the regulatory review,” Clogg said.

A statement on its website “Why West Coast is fighting Enbridge (it’s not the funding)” says in part:

Through our environmental legal aid services, citizens and community groups who could not otherwise afford it are able to participate meaningfully and democratically in decisions about resource development that have the potential to profoundly affect their lives.
Back in the ‘70s when a broad citizens’ coalition brought to a halt a proposed oil pipeline to an oil port at Kitimat, BC West Coast lawyers were there to support them. And we are there today for these northern communities as they once again face the threat of environmental devastation from oil pipelines and tankers….
Our belief remains strong today, as then, that our salmon-rich north Pacific coast and rivers should remain free from oil supertankers and the threat of oil spills….
This goal, like the other long-term strategic priorities of West Coast Environmental Law is set by our board and staff, informed by the deep connections we have forged over many decades with communities in every corner of the province. Without the generosity of our supporters, including dedicated individuals and foundations on both sides of the border, the work of our non-profit charity to protect the environment through law would not be possible. But we, not our funders, decide what issues we will focus on.

Links January 3, 2012

Links January 3, 2012

Northern Gateway

Vancouver Sun series on Northern Gateway

Jan. 3, 2012

Pipelines will fuel plenty of talk Final call on proposal expected at end of 2013, following multitude of hearings and reviews

Environmental groups line up star power against Northern Gateway pipeline

Enbridge is a Canadian success story

First nations fiercely opposed to Northern Gateway

Energy

International Business Times Chinese Court Accepts $78M Oil Spill-Related Lawsuit against ConocoPhillips

Globe and Mail Keystone inspector alleges shoddy work on original pipeline

Globe and Mail U.S. eyes supply side economics of natural gas

Globe and Mail B.C. launches review of oil and gas industry practices

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

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

“It’s a go.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rio Tinto Alcan to make announcement Thursday about Kitimat growth plans

Rio Tinto Alcan has called a news conference for Thursday, December 1 in Kitimat “to make an announcement regarding
the company’s multi-billion dollar growth plans.”

BC Premier Christy Clark, Rio Tinto CEO Jacynthe Cote, Jean Simon, president, RTA Primary Metal North America, Paul Henning, RTA vice president, British Columbia Operations & Strategic Projects, Western Canada and key regional stakeholders and First Nations representatives will be at the announcement at the Kitimat Modernization site during the noon hour.

The RTA news release says the announcement will be a significant event for Kitimat, the northwest region of the province, and all of British Columbia. It is likely, especially with the BC premier in attendance, the RTA is giving the go ahead for the long planned $2.5 billion smelter modernization project.

Updates

Sources have told Northwest Coast Energy News that applicants for jobs at the Kitimat Modernization Project, where the prime contractor is Bechtel, were told during the past month to wait until the end of November and that time, the applicants were told, there would probably be between 500 and 550 jobs available.

The Globe and Mail reports:

Rio Tinto to go ahead with Kitimat smelter expansion

Rio Tinto Alcan is pushing ahead with construction of a $3.3-billion (U.S.) smelter in Kitimat, B.C., even as stagnant prices have spurred a selloff of other aluminum assets.

London-based Rio Tinto PLC, which acquired Montreal-based aluminum giant Alcan for $38.1-billion in 2007, is expected to announce Thursday it has final approval to modernize the 57-year-old smelter to double its capacity

Approval will see Rio spend another $2.7-billion on Kitimat, after already setting aside $650-million towards the upgrade, raising the construction price tag more than 30 per cent from $2.5-billion. The plan includes demolishing a building and clearing space for a new plant.

Kitimat Methanex dismantling contract cancelled by Chinese buyer

Kitimat

Updated Nov. 15, with Shell statement
The Chinese company that bought the plant and equipment at the Methanex site in Kitimat has cancelled the dismantling contract according to the company that was doing the work.

Blue Horizon Industries of Red Deer, issued a news release early Monday, Nov, 14, saying that Ko Yo Development had issued a termination notice of the contract.

Blue Horizon’s parent firm BH Energy says it has

objected to the grounds for termination alleged by Ko Yo
and intends to vigorously enforce its rights and remedies under the
agreement and otherwise available at law against the contracting parties
for amounts owing to date as well as further damages.

Blue Horizon says it was in the final stages of dismantling an ammonia
plant and a methanol plant at Kitimat B. C. for Ko Yo and readying them
to be shipped to China. The company says that from February 2011 to date, BH Energy has been
paid and or credited by Ko Yo approximately USD $15.9 million of the
$20.4 million contract.

Donald Allan, President and CEO of Blue Horizon, said “We are
disappointed that we will not be given the opportunity at Kitimat to
finish the job for Ko Yo, who are experiencing significant logistical
issues… He added the company would proceed with other projects in other areas.

Ko Yo Chemical (Group) Limited, formerly Ko Yo Ecological Agrotech (Group) Limited, is a Hong Kong based investment holding company. According to a company profile it is engaged in the research and development, manufacture, marketing and distribution of chemical products, chemical fertilizers and bulk blending fertilizers and has a natural gas energy utilization project at Dazhou City, Sichuan Province, China. The company has a number of subsidiaries with similar names.

The contract to dismantle the old Methanex plant was signed in February, 2011 and then renegotiated in September, 2011. (pdf)

Shell purchased the Methanex site and marine terminal in October, 2011, as part of its plans for a liquified natural gas facility at Kitimat. Shell spokesman Stephen Doolan told Northwest Coast Energy News “The transaction … does not affect Shell’s purchase of the Cenovus property, nor is Shell involved in any way.”

Enbridge confident of avoiding Keystone XL woes: Globe and Mail

Energy Link

In Enbridge confident of avoiding Keystone XL woes, The Globe and Mail reports on Enbridge’s US bound pipelines. (So it is not really a story about Northern Gateway, although the Keystone and Gateway projects are similar)

Enbridge Inc. is expressing confidence that it won’t be harmed by the problems that have dogged its rival TransCanada Corp.’s Keystone XL line.

Enbridge has secured substantial support for two of its own new U.S. pipeline projects – one called Flanagan South, the other Wrangler. But because the Enbridge projects would run through existing pipeline corridors, chief executive Pat Daniel said he believes the company can avoid some of the loud environmental criticism that has caused delays – and the threat of serious new problems – for Keystone.

Joint Review media analysis Part two: Postmedia and The Great American Energy Conspiracy

In her column in The Calgary Herald, Nov 4, 2011 aimed at making the Northern Gateway Joint Review process quick, efficient and excluding a lot of people who want to make oral comments pro-pipeline columnist Deborah Yedlin raises once again what is a big deal for the mostly conservative Postmedia columnists. (See Part One of this analysis: Calgary Herald columnist advocates curbing free speech on Northern Gateway Hearings)

It could be called ” The Great American Energy Conspiracy,” which has apparently now gone international since a tiny minority of those wishing to give oral comments to the Northern Gateway Joint Review panel are not only from the United States, but from the United Kingdom and even Germany. Yedlin doesn’t want non-Canadians (at least non-Canadian environmentalists, no mention of oil executives flying up from Houston) to give oral testimony at the Joint Review Panel.

So where does this conspiracy originate? It was uncovered from the research by blogger Vivian Krause, who has detailed all the contributions made by US-based foundations to support environmental issues in Canada, especially on the bitumen sands, protecting the coastline and salmon farming.

Several Postmedia columnists, including Yedlin, go completely ballistic over this issue, quoting Krause as saying, in effect: How dare these foreigners interfere in a Canadian issue
(They don’t actually use the term foreigners)

Rockefeller Brothers Fund, Sea Change Foundation and San Francisco Oak Foundation. She will show you how these organizations have heavily funded the opposition to the oilsands in Canada.

To wit: a tax return filed for 2009 by Sea Change indicates $2 million was given to the Tides Foundation to be used for “promoting awareness and opposition to oilsands.”

(I should note here that Postmedia’s reporters continue with generally fair and accurate coverage of the pipeline issues, although the chain as a whole tends to tilt in favour of the energy industry)

Yedlin goes on to say

the involvement, nay, interference, by U.S. foundations in the development of Canada’s natural resources constitutes a violation of the North American Free Trade Agreement or of Canadian economic sovereignty.

Were the shoe on the other foot, and Canadian organizations were sending money to U.S. environmental concerns opposing development of, say, shale gas reserves, it’s a good bet steps would be taken in short order to shut it down.

Really?

Has the United States taken any steps to stop the millions of dollars Canadian corporations are spreading along Washington’s lobbying central, K Street, not to mention throughout the six western mountain and southern states the Keystone XL pipeline will cross, to promote that proposed pipeline?

Is the United States objecting to Ambassador Gary Doer crisscrossing the United States until he will equal George Clooney’s character in Up in the Air, building up frequent flier points lobbying in favour of the bitumen sands and cross continent pipelines?

Yedlin’s statement is the height of hypocrisy. For conservative columnists in Canada, it is unacceptable for American foundations to support the groups concerned environmental issues and opposing the bitumen sands. Yet apparently there is nothing wrong for Canadian companies to spend millions of dollars to lobby the United States on behalf of the Keystone XL pipeline:

The Globe and Mail reported on Oct. 20, 2011 that

In the past two years, TransCanada Corp. which is seeking to build the $7-billion pipeline, has spent over $1.5-million on U.S. federal lobbyists, and even more in individual states like Nebraska, where opposition has been the most vocal. That’s in addition to the money it has poured into advertising campaigns, which include a current print, TV and online effort in Washington, D.C., aimed at persuading decision makers that the pipeline will help “real Americans.”

TransCanada has been joined by the Canadian Association of Petroleum Producers (CAPP), which has marshalled the considerable connections of Gordon Giffin and David Wilkins, both former U.S. ambassadors to Canada, to press the case for the pipeline and the Alberta oil sands. The American Petroleum Institute has banded together with the Laborers International Union of North America to feed union workers and ferry them to public meetings, clothe them in orange shirts and ask them to make the case for the pipeline.

Now, of course, the United States is taking some action, with the Inspector General of the State Department investigating possible undue influence by TransCanada, as reported by the Globe and Mail.

The U.S. State Department’s Inspector-General on Monday launched a conflict-of-interest review of the pipeline’s permitting process to examine “the Department of State’s handling of the Environmental Impact Statement and National Interest Determination for TransCanada Corp.’s proposed Keystone XL permit process.”

The Inspector-General review comes after a request by several powerful U.S. senators, who questioned the impartiality of Cardno Entrix, the consultant hired to conduct the Keystone XL permitting process. Cardno Entrix has listed TransCanada as one of its major clients, raising conflict-of-interest concerns.

TransCanada denies any wrong doing and told the Globe

… spokesman James Millar welcomed the Inspector-General’s review “so that these latest claims by professional activists and lawmakers who are adamantly opposed to our pipeline project can be addressed.”

“At TransCanada, we conduct ourselves with integrity and in an open and transparent manner,” he wrote. “We are certain that the conclusion of this review will reflect that.”

Note that the Inspector General is not investigating the money that Canadian corporations and the Canadian government is showering on the United States, but the fact that a company that had worked for TransCanada was reviewing the company’s plans for the State Department. Is it just “professional activists and lawmakers” who perceive that as a conflict of interest?

In her column Yedlin says one of the foundations Krause has “exposed” has lobbied against Keystone.

Sea Change was apparently a signatory to a letter signed by 251 environmental organizations and sent to the U.S. State Department asking Secretary of State Hillary Clinton to block approval of the Keystone XL Pipeline

Just what is going on here? Sea Change is, as Krause and Yedlin point out, an American foundation. Now these two object to an American foundation lobbying the US Secretary of State on the issue of a bitumen sands pipeline crossing United States territory. Huh?

Why? Apparently this is all a giant conspiracy to cripple the Canadian energy economy:

it’s hard not to wonder if some of what is going on vis-a-vis Northern Gateway in particular is a (not so) veiled attempt by the U.S. foundations to ensure there is a wide differential between the continental North American price of oil price and the world price.

After all, low oil prices are better for the U.S. economy than are higher prices and what better way to do this than by cloaking oneself in an environmental cape?

So American environmental foundations, worried about the effects of a giant oil spill along our mutual coast, are secretly in the pocket of the American energy companies. Quick call Dan Brown and hire a boat to look for a Da Vinci Code among the petroglyphs along the cliffs of the Inside Passage and rocks on the shores of Douglas Channel.

Then there’s the issue of Chinese investment in the bitumen sands and various pipeline projects. Some of those millions of yuan will surely make their way into the lobbying funds used by Canadian energy companies. Apparently there’s nothing wrong with China having its hand in Canada’s natural resources, as long as they’re sending money to energy companies and not to environmental groups.

No conspiracy, just more hypocrisy.

AltaGas signs distribution deal with BC Hydro

Energy

Just two days after its friendly take over of Pacific Northern Gas, AltaGas has signed a electricity purchase agreement with BC Hydro.

The deal covers the McLymont Creek and Volcano Creek run-of-river hydroelectric projects. Both are in the traditional territory of the Tahltan First Nation.

Along with a third project, know as Forest Kerr, the three projects will total approximately 277 megawatts and are known as “the Northwest Projects.” The three will be the anchor tenants for the Northwest Transmission Line, which will upgrade the hydro infrastruture of northern western British Columbia.

David Cornhill, Chairman and Chief Executive Officer of AltaGas said in a news release

“With a combined capacity of approximately 82 MW the McLymont Creek and Volcano Creek projects, in addition to our 195 MW Forrest Kerr project, represent a $1 billion investment in British Columbia,”. “These three projects align with our strategy of adding low-risk, long-life assets as we continue to build long-term contracted assets that will generate power and deliver strong shareholder value for generations to come.”

The news release also says:

The Northwest Projects will be constructed solely within Tahltan Nation traditional territory. AltaGas and the Tahltan Nation have signed IBAs for all three projects and have established a strong working relationship that will provide the people of the Tahltan Nation with employment, business opportunities, and economic participation. Once completed, the projects will provide enough electricity for approximately 95,000 homes in British Columbia and will offset more than 780,000 tonnes of greenhouse gas equivalents annually.

Cornnhill said the hyro projects will generate more than 400 direct jobs during construction. He added there will be a lot of indirect economic benefits resulting from increased business activities in the area. “Not only will our Northwest Projects help support government job creation strategies but they will also provide much needed power to BC Hydro, which will allow them to meet the growing demand for power in the northwest.”

In a second news release, AltaGas said it will issue 4.27 million common shares to a syndicate of underwriters, co-led by TD Securities Inc. and RBC Capital Markets, at $29.30 per share, bringing the company approximately $125 million to be used to repay debt and for general corporate purposes.

AltaGas takes over Pacific Northern Gas

Energy

Pacific Northern Gas, the main supplier of natural gas to much of northern British Columbia, has agreed to be taken over by the much bigger Calgary-based AltaGas Ltd. in a deal worth $230 million or $36.75 a share.

The deal gives AltaGas a stake in the natural gas export race, since Pacific Northern’s pipelines link Alberta and British Columbia gas fields to Kitimat, where there are at least three projects underway to export liquified natural gas to Asian markets.

Pacific Northern Gas distribution network. (PNG)

In a news release, Pacific Northern Gas said that company executives began considering the future after PNG sold their interest in Pacific Trails Pipeline last February to the partners in the Kitimat LNG project.

Roy Dyce, president and CEO of PNG said in the news release:

This transaction is in the
best interests of our shareholders, customers, employees and other
stakeholders. Among the reasons we recommend the proposed transaction to
our shareholders are the size of the premium, the immediate liquidity
and the certainly of value the cash consideration offers, and the fact
that we believe AltaGas’ offer fairly values the $20 million contingent
payment that PNG will receive if the Kitimat liquefied natural gas
project proceeds.

Pacific Northern already had a small partnership with AltaGas to build a gas pipeline from a Montney gas plant to
British Columbia.

In its news release, AltaGas said “We are pleased to welcome all PNG employees to our team. AltaGas has a
long history of operating natural gas utilities across Canada and we
will continue to deliver safe and reliable service to our customers.”

AltaGas says the transaction will result in a 50 per cent increase in AltaGas’ holdings of regulated natural gas to consumers and businesses, now worth over $500 million and increase customers from 75,000 to more than 110,000.

The company is looking to increased natural gas exploration taking place in areas northeastern BC in the Montney and Horn River gas fields. AltaGas also expects to profit from “increased industrial activity in northern BC are expected to result in rate base and customer growth as areas such as Dawson Creek and Fort St. John.”

The new company would align the PNG system with AltaGas assets such as the Bear Mountain Wind Park and the Younger facility, BC’s only natural gas liquids extraction plant.

AltaGas adds. “Growing North American natural gas supply and continued attractive natural gas prices in Asian markets continue to support growth of an LNG industry in western Canada. PNG’s Western system is well positioned to capitalize on the growing demand for additional pipeline capacity along the Summit Lake to Kitimat/Prince Rupert corridor.”

AltaGas assets include small utilities, a gas business, and power. AltaGas describes itself this way:

AltaGas is an energy infrastructure business with a focus on natural
gas, power and regulated utilities. With the physical and economic links
along the energy value chain together with its efficient, reliable and
profitable assets, market knowledge and financial discipline, AltaGas
has provided strong, stable and predictable returns to its investors.
AltaGas focuses on maximizing the profitability of its assets, providing
services that are complementary to its existing businesses, and
growing through the acquisition and development of energy
infrastructure.

Consumers in northern British Columbia will be wondering, despite any long term spinoffs from liquified natural gas projects, what the deal will mean for their natural gas bills. Despite the statement by Dyce, “We look forward to joining with AltaGas in continuing our mutual history of delivering safe, reliable service to our customers” and Cornhill’s similar statement, “AltaGas has a long history of operating natural gas utilities across Canada and we will continue to deliver safe and reliable service to our customers,” it is highly likely that consumers in BC will be skeptical of the deal because up until now, while the price of natural gas has been falling, Pacific Northern Gas continued to charge very high (some would say extortionate) transportation and other fees to consumers.