Apache, Shell mark LNG progress at District of Kitimat council

Eurocan site at Kitimat
Apache will build the work camp for the Kitimat LNG project at the old Eurocan site. (Robin Rowland/Northwest Coast Energy News)

As the financial and energy markets speculated Monday, Feb. 6, 2012 that Apache Corporation would make an official announcement during its quarterly webcast next week that the Kitimat LNG project will go ahead, a company report to the District of Kitimat Council, released this evening, is a strong indication that the project is a go.

Mayor Joanne Monaghan told the council that Apache has reported to the district that work at the site for the LNG terminal at Bish Cove has been “progressing well” through the winter and was now “progressing toward the construction phase.” Work so far at Bish Cove includes site preparation, building an access road and a temporary dock for the crew boat.

Monaghan said that Apache will begin work on a work camp for the Kitimat LNG project at the old Eurocan site “shortly.”

Monaghan also that the province of British Columbia told her that it estimates that there will be 800 permanent,  long term jobs in British Columbia over the life of the projects  9,000 construction jobs over the 10 to 15 year multi-train (phase) plans from the KM LNG, BC LNG and Shell projects.  Premier Christy Clark estimated that LNG projects will bring the province $1 billion in revenue. (For Premier Christy Clark’s statement see Vancouver Province Liberals shift strategy to LNG)

The mayor said that Apache plans to work closely with local contractors in general contracting, supplies, concrete supply, logging and land clearing and other supporting jobs.

Apache will be in competition with Rio Tinto Alcan for the local workforce and contractors. Last Thursday, RTA, which is working on a $3 billion modernization project at the Kitimat aluminum smelter, stole a march on Apache, by holding a day long conference for contractors and suppliers across British Columbia, including a tour of the plant, so they could bid on work during that project.

At the same meeting, district council was told that Shell has begun the official transition in its takeover the old Methanex site, which it recently purchased from Cenovus by applying for a licence of occupation at the site, which included asking for permission under district of bylaws to put a  Shell Canada sign at the entrance to the site, replacing the current Methanex sign.  The old Methanex site will be the base for Shell’s plans for its LNG project.

 (This story has been updated and corrected after checking Christy Clark’s statement on LNG which at the council meeting was attributed, in part, to Apache)

Blue Horizon obtains injunction to stop Methanex equipment leaving Kitimat site

Old Methanex site, Kitimat BC
A truck enters the old Methanex site, now being dismantled, on the snowy afternoon of January 13, 2012. (Robin Rowland/Northwest Coast Energy News)

Blue Horizon, the company that had  and lost the contract to  dismantle the old Methanex site in Kitimat has obtained an injunction preventing the buyer of the equipment from removing the material from the site by the Kitimat River.

Last November, Ko Yo Development of Hong Kong cancelled its contract with Blue Horizon that would have seen the equipment in the plant dismantled and shipped to China.

Part of the old Methanex site is now operated by Cenovus and is used to ship condensate to the Alberta bitumen sands by rail.

Shell purchased the Methanex site and marine terminal in October, 2011, as part of its plans for a liquified natural gas facility at Kitimat.  At the time of the contract cancellation in November, 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.” On Friday, Doolan said he had nothing more to add to the original statement.

A news release issued by Blue Horizon says:

Blue Horizon Industries Inc. (“Blue Horizon” or the “Corporation”) (CNSX:BH) announces that its wholly owned subsidiary Blue Horizon Energy Inc. (“BH Energy”), on behalf of its wholly owned division Blue Horizon Contracting, obtained on January 12, 2012 an injunction in the Supreme Court of British Columbia, Vancouver Registry, prohibiting Ko Yo Development Co. Ltd., a Hong Kong incorporated company (“KoYo”) and Guangan Lotusan Natural Gas Chemicals Co. Ltd., a corporation incorporated under the laws of the Peoples Republic of China (“GLN”) from removing any portion of the dismantled ammonia or methanol plants from the Province of British Columbia unless and until KoYo / GLN posts security in court in the amount of $4,180,000 by way of an irrevocable letter of credit or other security acceptable to BH Energy and to the Court.

Mr. Don Allan, President and CEO of Blue Horizon, stated “We are pleased that the Supreme Court of British Columbia ruled quickly and decisively in this matter by issuing the injunction against KoYo / GLN while at the same time awarding significant security for costs and court costs to BH Energy. We are continuing to focus our attention on completing the bid process for a number of new high value dismantling contracts expected to be awarded for execution in 2012 as well as advancing our other operating businesses.”


The dispute between Blue Horizon, the Red Deer  based contractor  and Hong Kong based Ko Yo goes back months.   The original contract was awarded in February, 2011, renegotiated in September 2011 and then cancelled in November, 2011.

Bula sign on Methanex site
On the Methanex Project sign at the entrance to the decomissioning site, stencils from Bula.ca, the new contractor, can be seen overwriting Blue Horizon, the former contractor. (Robin Rowland/Northwest Coast Energy News)

The dismantling of the Methanex plant has since resumed with work being handled by a new contractor, Bula Enterprises, also of Red Deer.  A profile of Bula Enterprises on the website shows that  it has extensive construction experience, much of it in the Alberta   oil patch, including projects for Shell Albian, CNRL, Suncor, Conoco Phillips in Fort McMurray. As of late Friday afternoon, Bula had not returned calls seeking comment on how the injunction might affect the deocommissioning.

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.


Five energy companies reveal backing for Northern Gateway pipeline

Five major energy companies have filed documents with the Northern Gateway Joint Review Panel saying they are backing the pipeline project in one way or another

Cenovus Energy Inc., which runs the condensate operation at the old Methanex site in Kitimat and MEG are funding participants, that is they are investing in the pipeline.

MEG and Cenovus have also signed a precedent agreement, meaning that the company will transport diluted bitumen along the pipeline. Other companies signing the precedent agreement are Suncor Energy, Nexen Inc., and Total E&P Canada.

The Chinese state oil company Sinopec announced earlier it was one of the pipeline funding participants.

In October, Enbreige spokesman Paul Stanway said that ten companies have contributed $10 million each to help Enbridge finance the regulatory approval process, meaning that four backers remain to be revealed.

This is likely to happen before the hearings open at the Haisla Recreation Centre, at Kitamaat Village, on Tuesday January 10.

Shell’s go slow approach to Kitimat LNG project means little action before 2015

Energy Environment

When Royal Dutch Shell Canada purchased the Methanex/ Cenovus Energy plant and marine terminal in Kitimat Wednesday, company spokesman Paul Doolan told the media that Shell “is now exploring the potential for an LNG export terminal on the site,” but refused to give any time line for the project.

Now sources have confirmed to Northwest Coast Energy News that at this time it looks as if there will be no major developments in the Shell project until  2015.

Employees of Cenovus were told after the sale announcement that the plant’s condensate operations would be “business as usual” until sometime in  2015.

(After the sale, Cenovus told the media it doesn’t expect changes in
the regular shipments of condensate to change “for the foreseeable
future.” )

As anyone who has gone through a takeover or similar management transition knows, a company’s new management may have ideas that they haven’t discussed with the old regime.

The 2015 date is logical,  however, since 2015 is the projected launch date for the first project, KM LNG partners’ Kitimat LNG project.

There are already two projects in the “pipeline” so to speak, the Kitimat LNG and BC LNG projects. As discussions during the June National Energy Board hearings that led to the approval of the KM LNG export licence last week showed, the two companies must come to an agreement on some of the pipeline capacity coming into Kitimat, sharing “the molecules,” that favourite phrase of natural gas analysts.

Shell will also have to go through the National Energy Board process for granting an export licence.

With energy companies rushing to exploit the shale gas resources in northeastern BC and in Alberta. and growing demand for the natural gas in Asia, transportation of the natural gas is a big question, since it appears Shell and its partners will have to build new pipelines since the existing pipelines into the Kitimat region will be at full capacity.

Where will that new pipeline be built? How will that new pipeline be built? That question is already being widely debated in Kitimat. Ever since Enbridge has announced that it too is interested in joining the natural gas export boom, the question has been: could a natural gas pipeline replace the proposed Northern Gateway bitumen pipeline or does Enbridge intend to build two pipelines? If it is the latter, Enbridge, and possibly Shell, can expect years of hearings, protests and delays because while people in northwestern BC are generally accepting of natural gas projects, there is fierce and still growing opposition to the bitumen pipeline.