Clio Bay Editorial:Hire the experts. This is not the time to be learning on the job

Special report: Clio Bay cleanup: Controversial, complicated and costly

Editorial:

Hire the experts. This is not the time to be learning on the job.

Everyone in the Kitimat and Kitamaat Village are facing a dilemma, a dilemma that should have been solved a year ago, when it was first known that the KM LNG project at Bish Cove had grossly underestimated the amount of marine clay and other material that has to be removed for the liquified natural gas terminal, a total of about 3.5 million metric tonnes.

The Haisla and Chevron are proposing that much of the clay be deposited over sunken logs in Clio Bay.

Chevron, which only took over operations at KM LNG in December 2012, is still learning on the job.

When the Clio Bay capping plan became public, far too late in the process, only then did Chevron begin to take a serious look public worries about the environmental problems that might result from depositing all that marine clay in Clio Bay.

Chevron hired Stantec, a well-known international  consulting firm with close ties to the energy industry and some experience in remediation to evaluate Clio Bay. Although Chevron said in a statement that Stantec is a company  “with extensive experience in many major habitat restoration projects,” it appears that Stantec, in the case of Clio Bay, is a jack of all environmental trades and master of none, just learning on the job.

In answer to questions by Northwest Coast Energy News, Chevron cited two studies supplied to them by Stantec. One was Chris Picard’s (now with the Gitga’at First Nation) study of Clio Bay which anyone can find by using a Google Search. The second was an overview chapter of west coast North American logging practices from a book published 22 years ago.

Any of the web saavy undergraduate journalism students I once taught at Ryerson University could have done better. This semi-retired reporter, without the resources he once had in a major newsroom, easily found the studies of the log filled Ward Cove, the State of Alaska’s recommended remediation practices, the capping procedures recommended by the US Army Corps of Engineers and more. Chevron did not mention Stantec citing the 1995 DFO study of nearby Minette Bay which can easily be found on the DFO website.

A letter from Fisheries and Oceans to District of Kitimat Council only mentions Dungeness crab and not the Haisla desire to restore halibut and cod to Clio Bay. That can only raise suspicions that the DFO is also depending solely on Chris Picard’s limited survey of Clio Bay.

In Alaska, at Ward Cove, there were almost five years of studies on the ocean environment before part of the cove was dredged and parts of the cove with thousands of logs there were capped with fine sand.

The people of Kitimat and Kitamaat want the LNG project to proceed. Everyone wants a clean and sustainable ocean enviroment, whether in Clio Bay, Minette Bay or down Douglas Channel. The problem of that 3.5 million cubic metres of marine clay must be handled in a timely fashion so the LNG terminal can move to the next step in the coming months. There is no time for five years of studies before proceeding.

This site would not normally endorse one large corporation over another.

There isn’t time for Chevron and Stantec to be learning on the job, its technicians racing in their boats between Clio Bay and Bish Cove trying to figure out what is going on and casually asking people what they think. No time at all.

The clock is ticking. Chevron and Apache, in partnership with both the Haisla and the District of Kitimat, should immediately hire the companies that do have the expertise in remediating a northwest Pacific coast bay filled with sunken logs, the companies that cleaned up Ward Cove in Alaska. Integral Consulting was the main environmental consulting contractor at Ward Cove, assisted by another large firm, Exponent  and by Germano and Associates, a company that  according to its website specializes in “rapid seafloor reconnaissance”. Both Integral and Exponent are, like Stantec, giant international consulting firms.  In this case, experience has to count. While Stantec’s website does list remediation projects, none are similar to Clio Bay.

A letter from Fisheries and Oceans to the District of Kitimat says that:

Chevron will be required to conduct a pre-construction, construction and post construction monitoring program. Pre-construction monitoring will include collection of baseline information that will be used to assess effectiveness monitoring during and at the completion of the project. Water quality monitoring for turbidity and total suspended solids will be undertaken during construction to determine if established performance criteria are met.

From the reports available from both the EPA and the State of Alaska it appears that the companies that cleaned up Ward Cove did just what DFO is asking, assess and monitor.  Another reason to hire the experts rather than the newbies.

Why a three way partnership? Chevron/Apache and the Haisla Nation are already partners in the Clio Bay plan. Adding the District of Kitimat would establish trust and make sure that the results of any scientific and engineering studies, plans and operations would be available to the people of Kitimat (as well as some Haisla members who feel they were excluded) as part of the ongoing process. The partnership would make up for the lack of transparency up until now, make sure the public is kept up-to-date and not just by Chevron’s and DFO’s communications people since reports to the District could be reviewed by the engineering staff and members of council.

It is likely that those companies that worked at Ward Cove could quickly let everyone know whether the idea of capping at Clio Bay with marine clay is a viable option and if it is viable how to do it properly rather than just dumping the clay from a barge using a hose. If marine clay is not viable for Clio Bay, it is likely that those firms could advise whether one of the original plans, to dump the clay in the deep ocean, is a better solution, or if there is another alternative that no one has thought of.

Kitimat and Kitamaat are lucky. The recommended practice for capping sunken logs is using sand. There is here a ready source at the Kitimat Sand Hill. If marine clay is not a viable option, or for future projects, the Sand Hill can easily be used to fulfill the aims of both the Haisla Nation and the residents of Kitimat to clean up Clio Bay, Minette Bay and eventually all 50 other sites identified along Douglas Channel by DFO in 1997. Those consulting firms have the expertise in this area and that expertise should be utilized.

Learning from the job

Even though sand has a track a record in capping, using marine clay from Bish Cove  to cap the logs at Clio Bay is probably a good idea, after all that marine clay was once at the bottom of the Ice Age Douglas Channel.

The use of sand for capping sites is well-known, there are established engineering parameters. At Ward Cove, there were studies of the angle of the slopes and how much weight of sand that the debris could hold.  Sand is very different from marine clay. At the moment, there are no engineering parameters for marine clay. It appears that no one has thought of doing slope analysis and load bearing engineering studies at Clio Bay.

Marine clay is a potential cap for all the sunken log sites on Douglas Channel and on the whole Pacific coast from Oregon to Alaska.  That means that Clio Bay is a pilot project that should be planned as carefully as possible, within the time constraints needed for construction of the LNG terminal, but not regarded as a rush job to get rid of that clay.  That means taking the time needed to do all the necessary scientific and engineering studies before the first drop of clay heads to the bottom. That is another reason to hire experts who actually know what they are doing so everyone can learn from the job.

 

Standards

No matter how the cleanup of Clio Bay proceeds, KM LNG, the Haisla and the District of Kitimat are facing another dilemma. What standards and benchmarks should be applied to the project?

By law, the Department of Fisheries and Oceans is responsible and will, of course, be monitoring the cleanup.

Despite assurances in a letter to the District of Kitimat, it is clear that DFO too is learning on the job.

At the moment, DFO has no standards for remediation, because the Conservative omnibus bills have gutted environmental standards in Canada. Even before the omnibus bills and the LNG rush, cleaning up log dumps was on the DFO low low priority list.

The letter from DFO to District of Kitimat council shows what knowledgeable sources have told us, DFO will be navigating Clio Bay from a desk in Kamloops (of all places). The same sources say that the Prince Rupert office of DFO, which has the expertise on the northwest coast is out of the loop on this project. The residents of the northwest coast already know there are not enough fisheries officers to properly monitor the coast. DFO “estimates” the annual recreational halibut catch (perhaps by using fish entrails rather than the traditional chicken?). DFO has retired or laid off many scientists who have studied the coast. Others have left on their own. The remaining scientists are muzzled by the Harper government, with anything they could say filtered by the Prime Minister’s Office, so it is likely that no one in the northwest will actually trust what they say.

Normally in a free and democratic society, the government tells local residents when a major operation like the remediation of Clio Bay is going to occur.  In this case, Fisheries and Oceans did not tell anyone in Kitimat anything until the District of Kitimat Council requested information.

On Monday, Sept. 30, a representative of Chevron will make a presentation to District Council. DFO did nothing more than send a letter that said: “Regretfully, Fisheries and Oceans Canada is unable to attend the scheduled council meeting.” Nobody, in the whole department? One is tempted to say, “That’s not good enough.” Then you remember that if DFO appeared before Council, the presenter would have to face possibly awkward questions from both members of Council and the media. That just doesn’t happen in Stephen Harper’s Canada, not in Ottawa and certainly not in Kitimat.

Despite what DFO has said in its letter, this regulatory vacuum leaves the Kitimat region no choice. Since Canada has no standards, when the Clio Bay project proceeds, the best available standards are those set by Alaska, which has the same type of coast and climate. The Clio Bay clean up should therefore be measured against those Alaska standards.
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Clio Bay: Links and Documents

Links and documents relating to sunken logs and site remediation

Note many, not all, external links are to pdf files.

Canada

DFO study of sunken log sites in Douglas Channel

DFO Study Dissolved oxygen cycle in Minette Bay

Impact of Wood debris in British Columbia estuaries

Chris Picard’s study of Clio and Eagle Bays as posted on the University of Laval website

United States

Links

Alaska Department of Environmental Conservation

Environmental Protection Agency

Ketchikan Paper Company
This is the EPA Web site on the Ward Cove cleanup and remediation with numerous documents.

EPA capping guidance
EPA contaminated sediment capping guidance

US Army Corps of Engineers

US Army Corps of Engineers capping guidance

Documents

Alaska log site remediation guide  (pdf)

EPA study of dissolved oxygen in Ward Cove (pdf)

Marine Log Transfer Facilities and Wood Waste (pdf)

Academic paper by Ward Cove consultants Geramano & Associates on sediments in Ward Cove and Thorne  Bay, Alaska.

Ward Cove Sediment Remediation Project Revisited

Academic paper by Ward Cove consultants Integral Consulting

 


 Other Links

Kitimat LNG (KM LNG)

Stantec

Stantec remediation project page

Integral Consulting

Integral Consulting Ward Cove web page

Exponent 

Exponent Ward Cove web page

Exponent LNG Safety web page

Germano & Associates

(Note not all documents used in this report are available online. Some sent to NWCEN are too large to upload)

 


 
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Chevron announces open house on Clio Bay, seeks input from stakeholders

Updates with open house location

Chevron LogoChevron, the partner with Apache in the KM LNG (also known as Kitimat LNG) project at Bish Cove, said Sunday that the company will hold an open house in Kitimat on the controversial Clio Bay reclamation project.

Chevron says there will be a public open house at Riverlodge Tuesday, October 8 from 4 pm to 8 pm.

In an e-mail to politicians and local groups, including Douglas Channel Watch, Marc Douglas, a senior advisor for Chevron, based in Calgary, invited local stakeholders for a series of one hour meetings the same day at the KM LNG offices in City Centre.

Chevron Canada invites you to a meeting to discuss the Clio Bay Marine Life Restoration Project.
This proposed project would see Chevron excavate marine clay from the Kitimat LNG construction site at Bish Cove and work closely with the Federal Department of Fisheries and Oceans to deposit this natural material in specific locations in Clio Bay. The clay will cap-off decaying wood debris left by historic log booming operations that has accumulated on the bottom of Clio Bay, damaging the Bay’s natural ecosystem. A key goal of the project is to restore natural marine life populations in Clio Bay. Come and share your thoughts and ideas with us and learn more about this innovative restoration project.

 

Ad for open houseThere has been growing controversy over the Clio Bay project in recent weeks. Members of the Haisla Nation and residents of Kitimat were initially told that due to the large number of sunken logs at Clio Bay, that the area was deprived of oxygen, with limited sealife and that capping the logs with clay from Bish Cove would restore the ecosystem. However, beginning with a discussion at District of Kitimat Council on September 3, more people have been challenging the idea that Clio Bay needs restoration, with fishers posting photographs of recent catches on Facebook pages.

On Sept.3, Councillor Phil Germuth told Council:  “Those logs have actually created a woody reef, where like any other reef, an ecosystem is being sustained. So to say that those logs are suffocating the life out of Clio Bay doesn’t seem to have a lot of merit.”

At the time, Chevron told the media  that they had consulted with the Department of Fisheries and Oceans and  concluded that carefully placed clay would improve the ecosystem.

Special report: Clio Bay cleanup: Controversial, complicated and costly

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Why BC should watch the Australian election: LNG and natural gas are suddenly a top issue

Could the future of northwestern British Columbia’s hoped for natural gas boom depend on the outcome of this weekend’s Australian general election?

While the mainstream media in North America has mostly been following the personal feud between Prime Minister Kevin Rudd and Opposition Leader Tony Abbott or speculating whether or not Wikileaks founder Julian Assange’s party will make a ripple or a splish, a natural gas crisis has rocketed high on to the Australian election agenda.

I’ll be the first to admit that I know very little about Aussie politics, but I couldn’t ignore all the LNG and natural gas Australian election related stories that suddenly started showing up in my alerts.

LNG train “on ice”

This morning came the alert that Chevron has put the development of another train at its giant Gorgon LNG facility “on ice” (as a pun enabled headline writer in the Western Australian put it)

Chevron and its partners in the Gorgon LNG project on Barrow Island are expected to postpone work on detailed design and engineering of a fourth processing line at the mega project until at least next year as they battle to contain the soaring cost of the foundation development.
As reported by WestBusiness at the weekend, Chevron’s latest internal cost review is understood to have placed a final cost on Gorgon’s three-train venture of up to $US59 billion ($65.6 billion), or 13 per cent above the last confirmed budget revision of $US52 billion.
Chevron is refusing to discuss the status of the cost review and is understood to have told its Gorgon team to “value engineer” in the hope of substantially reducing the latest overrun on a project that was originally supposed to cost $US37 billion to complete.

 

Raw logs all over again

For a resident of northwestern BC, one thought comes to mind from the media reports on the LNG situation in the Australian election, it’s raw logs all over again.

It appears from those media reports that while Australia has huge reserves of shale-based natural gas, the way the country has structured its LNG boom, major industries and consumers are becoming alarmed that domestic natural gas prices for both will soon skyrocket. There are calls for whatever party wins the election to pass legislation that would create “domestic gas reservation” so that Australians won’t see the gas exported while they pay higher prices for what’s left over.

Most of the shale gas reserves are in Western Australia, while the population—and industry– are concentrated far away on the east coast.

That is leading to another controversy, demands that eastern Australia develop its coal gas reserves, which, of course, brings to mind Shell’s decision to forgo development of coal gas deposits in the Sacred Headwaters and the ongoing fight by the Tahltan First Nation to stop Fortune Minerals’ open pit coal mine in the Sacred Headwaters at Klappan.

Then there’s another vexing issue that northwestern BC is facing and soon have to deal with. In the election, some Australian politicians and unions are calling for curbs on the use for temporary (and not so temporary) foreign workers.

Another factor is the growing cost of natural gas extraction and LNG export, which has, in the midst of the election campaign, pitted Chevron against Australian unions, with Chevron executives (as they did in other contexts before the election call) pointing to Canada—that means Kitimat, folks — as the cheaper alternative.

Rising prices

The Australian has reported that a poll, commissioned by the nation’s manufacturers, so it is somewhat suspect, that:

Manufacturers  will today claim that most Australians want a policy of domestic gas reservation and that this would sway voter intentions, a move set to renew the acrimonious debate over rising gas prices.
Manufacturing Australia will release a survey it commissioned where 35 per cent of people said it was “quite likely” and 13 per cent “extremely likely” that it would sway their decision at the election if a party made a policy pledge on the issue.Those uncertain stood at 21 per cent.

In one Australian riding, a local candidate wants one per cent of Australia’s gas be reserved just for the State of Queensland.

Bob Katter flew through Gladstone as fast as the wind whistled through Spinnaker Park on Monday, where he told local media he wanted to reserve a domestic gas supply for Australia and scrap the 457 visas that bring foreign workers into the country….

Mr Katter said mineral processing was under enormous pressure in Australia with copper processing wiped out in northern Queensland and to counter that, the Katter Australia Party would reserve 1% of the gas supply for Queensland.
“Because of the escalating skyrocketing cost of coal, gas and electricity in the past eight years, one per cent of the gas will be reserved for the benefit of the people in Queensland if not Australia,” he said.

“That gas will be used to produce electricity at prices our retirees can afford, and young families can afford, and most importantly that our mineral processing plants have prices for processing they can afford.”

 

Coal gas

Another story in The Australian quotes James Baulderstone of the Australian energy company Santos:

THE NSW gas industry has warned of higher gas prices, job cuts and a significant risk to the state’s energy security if the coal-seam gas sector is not developed.
James Baulderstone, vice-president of eastern Australia at Santos, said without indigenous gas of its own, NSW had no ability to control its energy supply security.
“NSW faces prospective gas shortages as long-term contracts underpinning the state’s gas supply expire over the next two to three years, the very time in which the commencement of LNG exports from Queensland will see annual gas demand in eastern Australia triple,” he said.
“Looming natural gas shortages in NSW could be avoided by the timely and balanced development of the state’s already discovered reserves of natural gas.”

The Australian Liberal Party (which like BC’s is actually conservative) supports coal gas projects. But it also wants to force energy companies to develop gas reserves they have leased.

Chevron and the unions

Also embroiling the election is the growing dispute between Chevron and the Australian unions.
As the Australian Financial Review reported, Chevron is claiming that high costs are slowing the LNG projects and blaming the government of Prime Minister Kevin Rudd.

The federal government has rejected claims from Chevron that Australia’s high-cost economy is threatening the nation’s biggest energy project, Gorgon, even as the Maritime Union of Australia demands a 26 per cent pay rise and more than 100 other benefits for its members, including Qantas Club memberships and iTunes store credits.

As Chevron’s $52 billion Gorgon project became embroiled in the ­election campaign, trade union officials accused Chevron of seeking to dodge responsibility for poor labour productivity and high costs.

The union’s demands for employees working for 19 offshore oil and gas contractors around Australia include a 26 per cent raise over four years, no foreign labour without consultation, union control of hiring and four weeks holiday for every four weeks work.

(Note there are accusations of biased reporting during this election, especially from the media owned by Rupert Murdoch. I could find no independent confirmation of union demands for airline memberships and iTunes credits) 

The Australian Labour minister, Gary Gray, who is from Western Australia, and according to reports, in a tough re-election fight, is blaming Chevron and the other energy companies for “failing to control the costs of their staff and contractors.”

“We do need our companies to get better in managing their productivity issues,” he said.

Prime Minister Kevin Rudd said he had studied China’s latest five-year economic plan and concluded Australia’s industrial relations system wasn’t hurting the industry.

Boom or bust?

The Australian Financial Review quotes Chevron Australia managing director Roy Krzywosinski as saying Australia has a two-year window to get ­policy settings right and fix industrial relations and productivity or risk losing out on billions of further investment in liquefied natural gas projects.

It goes on to make a reference to Shell and operations in Canada—again that’s Kitimat folks.

after the unprecedented rush of LNG investment in the past four years, Australia has become the most costly place worldwide for new plants, while new competition is emerging in North America and east Africa.

Shell, which has slowed its $20 billion-plus Arrow LNG project in Queensland, said construction costs in Australia are now up to 30 per cent higher than in the US and Canada.

Mr Krzywosinski said LNG projects are “long-term projects that transcend governments” and Chevron would work with all sides of politics to get policy settings right.

This Australian blogger warns:

The investment surge in LNG – often favourably compared with the Apollo moon program in its magnitude – is in some ways a bubble. Firms have rushed in, extrapolated an endless supply/demand imbalance for their product, ignored global competition, over-paid for assets and developed with little thought to what others were doing, grossly inflating input costs in the process.

The blogger goes on to say

This fallout is typical of the “built it and they will come” attitude that seized energy and mining executives in the final stages of the “commodity super cycle” boom. A similar story, with different dynamics, is playing out in coal and next year in iron ore.
The unions are largely not to blame for the cost blowouts even if they are a party to them. They are, after all, unions. What does capital think will happen if it hands them such a card to play?

Sound familiar?
Australia a mirror of the BC election?

Again it appears from this far off shore, that the Australian election is somewhat mirroring the recent BC provincial election and not only because of the issue of LNG. The Labour PM Kevin Rudd returned to power after three years on the back benches,  coming back after the party dumped PM Julia Gillard.

Like BC, the Australian Liberal Party is really conservative. The Liberal Leader Tony Abbott, wants to abolish Australia’s carbon tax but Abbott is also threatening to fine companies that don’t lower prices if (or when) the carbon tax is abolished.

The polls show that the Liberal Party is leading, but that Kevin Rudd is more popular than Tony Abbott. Rudd is running an attack campaign against Abbott, warning of the consequences of an (conservative) Liberal victory. Sounds a bit like Christy Clark.

Given the split in the polls, with the leader of one party more popular than the leader of the party that is leading the polls, this video of the editors of The Australian which accompanies this story  shows their senior editors are awfully confident, perhaps over confident, about the polls. I know given what happened in BC, Alberta and even Israel, I’d be a lot more skeptical.

We’ll know the outcome of the Australian election by this time next week. As for LNG, given the volatility of the market, who knows?

 

(Editor’s Note: Tony Abbott and the Australian Liberal Party won a landslide victory in the weekend vote)

 (Note some of the Australian media sites appear to be metered and allow only one viewing)

Kitimat in “horse race” with Australian LNG project Chevron says

Gorgon project in Australia
The Gorgon LNG project in Western Australia. Chevron says  Gorgon Project work continues to progress with the installation of the second of three amine absorbers, two condensate stabilization modules and a recycled gas compression module. (Chevron Australia)

Kitimat LNG is in a “horse race” with an LNG project in Western Australia–and at this point, according to the Australian media–Kitimat is winning, even though the Australian Gorgon project is much further ahead while the Kitimat LNG project at Bish Cove hasn’t really started.

The Australian reports come from the same conference call Chevron held with financial analysts last week, when the company said the final investment decision for Kitimat LNG has been postponed to 2014.

The Brisbane Times  is quoting Chevron as saying that expansion of the Gorgon “will be in direct competition with exports from North America, which have a cost advantage.”

Chevron has a 47.3 per cent stake in Gorgon. Shell which is developing its own project at Kitimat, LNG Canada, has a 25 per cent stake in Gorgon. ExxonMobil holds 25 per cent.

”In the case of Gorgon train four … we are happy to see both of them move forward,” Chevron vice-chairman George Kirkland told analysts late last week, referring to the competition with Kitimat. ”[There is] a bit of a horse race between them at this point.”

Shipping gas to north Asia from Canada is cheaper than exports from Australia, he said, although the challenge is to find markets for the gas. ”The development cost at Kitimat … may end up being less than in the case of Gorgon,” he said, which ”has the benefit of [being a] brownfield development on the plant side”.

”We’re going to offer volumes … and interest in the plant as a combination,” Mr Kirkland said of the Kitimat marketing plans. ”We think that’s a big advantage.

”Our goal is to maintain our … first-mover advantage … We have had some initial discussions with Asian buyers.”

The Gorgon project in the northwestern area of Western Australia. (Chevron Australia)
The Gorgon project in the northwestern area of Western Australia. (Chevron Australia)

According to Wikipedia, the Gorgon area of Western Australia is the site for a number of liquified natural gas projects. The projects are off shore and close to the export terminals, much different from British Columbia where the gas fields are in the Peace River district in the northeast of the province.

Wikipedia says

The Gorgon field is centered about 130 kilometres (81 mi) off the north-west coast of Western Australia, where the water depth is approximately 200 metres (660 ft). Other fields in the group lie to the north, such as Jansz-Io, which covers an area of 2,000 square kilometres (770 sq mi), in a water depth of 1,300 metres (4,300 ft).

Chevron says

It is one of the world’s largest natural gas projects and the largest single resource development in Australia’s history.
The Gorgon Project is developing the Gorgon and Jansz-Io gas fields, located within the Greater Gorgon area, between 130 and 220 kilometres off the northwest coast of Western Australia.
It includes the construction of a 15.6 million tonne per annum (MTPA) liquefied natural gas (LNG) plant on Barrow Island and a domestic gas plant with the capacity to supply 300 terajoules of gas per day to Western Australia.
Gorgon LNG will be off loaded via a 2.1 kilometre long loading jetty for transport to international markets. The domestic gas will be piped to the Western Australian mainland.
The Gorgon joint venture is investing approximately $2 billion in the design and construction of the world’s largest commercial-scale CO2 injection facility to reduce the project’s overall greenhouse gas emissions by between 3.4 and 4.1 million tonnes per year. The Australian Government has committed $60 million to the Gorgon Carbon Dioxide Injection Project as part of the Low Emissions Technology Demonstration Fund.

Gorgon project wharf
A view of construction on the 2.1-km (1.3-mile ) LNG wharf with 24 caissons in place. (Chevron Australia)

 

In May, Reuters reported that the $52 billion Gorgon liquefied natural gas (LNG) development was 60 per cent complete. At the time, Reuters said Chevron planned to start engineering and design work for an expansion by the end of the year.

Parts of the Gorgon project are in an environmentally sensitive area, Barrow Island, which has been a nature reserve in Australia since 1910.

Wikipedia says

Barrow Island’s ecology. The island is a Class A nature reserve, and home to theflatback turtle (classified as a vulnerable species) and numerous other animals not found on the Australian mainland. Other concerns are related to the adequacy of quarantine procedures on Barrow Island to protect against the introduction of non-endemic species, and risks associated with geological sequestration of CO2.It was reported in November 2011 that native animals on Barrow Island had been accidentally killed daily with a known total of 1550 since construction began.

Chevron says

The Gorgon Project is being undertaken in accordance with strict environmental standards to preserve the island’s ecology.
Central to the Gorgon Project’s commitment to protect the conservation values of Barrow Island is the Quarantine Management System (QMS), which directs
the Project’s quarantine operations. The QMS is the largest non-government quarantine initiative in the world and was considered to be “likely world’s best practice” by the Western Australian Environmental Protection Authority. The Project’s gas processing facilities are being constructed within a 300 hectare ground disturbance limit, which represents 1.3 percent of Barrow Island’s uncleared land area.

Gorgon Project Overview Chevron document pdf

Gorgon-Progress Update August 2, 2013 pdf

Chevron postpones Kitimat LNG decision to 2014, seeks new equity partners, Dow Jones reports

The Dow Jones wire is reporting that Chevron has postponed a final investment decision on the Kitimat LNG project until 2014, “putting a deadline on a project that has already seen delays.”

Competitors are trying to sell natural gas to Asian customers using the cheaper Henry Hub North American market  benchmark rather than higher Japanese bench mark which is based on the price of oil. 

The Dow Jones report says Chevron, which is partnered with Apache, is still having problems finding customers in Asia.  It quotes George Kirkland, head of Chevron’s upstream business, as saying that the company is offering customers equity stakes in the Kitimat project. Kirkland told a conference call that equity should be more attractive to buyers.

Kirkland said the company won’t approve the project until it has lined up customers for at least 60 per cent of Kitimat’s total 5 million metric tons a year of export capacity, although Kirkland expects that to happen in 2014.

“We’ve have had some discussions with Asian buyers,” Mr. Kirkland said during a call with investors. He declined to name the companies with which Chevron was negotiating. “It’s more likely to be a 2014 (decision), not late 2013,” he said.

U.S. natural gas prices were $3.37 per million British thermal units Friday, down from $13.69 in July 2008.
Chevron to Make Final Kitimat LNG Decision in 2014

Kitimat approves building permit for KM LNG construction camp

 

Ron Link of KM LNG addresses District of Kitimat Council on a building permit for the work camp. (Robin Rowland)
Ron Link of KM LNG addresses District of Kitimat Council on a building permit for the work camp. (Robin Rowland)

District of Kitimat Council tonight (March 4, 2013) approved building permits for the KMLNG work camp at the old West Fraser Eurocan paper mill site.

The first phase of the camp, called 1A will have 155 beds, followed by a second camp, called 1B with 145 beds. Council also approved a second phase, Camp 2, which will have an additional 300 beds. The camp will consist of single-storey, 44 bed dormitories, similar to those now being used at the Rio Tinto Alcan Kitimat Modernization project, a couple of kilometres away.

“This camp will support the construction of the LNG terminal,” KM LNG’s Ron Link told council, “the focus right now is a 600 man camp. Beyond that, if the final investment decision is approved, it will eventually grow to 2,800.

To build the camp KMLNG will have to demolish some of the remaining blow pipes and chip screening facilites that are there.

“Under the regulations it is a contaminated site and we have a company called Constega Rovers that are participating in sampling the site. It is certainly our attention to clean it up.

If the full 2,800 bed camp is built, the remaining part of the facility will be directly west of the current proposed campsite.

Later in the meeting council continued to debate the contenious issue of an over all camp policy for the District of Kitimat and voted to instruct district staff to “bring back a calendar with the process and dates for discussing camp policy.”

Staff would prepare a document indicating where camps are presently permitted within the District of Kitimat followd by a committee of the whole meeting dedicated to the pros and cons of camps within the district and perferred locations, services provided by the district and size limits.

There will likely be both a public town hall and a “public meeting” of council to discussion the issues later in the spring,

The debate was prompted bya proposal from the PTI Group to build a large “lodge style” work camp within the boundaries of the residential part of Kitimat, near the hospital and City Centre Mall. The PTI proposal would require amendments to both zoning and the Official City Plan. The KMLNG and RTA camps are in areas zoned for industrial use and would not be affected by a change to the official plan for the residential area.

Chevron advertises for Houston-based Kitimat plant logistics manager

Chevron, which recently took over management of the Kitimat LNG project is advertising for a Houston, Texas, based logistics manager for the project.

The ad gives (in part) this job description:

Chevron is accepting online applications for the position of Kitimat Plant Logistics Manager located in Houston, TX through February 19, 2013 at 11:59 p.m. (Eastern Standard Time).

The Kitimat LNG project is located in Western Canada and includes 1) construction of the 2 x 5.5 MTPA Kitimat LNG Plant and 2) the Pacific Trails Pipeline.

Responsibilities for this position may include but are not limited to:

Responsibility for overseeing and managing the entire plant logistics program including module, equipment and bulk cargo logistics throughout the overall supply chain. Development of the necessary organizational capability within the Kitimat team, Engineering, Procurement & Construction (EPC) Re / Engineering, Procurement and Construction (Management) (EPCM) Contractor organization, and selected logistics contractors’ organizations

Assist in the development of contract ITB templates and scopes of work for project logistics contracts for (a) Heavy module marine/road transport and (b) General cargo transport from worldwide locations to module yards and Kitimat, freight forwarding services, and in-country transport, including development of criteria to evaluate bids.

Oversee the selected logistics contractors’ performance of project logistics, focusing primarily on the movement of prefabricated modules from multiple locations to ports near Kitimat.

 

 

 

Haisla, Ottawa and BC sign agreement to open way for Kitimat LNG developments

Haisla NationThe Haisla Nation, the federal government and the province of British Columbia have signed an agreement that opens the way for liquified natural gas development on Haisla territory on Douglas Channel.

The federal government also announced new regulations under the the First Nations Commercial and Industrial Development Act (FNCIDA). The regulations are necessary because First Nations are still governed by provisions of the century old Indian Act and reserve land is outside of provincial jurisdiction.

The agreement was announced at a news conference in Vancouver today, January 22, 2013. At this point it mainly concerns the Kitimat LNG project (also known as KM LNG)

A news release from the federal department of Aboriginal Affairs and Northern Development says: “FNCIDA was a First Nations-led initiative that allows the government to work with First Nations and provincial regulatory authorities to create regulations for complex commercial and industrial development projects on reserve.”

The tripartite agreement with the Government of Canada, Government of British Columbia and Haisla Nation “ensures administrative, monitoring and compliance activities for the LNG facility are performed and enforced by provincial officials.”

The news release also quotes Haisla Chief Counsellor Ellis Ross as saying: “Kitimat LNG offers new, important and sustainable economic opportunities which the Haisla people are eager to embrace. We have seen new jobs, business opportunities, and skills training come to our people since KM LNG signed its agreement with us, and we know that the agreement signed today with Canada and BC is a milestone in making the project a reality. On behalf of the 1,700 Haisla people, I thank both governments for their commitment to this important agreement and the better future it is bringing our people.”

The federal news release goes on to  quote BC Community, Sport and Cultural Development Minister Bill Bennett as saying: “The BC Government is working with industry and First Nations to foster economic growth through the expansion of our province’s natural gas sector. I would like to thank the Government of Canada and the Haisla Nation for working with us to move the Kitimat LNG facility another step forward.”

The federal release also quotes executives from both major companies involved in the Kitimat LNG project, Apache and Chevron. Chevron recently took over operating control of the project from Apache when that company had difficulty finding customers in Asia for the LNG.

The Government of Canada, Government of BC and the Haisla Nation have shown exceptional leadership and support towards BC’s new LNG industry” said Tim Wall, President of Apache Canada. “This regulatory agreement builds on the many other agreements with the Haisla that has led to jobs, training, education and economic development in Kitimaat Village.”

“I want to congratulate the Haisla First Nation, the Governments of Canada and British Columbia, and Apache Canada for their shared leadership in finalizing the regulations governing the Kitimat LNG facility site,” said Jeff Lehrmann, president, Chevron Canada Limited. “We look forward to working with the Haisla First Nation, both governments, other First Nations and local communities to realize the project’s long-term economic potential.”

In remarks prepared for the meeting Canada’s Aboriginal Affairs minister John Duncan was quoted as saying

The proposed project will provide Canada’s energy producers with a doorway to overseas markets, in addition to creating jobs and economic development opportunities not just for the Haisla First Nation, but the entire northwest region of British Columbia.
That’s good news for members of the Haisla Nation, good news for British Columbia, and good news for all Canadians.
These regulations are passed under the First Nations Commercial and Industrial Development Act, known as FNCIDA, which allows the federal government to develop regulations for complex commercial and industrial development projects on reserve in partnership with First Nations and Provincial governments.
For First Nations, FNCIDA can remove the barriers they face in pursuit of economic development opportunities, while providing the certainty investors require, and assuring the community that the necessary oversight measures are in place.
Together with the Province of British Columbia and the Haisla Nation, the Government of Canada has also signed an agreement which ensures administrative, monitoring and compliance activities for the facility are performed and enforced by provincial officials who have the necessary experience and expertise.
As a result, the regulatory pieces are now in place for project to proceed.

Duncan added:

To protect the environment as it relates to natural gas production, together with the Province of British Columbia we have completed an environmental assessment pursuant to the Canadian Environmental Assessment Act. With our partners, we will ensure that the LNG plant is designed and built to industrial safety standards and that the operation is properly regulated

Related: First Nations Commercial and Industrial Development Act 

Chevron takes over Kitimat LNG operations from Apache, EOG and Encana

logoChevronApache has a new partner in the Kitimat LNG project, Chevron Canada Ltd and, in effect,  Chevron is taking over the project from Apache who has been unable to find customers for the liquified natural gas project in Asia.

A news release from Apache announced “a broad agreement with Chevron Canada Limited to build and operate the Kitimat LNG project.”

Chevron Canada and Apache Canada each will become a 50 per cent owner of the Kitimat LNG plant, the Pacific Trail Pipeline and 644,000 gross undeveloped acres in the Horn River and Liard basins. Chevron Canada will operate the LNG plant, which will be located on the northern British Columbia coast, and the pipeline.  Apache will continue to develop shale gas resources at the Liard and Horn River basins in north eastern BC.

Encana and EOG Resources — currently 30 percent non-operating partners in Kitimat LNG and Pacific Trail Pipeline — will sell their interests to Chevron and exit the venture. As part of the transaction with Chevron, Apache will increase its ownership of the plant and pipeline to 50 percent from 40 percent.

G. Steven Farris, Apache’s chairman and chief executive officer said in the company news release, “This agreement is a milestone for two principal reasons: Chevron is the premier LNG developer in the world today with longstanding relationships in key Asian markets, and the new structure will enable Apache to unlock the tremendous potential at Liard, one of the most prolific shale gas basins in North America.” “With experience developing LNG projects, marketing expertise and financial wherewithal, Chevron is the preferred coventurer to join Kitimat LNG,” Farris said. “Apache has a proven record in finding and developing shale gas resources in Canada and is the logical operator for the upstream elements of the joint venture.”

In its news release, Chevron quoted  vice chairman George Kirkland as saying:  “The Kitimat LNG development is an attractive opportunity that is aligned with existing strategies and will drive additional long-term production growth and shareholder returns.”

“This investment grows our global LNG portfolio and builds upon our LNG construction, operations and marketing capabilities. It is ideally situated to meet rapidly growing demand for reliable, secure, and cleaner-burning fuels in Asia, which are projected to approximately double from current levels by 2025.”

The  two-train (stage) Kitimat LNG Project is still working through the Front-End Engineering and Design (FEED) phase. Construction has continued at the Bish Cove site throughout the summer but has slowed down to the uncertainty over the future of the project and some environmental problems.

Current plans call for two liquefaction trains, each with expected capacity of 5 million tons of LNG per annum (about 750 million cubic feet of gas per day). Kitimat has received all significant environmental approvals and a 20-year export license from the Canadian federal government.

The 290-mile (463-km) Pacific Trail Pipeline is planned to provide a direct connection between the Spectra Energy Transmission pipeline system and the Kitimat LNG terminal.

While the Apache release says: “The project has strong support from many of the First Nations along the route,”  there is no support at this moment from the Wet’suwet’en, in the area from Burns Lake through Smithers to the mountains, because some houses are strongly opposed to the pipeline on their traditional territory.

In the Apache news release, Farris says: “”We want to thank and acknowledge EOG and Encana for their contribution to the development of the Kitimat project. We appreciate the hard work of many employees and contractors to advance the project to this stage and the strong support the plant and pipeline projects have received from local communities, provincial and federal officials and the Haisla and other First Nations.

“Construction of the plant and pipeline will have a significant economic impact, and the operational phase will provide opportunities for employment as well as royalties and tax revenues for the Federal, Provincial and local governments for many years,” he said. “Chevron and Apache will continue to develop this project in a safe and environmentally responsible manner.”

As the news releases point out Chevron is a major player in Australia’s LNG projects, considered by many to be Canada’s rival in finding market for natural gas in Asia. Chevron is the operator and led marketing efforts at Wheatstone, a two-train plant with capacity of 8.9 million tons of LNG a year that is expected to commence operations in 2016. Chevron also operates the Gorgon LNG project in Australia and LNG Angola.

Much of the media attention is also on the deal for the natural resources northeastern BC, with, Chevron Canada acquiring approximately 110,000 net acres in the established Horn River Basin from Encana, EOG and Apache, and approximately 212,000 net acres in the Liard Basin from Apache. Chevron Canada Limited and Apache will each hold a 50 percent interest and Apache will operate these two natural gas resource developments.

In its news release, Encana concentrates on the natural gas deal, quoting Randy Eresman, Encana’s President & CEO, “This investment by Chevron, a multinational LNG player, represents a key step in the development of LNG export from Western Canada. Our main goal since we first acquired an interest in Kitimat LNG almost two years ago was to help ensure the progression of this project towards its development. While we are no longer a direct participant in this project, we continue to support LNG export as vital to diversifying markets for North American natural gas.”

The company goes on to say that: “The sale of Encana’s interest in the proposed Kitimat LNG export facility is consistent with the company choosing to focus on its core business. In addition, this transaction reduces Encana’s future capital commitments. The proceeds from this transaction will help to strengthen the balance sheet and provide further financial flexibility to fund capital programs and develop key and emerging resource plays.”

The Financial Post points out that “the Chevron deal leaves most of the LNG projects in the hands of foreign companies, which have competing interests in LNG projects across the world.” That means that the Haisla Nation, with its partnership with the BC LNG project, is one of the few Canadian players left in the LNG scramble.