KM LNG | Northwest Coast Energy News

Apache expects first LNG cargo from Kitimat in 2016

Map of Apache Corp LNG projects in the Pacific Region — A map of Apache Corp's liquified natural gas projects, including Ktimat, as presented to the UBS conference on May 22, 2012 (Apache)

Apache said Tuesday, May 22, 2012, that it expects the first LNG cargo leave the Kitimat terminal for Asia sometime in 2016, with possible further expansion in the future.

Patrick Cassidy, director of Apache’s Investor relations division, was making a presentation to the UBS Global Oil and Gas Conference in Houston, Texas, on the company’s future plans.

One slide in the Power Point presentation summed up Apache’s Pacific strategy, both at Kitimat and its chief rival, the Wheatstone project in Western Australia.

Apache said the final investment decision for the first train or phase the Kitimat LNG is still expected later this year. Previous reports have indicated the decision will likely come in the fourth quarter as Apache and its partners line up customers in Asia.

Originally the KM LNG partners said the project would start up in 2015, but delays, including the unusually harsh winter in Kitimat, which slowed construction at the Bish Cove site, and the search for customers for the natural gas, has pushed the date back to 2016.

Apache Corp. owns 40 per cent the KM LNG partnership, Canada’sEncana Corp. and EOG Resources each own 30 per cent each.

Two other projects are planned for Kitimat, the smaller BC LNG co-owned by Houston-based investors and the Haisla Nation and a larger project announced last week by Royal Dutch Shell.

LINK: Apache presentation to UBS Conference

Editorial: It’s time for the District of Kitimat to play hardball on Gateway

EDITORIAL

Who speaks for Kitimat?

Someone has to speak for Kitimat on the Northern Gateway project.

The District of Kitimat Council no longer has a choice. It’s time to play hardball with Ottawa and Enbridge on the Northern Gateway Pipeline.

You can’t negotiate from a position of weakness.

The game of pipelines changed forever in recent weeks, when the Conservative government introduced Bill C-38, the Budget Implementation Act.

Bill C-38, which passed Second Reading on May 14, 2012 is an affront to basic democratic principles, a 425 page omnibus monster that will not permit the kind of careful consideration of major changes in Canadian society that what was once normal in a free and democratic society. The omnibus bill not only concerns the federal budget but also repeals the environmental assessment process and guts fisheries protection for the smaller spawning streams where salmon are born. By giving the federal cabinet the power to overrule the National Energy Board, the decision on the pipeline rests with just one man, Prime Minister Stephen Harper, who has made no secret that he intends to push the project through no matter how fierce the opposition to the project.

This week has seen devastating cutbacks along the west coast, to environmental monitoring and pollution control, to Coast Guard protection. It is now clear that protection of the environment along the BC coast and the lives of the mariners who sail those waters are of little importance to Ottawa, and of no importance to the war room types counting votes in Alberta and suburban ridings outside Toronto and Vancouver.

The District of Kitimat Council has voted to wait to make a decision until after the report of the Joint Review Panel, when “all information” is available.

The news this week that the Joint Review Panel decided to bypass Kitimat, that the town that is to be the terminal of the proposed pipeline is irrelevant to the process, shows more than any other move what the JRP thinks of Kitimat. Not much.

The Joint Review Panel has lost all credibility. Even if the JRP does produce a fair and honest report with valid recommendations for conditions and restrictions, it is highly unlikely that those recommendations will be fully implemented, because the final decision will be made in the Prime Minster’s Office and that decision will be build, baby, build.

Media reports in recent months have shown that Enbridge has easy access to the senior levels of the Conservative government and Enbridge lobbying preceded the changes to the Fisheries Act in Bill C-38. Enbridge walks the halls of power in Ottawa. Kitimat, on the other hand, counts for little, as the JRP schedule clearly shows.

So, for example, even if the Joint Review Panel recommends strict conditions on the pipeline to insure the safety of Kitimat’s water supply, and if Enbridge doesn’t like those conditions, there is no guarantee that Harper and the cabinet will implement those recommendations. That would leave the District of Kitimat holding the water barrel for several years.

(One of the many reasons, it seems, that the JRP wants to have all the northwest hearings is in Prince Rupert is so the high-priced energy lawyers from Calgary can have comfortable accommodation. So, if any protests from the District and the Haisla Nation are successful and there actually are final hearings in Kitimat, perhaps the District could arrange for the lawyers to camp in Radley Park, so they can actually grasp the realities of living in Kitimat by the Kitimat River.)

The District of Kitimat Council has a duty to make sure that this region is protected.

So what does this mean?

“Armed neutrality”

It is now too late for the District Council to take a position for or against the pipeline. It no longer matters whether Mayor and Councillors support the pipeline, are sitting on the fence or oppose the pipeline. Bill C-38 has made the decision for the Council.

Council must assume that Stephen Harper will impose the pipeline on Kitimat and will impose conditions that could be determinable to the District in favour of Alberta and Enbridge.

From now on Council must unify and work to protect the District from Stephen Harper. The Council must make sure that the District is an aggressive force at any negotiating table or court battle.

That means Council should retain its position of neutrality, leaving opposition to the pipeline to others like Douglas Channel Watch. Given the growing witch hunt against the environmental movement, an official position of neutrality is negotiating from a position of strength and protects the District from any accusation that “radicals” are distorting the District’s position.

In international affairs, countries like Switzerland and Sweden are neutral, robustly neutral. Both Switzerland and Sweden practice what is called “armed neutrality.”

“Armed neutrality” means that Kitimat Council can no longer continue its current wishy-washy neutrality, arguing over the nuances of words in letters to the Joint Review Panel and Enbridge. To protect Kitimat, Council must adopt its own policy of “armed neutrality,” an aggressive stance that represents the entire community, both opponents and supporters of the pipeline.

So what now?

Professional advice

The announcement this week that Shell is planning to build a liquified natural gas facility in Kitimat, in combination with the KMLNG and BC LNG projects plus Enbridge, means it is vital for the District to have independent, professional advice on energy issues.

The District must immediately start paying much closer attention to the all the relevant documents that are filed with the Joint Review Panel. The District Council and staff must have their own independent advisers rather than juggling the views of Douglas Channel Watch and Enbridge and hoping for the best. That means hiring more professionals to supplement current staff that will understand the technicalities of both the Enbridge pipeline and the LNG projects; staff who can advise the senior administration and Council about how to proceed where the issues of the pipeline construction, terminal construction and management of the terminal come under municipal jurisdiction or could adversely affect the municipality.

That takes money, even though money is tight, Council must budget for that staff. When it comes to negotiating factors within the responsibility of the municipality, Kitimat must be at the table at full strength.

All the way to the Supreme Court

It is now certain that after Stephen Harper orders the pipeline to go ahead, disputes over the Northern Gateway Pipeline will end up in the courts. Lawyers are already talking about the constitutional necessity to consult First Nations, that pushing the pipeline across aboriginal traditional territory will violate Rights and Title.

First Nations across British Columbia are already represented by some of the best lawyers in Canada.

Vancouver is already looking at what powers a municipality has to make sure that city is fully protected in case of a catastrophic tanker accident from the Kinder Morgan pipeline and project.

Yes, the District is wary because of the long and bitter fight over power allocation, but that is in the past. Again Bill C-38 gives the District no choice but to prepare for new legal battles, probably all the way to the Supreme Court of Canada.

The District of Kitimat must immediately budget for, seek out, retain and instruct a law firm that can advise the District on its rights and responsibilities now and in the future once the Harper government imposes the pipeline on Kitimat. As we have seen from the Joint Review and other National Energy Board hearings, the energy industry hires the best lawyers money can buy.

If Kitimat has to face those lawyers, the District can’t act like a Junior B team facing the NHL All-Stars. That law firm should be able to advise Kitimat on the constitutional issues involved and what powers a municipality has to protect the community from unwanted and unwarranted aspects of pipeline and tanker development. That law firm must also be able to participate in hardball business negotiations.

Seeking Alliances

The District must build better bridges with the Haisla Nation and find where there is common ground in the Kitimat region as Stephen Harper imposes the pipeline on the northwest. They may be arguments before the courts or with Enbridge where both the Haisla and the District of Kitimat are allies in a fight.

Stephen Harper and his government are prepared to impose the pipeline, terminals and tanker traffic on northwestern British Columbia, again no matter what local municipalities and regions say. All the environmental and Coast Guard safeguards that might have brought acceptance of the Enbridge project are being cut to the bone. That means Kitimat must also forge alliances with those municipalities and regions, again to make sure that local rights and responsibilities are fully protected once the government decides to impose the pipeline on the northwest.

It is highly likely that the constitutional consultation and Rights and Title cases on the pipeline will end up at the Supreme Court of Canada. If there are other cases, perhaps raised by Vancouver or other Lower Mainland or northern communities or even the Province of British Columbia, it may be that the Supreme Court, as it has with some cases in the past, could consolidate all the pipeline cases into one. That means Kitimat will need to be a participant in any case on the pipeline before the Supreme Court.

Unless District of Kitimat Council starts playing hardball, Stephen Harper will drive a bulldozer down bank of the Kitimat River to Douglas Channel, ignoring the council standing and watching from the hill looking over the pipeline trench.

Alterra acquires coastal island wind farms to supply LNG plants, but how will it get to Kitimat?

Updated with Alterra comments.
A Vancouver-based energy company, Alterra Power Corp, today, May 18, 2012, announced the acquisition of three wind farm sites off the northernwestern British Columbia coast.

A news release from Alterra notes that the three “early-stage wind farm” sites, on Banks Island, Porcher Island and McCauley Island are “all within 150 kilometres of several proposed power-intensive LNG plant sites at Kitimat.”

The three sites plus one on Vancouver island will have an estimated generation capacity of over 1,000 megawatts for the four sites.

Alterra acquired the sites from English Bay Energy Limited. Alterra says “the sellers will receive royalty payments during the operations phase of the projects, and under certain circumstances the sellers may receive additional compensation of up to 1.34 million Alterra shares.”

The release quotes John Carson, Alterra’s Chief Executive Officer, as saying, “This transaction further positions us to play a major role in B.C.’s clean energy future. We look forward to advancing and ultimately building these wind projects as a part of the continued growth of Alterra and British Columbia.”

Satellite map of BC showing Kitimat and wind farm locations — A satellite image of northwestern BC showing the location of Kitimat and the three islands that are the location of the proposed windfarms to supply to Kitimat’s LNG projects. (Satellite image NASA/MODIS)

When informed of the announcement, Kitimat mayor Joanne Monaghan asked, “How are they going to get it here?”

While the three islands are within 150 kilometres of Kitmat, any transmission lines would have to somehow cross the Inside Passage and its heavy ship traffic, including cruise ships, ferries, fishing vessels and bulk carriers (not to mention potentially tankers), and then also get over some of the most rugged mountain territory in Canada to reach any of the three liquified natural gas sites in Kitimat.

“I know that all of the LNG plants considering coming in here, including Shell, are talking about co-gen [co-generation of electricity using natural gas], because if they don’t do co-generation they’re going to have to bring all of this in from the Site C Dam and that is going to make it totally out of the range of their price,” Monaghan said. She also remarked that the cost of building transmission lines from the three off shore islands could also be prohibitive.

Alterra spokesman Anders Kruus said that supplying power from the islands to Kitimat a major consideration but added it “would not be an insurmountable problem.”

He said the company’s predecessor before a merger, Plutonic Power, had built “the province’s largest run-of-river hydro facility at Toba Inlet not far from Powell River (80 kilometres) and in the process of building that, beause the run-of-river facilty was quite far back, not accessible by roadway, you have to barge in, we built a 120 kilmetre long tranmission line out to Saltery Bay. So we’ve done it over the mountains.” Kruus said.

“It’s early days,” Kruus said and the company now plans to compile more wind data before proceeding. He acknowledged that the “intermittency of the wind” could be a problem with an LNG plant that requires a consistent, balanced power load and so the best “off-taker” (customer) for the wind energy electricity might likely be BC Hydro who could balance the power from the project within its own system before supplying it to customers.

On its website, Alterra Power Corp describes itself as

a leading global renewable energy company, formed in 2011 through the merger of Magma Energy Corp and Plutonic Power Corp. We operate six power plants totaling 570 MW of capacity, including two geothermal facilities in Iceland, a geothermal plant in Nevada, British Columbia’s largest run of river hydro facilities and the province’s largest wind farm. Our 300 MW share of production generates over 1,400 GWh of clean power annually. We have an extensive portfolio of exploration and development projects, a skilled international team of explorers, builders and operators as well as the strong financial capacity to support our aggressive growth plans.

Shell, partners, plan giant liquified natural gas project at Kitimat, mayor sees town growing to 15,000 residents

Shell Canada has confirmed that, with three partners, it is developing a giant proposed liquified natural gas export facility at Kitimat.

The project could see up to 12 million tonnes of LNG exported from Kitimat each year. What the companies are now calling LNG Canada would be built in two “trains” or stages, with each producing six million tonnes. A news release from Shell says there is an option to expand the project beyond the 12 million tonne capacity.

The announcement made international news. The Chicago Tribune said Tuesday. “Kitimat… looks set to become a major supply hub for the Pacific Rim.”

Shell’s partners, Korea Gas Corporation, Mitsubishi Corporation, and PetroChina Company Limited will work to export natural gas, mostly from northeastern British Columbia, combining the “four companies’ extensive development experience, technical depth, financial strength and access to markets required to be the leading LNG developer in Canada.”

The four companies did not say how much money is involved in the project. Reports in the Japanese media said the project could cost as much as $12 billion US.

Shell holds a 40 per cent working interest. The partners KOGAS, Mitsubishi and PetroChina each hold a 20 per cent working interest.

“Our combined expertise, and our focus on technological innovation in delivering safe and environmentally sound LNG projects around the globe, ensures that our LNG Canada project would be well-suited to deliver long-term value for British Columbia and increase access to new export markets for Canada,” says Jose-Alberto Lima, Vice President LNG Americas, Shell Energy Resources Company in a news release.

News releases from both Shell and Petrochina both say:

The proposed LNG Canada project includes the design, construction and operation of a gas liquefaction plant and facilities for the storage and export of liquefied natural gas (LNG), including marine off-loading facilities and shipping. LNG Canada can create significant economic benefit for the province, First Nations, local communities and the region. Such a project can create thousands of jobs during construction and hundreds of full-time, permanent jobs during operations. Such a significant energy project can also bring indirect economic development opportunities to the region.

Shell and PetroChina say:

A decision to move this project into development would be taken after conducting necessary engineering, environmental and stakeholder engagement work with start up around the end of the decade, pending regulatory approvals and investment decisions.
The approval process will begin with a formal consultation process with First Nations and local community residents.

“This project will contribute to a further strengthening of trade relationships between China and Canada and will help China use clean burning natural gas to fuel its economic growth,” Bo Qiliang, Vice President, PetroChina, said in the release.

“We are sitting on the doorstep of a very fast-growing market that actually wants to come to Canada because they see it as long-term stability and a secure source of supply,” Shell Canada president Lorraine Mitchelmore said. “We are now, for the first time in the natural gas industry, very competitive with other countries like Australia.”

Kitimat Mayor Joanne Monaghan said her and the District Council have been working on the project for sometime. “Council have been aware of it and have rolled up their sleeves for almost a year and half to two years,” the mayor said.

Kitimat mayor Joanne Monagahn reads notes on the LNG Canada announcement, May 15, 2012. (Robin Rowland/Northwest Coast Energy News)

One aspect was making sure Kitimat is ready for the project, Monaghan said: “We had to make sure there were hospital facilities, rental facilities, that we had housing available. We were getting all our inventories together. Now we know and now we can go full blast ahead.”

Monaghan hopes that eventually Kitimat will return its population peak of between 10,000 and 15,000 residents. (Since the closure of the Eurocan craft paper mill in 2010, Kitimat’s population dropped to around 8,000 but that number has been growing with the LNG projects and the Rio Tinto Alcan Kitimat Modernization Project, even though the KMP project will eventually mean fewer jobs at the aluminum smelter).

“If they have the five to seven thousand construction workers they’re looking for, they will bring in workers from all over BC, probably all over Canada,” Monaghan said.

Shell purchased the former Methanex plant site and the related Kitimat port terminal last fall, raising worldwide speculation about the LNG project. The Methanex site is now used by Cenovus to transport bitumen condensate by rail from Kitimat to the Alberta oil sands. Much of the old Methanex plant has been decommissioned and is being shipped to a buyer in China.

Most of the natural gas supply will come from the booming Horn River and Montney shale gas formations in northeastern British Columbia.

Reports say that LNG Canada will work with a third party that would build and probably own a pipeline from the northeast to the coat.

The profit picture comes from the fact that LNG prices in Asia, based on a proportion of the world price of oil, are much higher than the price of natural gas in North America, where the shale gas boom has driven gas prices to a record low.

The price boom in Asia could be a windfall for British Columbia, which could receive up to $600 billion in natural gas royalties over the next 25 years.

There is also fierce international competition to send LNG to Asia. The major energy companies are investing heavily in projects in Australia, while traditional suppliers like Qatar and Russia are ramping up their marketing efforts to Asia.

The old Methanex site in Kitimat — The decommissioned Methanex site by the Kitimat River, now owned by Shell. (Robin Rowland/Northwest Coast Energy News)

As of this week, Japan began closing down the last of its nuclear electrical generation capacity. After the March 11, 2011 earthquake, that country became a major customer for current and future liquified natural gas projects.

Since the earthquake last year, two other projects in Kitimat have proceeded. The Kitimat LNG project, a partnership called KM LNG led by Apache Corporation, Encana Corp, and EOG Resources plan to start up a Kitimat LNG plant in 2015, at Bish Cove with an initial capacity of five million tonnes a year. That project has been approved by the National Energy Board but is still waiting for a final go ahead from the boards of the three corporations, expected now in the fourth quarter of 2012.

A second project, called BC LNG, owned by the Haisla Nation in partnership with Houston-based LNG Partners, will act as broker and exporter for other LNG companies, facilitating exports to Asia from a barge based facility at North Cove, with the first shipment expected in 2014 or 2015.

There are also reports that Malaysia’s Petronas in partnership with Calgary-based Progress Energy Resources Corp., which have major stakes in B.C. shale are also looking for a possible LNG terminal on the west coast. As well, Talisman Energy, Nexen and Imperial Oil are also looking at west coast projects.

Related Links

News release from BC Premier Christy Clark Premier Applauds Progress on Kitimat Project: LNG Canada

Mitsubishi news release

More oil leaking from sunken WWII US transport near Hartley Bay, Gitga’at warn

Oil slick in Grenville Channel (Gitga`at First Nation Guardians)

The Gitga’at First Nation at Hartley Bay report that a large oil slick has been spotted in Grenville Channel near Hartley Bay. It is believed that the oil is coming from the USAT Brigadier General M.G. Zalinski, a U.S. army transport ship that sank in 1946 with 700 tonnes of bunker fuel on board.

A news release from the Gitga’at says the oil spill is between between two and five miles (four to eight kilometres) long and 200 feet wide (70 metres) inside the Grenville Channel.

A Canadian Coast Guard vessel from Prince Rupert is expected in the area sometime this afternoon.

The Gitga’at are sending their own Guardians to take samples and have chartered a plane to take aerial photos of the spill, the release says.

“If this spill is as big as the pilots are reporting, then we’re looking at serious environmental impacts, including threats to our traditional shellfish harvesting areas,” says Arnold Clifton, Chief Councillor of the Gitga’at Nation. “We need an immediate and full clean-up response from the federal government ASAP.”

The USAT Brigadier General M.G. Zalinski was carrying Bunker C when it sank. The First Nation says the Canadian government has been saying it would remove the oil and munitions from the ship since 2006, but with no results.

“Right now we’re focused on getting a handle on the size of the spill and the clean-up that’s required,” says Clifton. “But this incident definitely raises questions about the federal government’s ability to guard against oil spills and to honour its clean-up obligations. As a result, our nation has serious concerns about any proposal to have tankers travel through our coastal waters, including the Enbridge proposal.”

The spill is just the latest in a series of spills of bunker oil and diesel coming from the Zalinski and the BC Ferry Queen of the North, which sank in 2006. Despite government assurances of clean-up, both wreckages continue to leak fuel, fouling the marine environment, and heightening the fear of future oil spills.

The Gitga’at depend on the ocean for 40 per cent of their traditional diet.

According to Wikipedia, the Zalinksi was enroute from Seattle to Whittier Island, Alaska, when it struck rocks at Pitt Island on Grenville Channel 0n September 26 1946, 55 miles (88 kilometres) south of Prince Rupert. The ship sank within twenty minutes, while her crew of 48 were rescued by the tug Sally N and the passenger steamer SS Catala. According to a report in The Vancouver Sun on September 30, 1946, at the time of her sinking she was transporting a cargo of at least twelve 500-pound (230 kg) bombs, large amounts of .30 and .50 caliber ammunition, at least 700 tonnes of bunker oil, and truck axles with army type tires.

Oil was first spotted leaking in Grenville Channel in 2003 and the wreck of the Zalinski was identified later that year by a remotely operated undersea vessel.

Hartley Bay is the entrance to Douglas Channel where tankers will go to Kitimat for the proposed Northern Gateway pipeline and three liquified natural gas projects.

BC NDP formally opposes Northern Gateway in letter to Joint Review Panel

The British Columbia New Democratic Party has written to the Northern Gateway Joint Review panel formally opposing the controversial pipeline project, while at the same time supporting the Kitimat LNG projects, as long as there are strong environmental controls on those projects.

A long letter from NDP leader Adrian Dix to the panel concludes by saying

as the Official Opposition, we have carefully weighed the risks and benefits of the NGP to British Columbia, and to Canada. After much consideration and consultation, we have come to the conclusion that the risks of this project far outweigh its benefits. We believe that the NGP will cause significant adverse economic and environmental effects and is not in the public interest. Therefore the NGP should not be permitted to proceed.

The letter also calls on the federal government to legislate a permanent ban on tankers for the west coast. The letter goes over the history of the Exxon Valdez spill

Eight of 11 cargo tanks were punctured, releasing about 258,000 barrels of crude oil, most of which was lost in the first eight hours. There were widespread ecological and economic impacts….To this day, vital shore habitats remain contaminated, the herring fishery has been closed for 15 seasons since the spill, and herring are not considered recovered. The clean-up costs alone are estimated at $3.7 billion…Wildlife and natural resource damages range from $8.5 billion to as high as $127 billion…. Related to the economic hardship felt by families and communities, a wave of social problems followed – alcoholism, high divorce rates and even suicides swept through the Sound’s small towns….

We simply cannot let this happen in British Columbia: the risk is just too great. Therefore, we are calling on the federal government to legislate a permanent moratorium on oil tankers and oil drilling activity on B.C.’s north coast to ensure the ecological integrity and economic and social vitality of the lands and waters of this unique region.

The letter also takes Premeir Christy Clark to task for not taking a stand on the Northern Gateway Issue

The Government of British Columbia agreed to the Joint Review Panel (JRP) process, limiting its ability to give voice to B.C.’s interests. In addition, the Province did not seek government participant status and has failed to exercise its intervenor status to fully represent the interests of British Columbians.

We note that other government agencies including an Alberta municipality, the Province of Alberta and Alberta’s Transportation Ministry, as well as the federal Department of Indian and Northern Affairs, Department of Justice, Environment Canada, Fisheries and Oceans Canada, Natural Resources Canada and Transport Canada have registered as government participants in the JRP.

We also note that the Union of British Columbia Municipalities, and a number of local
governments have passed motions opposing the NGP. These include: the Village of Queen Charlotte, Sandspit, Masset, Port Clements, Prince Rupert, Terrace and Smithers.

As the Official Opposition, we take our responsibility to represent and to protect the interests of British Columbia and British Columbians seriously. We have listened to the concerns and diverse perspectives of constituents throughout the province and we have met with stakeholders and experts about the NGP.

The letter also expresses concern about the fairness of the Joint Review Process

Four New Democrat MLAs are actively participating in the JRP, as intervenors or as presenters. Three of these MLAs represent constituencies that will be directly impacted if the NGP proceeds. The fourth MLA is our environment critic. All of them, like the thousands of other British Columbians who are participating in the JRP, are doing so in good faith.

We are very troubled by statements of the Prime Minister and Minister of Natural Resources that have caused several commentators and JRP participants to question the objectivity of the process and ask if its outcome is predetermined.

Dix is quick to point out that the New Democrats are not against sustainable economic development.

The importance of sustainable economic development International trade and responsible resource extraction are essential to B.C. and Canada’s economy.

International trade creates good-paying jobs and vital communities. To this end, we are committed to building on our tradition of further developing trade relations with China and other Asia Pacific markets to build a strong B.C. economy.

Further, we have been clear about our support for the Kitimat liquefied natural gas project while emphasizing it comes with the serious responsibility to ensure strong environmental protections. We acknowledge that all resource development and extraction has inherent risks.

Other points in the NDP letter were:

The tanker traffic to ship Alberta oil to Asian markets will require lifting of the current tanker moratorium and the Tanker Exclusion Zone, and will put the British Columbia coastline at serious risk of devastating environmental and economic damage from potential oil spills;The NGP will traverse remote and highly valued areas of B.C., and will cross almost 800 streams. The risk of spills from the proposed pipeline will put these valuable
environments and species, such as salmon, at risk;The impact of an oil leak or spill would be most severely felt by First Nation
communities. As has been affirmed by the Supreme Court of Canada, First Nations must be consulted effectively and be respected on a government-to-government level;• The greenhouse gas emissions generated by NGP-related oil sands development will
contribute to the economic, social, and environmental costs of climate change;
The NGP provides few long-term and sustainable economic benefits for British
Columbia, while shipping raw bitumen forgoes important value-added economic
development opportunities involving upgrading and refining the oil in Canada;• The NGP is forecast to increase Canadian oil prices for Canadian consumers.

NDP BC news release

BC NDP caucus letter to Joint Review Panel (pdf)

NDP BC backgrounder on the Northern Gateway (pdf)

BC approves Pacific Trails Pipeline amendments

: A couple from Vancouver, who refused to give their names, unfurl an anti-Pacific Trails Pipeline banner at the British Columbia legislature in Victoria, Sunday, April 15, 2012. The man said he against all pipelines and that he was supporting the Wet’suwet’en First Nation. About 1,000 people marched through downtown Victoria to oppose the Enbridge Northern Gateway pipeline and coastal tanker traffic. (Robin Rowland/Northwest Coast Energy News)

The BC Environmental Assessment Office has approved an application to increase the capacity of the proposed 463 kilometre Pacific Trails Pipeline from the Summit Creek natural gas hub near Prince George to Kitimat.

The $1 billion pipeline project is crucial to the success of the KM LNG liquified natural gas export terminal at Kitimat, a partnership of Apache Corp., Ecana and EOG Resources.

The main thrust of the application was to increase the capacity of the pipeline to 1066.8 mm (42 inch) from the originally proposed 914 mm (36 inch). Pacific Trails will change the location of pump stations since the original proposal was for an import pipeline while now it is for export. There are also minor changes.

The proposal was generally considered pro forma since the main environmental review was completed under the original application approval in 2008 and the BC government was only considering the changes proposed by PTP.

The government report says officials were convinced that Pacific Trails would be able to handle problems with increased traffic and any potential risk involved in drilling under watercourses.

The Haisla submitted a number of technical questions about the impact of the larger pipes. While the BC Assessment office noted in its report that the Pacific Trails Pipeline is generally outside Haisla traditional territory, it is clear from the documentation that one of the Haisla concerns are any impacts on the Kitimat River watershed, as the questions concern the Stuart and Endako Rivers, the Morice and Gosnell Creeks and Weedene and Little Wedeene Rivers. The EAO ruled that the Haisla questions were outside the scope of the amendment or should be addressed in the “permitting process.”

Some Wet’suwet’en houses have been vocal in their opposition to the Pacific Trails Pipeline crossing their traditional territory, The Office of the Wet’suwet’en filed a strong objection to certain parts of the plan.

Given that the Minister of Natural Resources Joe Oliver and the federal government are now working to fast tracking all major resource projects, a comment from David de Wit, Wet’suwet’en natural resources manager is significant:

Fast tracking projects may result in overlooking important details [that] can have detrimental consequences. It is important to point out that the diligence required post-certification to ensure that impacts and effects on important resources are prevented or avoided is not satisfactory. This leaves the burden and legacy of any impacts to be borne by the Wet’suwet’en.

The letter goes on

We have invested considerable time and resources in the BC EAO review only to find that the level of detail required pre-certification leaves far too many unanswered questions critical for ensuring environmental effects and identification of potential infringements to our Title and associated rights from the project are avoided or minimized.

The EAO responded by saying the issues were covered by the original assessment and through the Oil and Gas Commission permit process. The letter from the Wet’suwet’en was, however, passed on to the Executive Director for further consideration

The Pacific Trials Pipeline, also known as the the Summit-to Kitimat pipeline will supply the Kitimat LNG project, a venture of the KM LNG partners, Apache Corp., Encana Corp., Apache Canada and EOG Resources. The $4.5-billion LNG terminal and facility will likely be operational by 2015, depending on how long it takes for the partners to line up Asian buyers.

Documents

BC Environmental Assessment office ruling on Pacific Trails Pipeline (pdf)

Wet’suwet’en submission to the BC EAO (pdf)

Apache posts job for Kitimat LNG construction manager

The Apache Corporation website has a posting for a construction manager for the Kitimat LNG project.

The posting says the job will initially based in Houston, Texas, with the manager coming to Kitimat sometime in the future.

The posting calls for the manager to provide an overall construction plan, co-ordinate and control the construction project from inception to completion aimed at meeting the Project’s requirements in order to produce a functionally and financially viable safe project that will be completed on time within the authorized budget and to the required quality standards.

Some of the job requirements give hints of the project to come:

Previous LNG Project experience including construction
Experience of modular and stick built construction
Working knowledge of safety system and management to maintain world class safety performance
Working knowledge environment system and management to maintain world class environmental performance
Knowledge of logistics in remote sites
Knowledge of heavy haul and lift works
Proven ability with advanced project management principles
Proven ability with people management
Experience in Canadian labor law and have deep experience working with unionized labor
Experience in working through cold weather climates

The site also has a posting for a Contracts and Procurement Manager.

Both postings expire on May 2, 2012.

Although Apache and its partners, Encana and EOG Resources now say that they have postponed the final go-ahead decision on the KM LNG project until the fourth quarter of 2012, as negotiations continue with Asian natural gas customers, the postings are indication that the project is progressing.

Alberta Oil magazine describes Kitimat LNG projects as high stakes poker

It looks like the Chinese curse (and journalist’s blessing) “May you live in interesting times,” has come to Kitimat, especially when it comes to selling LNG to Asia.

In the past months the world liquified natural gas market has become more volatile with increased competition across the globe and, in some cases, political factors adding to the molecule mix.

In the past few days, Alberta Oil magazine has published a series of articles on the Kitimat LNG projects, describing the projects as a high stakes poker game.

The point is that the potential Asian buyers for BC (and US) liquified natural gas want a secure supply and they’re not sure what is going on on this side of the Pacific.

That’s apparently why the first project, KM LNG, has put off the final go ahead project from the first quarter of 2012, as originally expected, to the now likely the fourth quarter of 2012.

That has left a lot of uncertainty in town, despite assurances from two of the KM LNG partners, Apache Corporation and EOG Resources that they are optimistic that there will be a deal with Asian gas buyers, even if it means Asian equity in the KM LNG project.

That uncertainty in Kitimat has led to widespread rumours, none substantiated, that the three proposed projects, by KM LNG, by the Houston-Haisla BC LNG partnership and Shell, may be consolidated in one way or another.

At Kitimat council on Monday, April 2, Mayor Joanne Monaghan said “There has been a rumour around recently that Apache is stopping their working for a year and I talked to the CEO, Tim Wall, yesterday and he assured me that that was not true.”

Work is continuing on the KM LNG site at Bish Cove.

This morning, April 5, 2012, Alberta Oil reported that EOG Resources boss still bullish on Kitimat LNG, quoting a company called Bernstein Research that met with EOG’s top executive, CEO Mark Papa, who told Bernstein that EOG considers its 30 per cent holding in KM LNG as a “core holding.”

In a Thursday research note, Bernstein’s Bob Brackett says EOG is willing to sell some of its stake in the Kitimat project to a buyer (likely of the Asian persuasion) looking for equity in the upstream portion of project. “EOG expects to dilute a portion of its stake for that purpose,” Brackett writes.

A day earlier, Alberta Oil reported in Global LNG players jockey for space on a crowded field noting that Australia’s LNG megaprojects are facing competition from North America and cost inflation as the number of projects increase. At the same, US LNG projects are trapped in the current mire of US politics, with many politicians wary of the energy-starved US exporting natural gas.

In Apache Canada makes global push amid fierce competition, the article that uses the poker analogy, the magazine quotes Asish Mohanty, senior research analyst, global LNG, with Wood Mackenzie

Kitimat is due to start pumping out five million tonnes of LNG by 2015, widely viewed as a market “sweet spot” because it beats a number of major Australian projects – among them Shell’s massive Prelude endeavor – into production. “It’s a bit of a race,” Mohanty at Wood Mackenzie says. “The general impression in the industry is that before these Australasian projects start up it’s going to be a sellers’ market.”

Mohanty also looks at the problem of cost inflation and limited resources, a problem Kitimat already faces with not only the three proposed LNG projects but RTA’s Kitimat Modernization Project.

Companies that specialize in engineering, procurement and construction of liquefaction facilities number fewer than 10 internationally, Mohanty says. He expects many of them will be kept busy by construction of several LNG projects underway in northwest Australia, including ongoing work at the massive Gorgon plant at Barrow Island. The Chevron-led venture is due to begin pumping out 15 million tonnes of LNG annually by 2014-15. “All of these are massive projects,” the analyst says. “What that means is order books are pretty full. There is a scarcity of resources in places like Australia right now.”

The shortfall could potentially squeeze Canadian LNG forays. “The fact that most of the B.C. facilities are going to be ‘green-field’ will not make it easy for them to meet a timeline compared to a lot of others.”

Related CBC News Mackenzie Valley pipeline funding reduced

Kitimat Modernization will create competitive contractors for future energy projects: RTA CEO

Jacynthe Côté, CEO Rio Tinto Alcan — Jacynthe Côté,the CEO of Rio Tinto Alcan, briefs reporters on the progress of the Kitimat Modernization Project,March 8, 2011(Robin Rowland/Northwest Coast Energy News)

The Kitimat Modernization Project, the $3.3 billion upgrade of the Kitimat aluminum smelter will create capable and competitive contractors that can go on to work at the future energy developments in the region, Rio Tinto Alcan CEO Jacynthe Côté said Thursday, March 8.

Côté was in Kitimat to tour the region, a trip that was postponed in December, at the time of the “Notice to Proceed” on the modernization project, when her aircraft was diverted to Prince Rupert by a snow and sleet storm the day of the announcement.

During a dinner on Wednesday night, Côté met with leading contractors, the leaders of the Haisla First Nation, Mayor Joanne Monaghan and members of the District of Kitimat Council.

The prospect of future energy projects, three liquified natural gas terminals to be built by the KM LNG partners, by the BC LNG partnership and by Shell was one factor in Rio Tinto Alcan giving the go ahead for the modernization project, she told local reporters.

“We have seen the critical mass in other parts of the world, “she said. “One of the reason to do full speed in December was to aim that we will be ramping down as the others are ramping up. Of course, I cannot say for the other projects that will be their decision.” Given the current schedules, she said, “we should be out of the way when others pick up.” (Another key reason for the go ahead, according to RTA primary metal vice president Jean Simon, speaking at the launch last December was the growing market for aluminum in Asia)

Côté added that the contractors now have “great abilities that could be redeployed.”

Michel Lamarre, Director of KMP said that despite some delays due to the harsh winter, RTA is still aiming for first concrete at the new potlines on June 1. First new metal is scheduled for the second quarter of 2014. Peak employment, about 2,500 people, is expected to be in the first quarter of 2013.

“We have the ambition to make the project a real showcase, for us, for British Columbia, for Canada,” Côté said. “So we’re pretty proud that 62 per cent of the work done so far has been done by the community in the area., 95 per cent of them in British Columbia, which is absolutely spectacular for a project of that complexity and magnitude.

“It requires a lot of skills, a lot of organization.”

Côté said she stressed RTA’s safety priorities when she met with the local contractors (a point the company made both at the Notice to Proceed gathering in December and at a local meeting for contractors last month). The contractors are very enthusiastic, Côté said. “I’ve seen in other regions as contractor and employees moved to that level of safety performance, it becomes a competitive edge, there’s going to be other projects coming in the region, there’s a lot of discussion around LNG, and it will be an advantage for contractors who have demonstrated superior performance and safety. We’re here to support that. I think they’re going to be more compelling and competitive, I mean it’s good business.”

She says that RTA is spending $3.1 million each day on the modernization project.

Asked about both the prospective LNG projects and the fact that accommodation in Kitimat is now at a premium, she said that “crowding” was a significant part of her discussions with both the Haisla and the District of Kitimat.

Rio Tinto has worked on what she called “disproportionately big” projects at sites compared to local communities around the world. “So we adjust, my message was we adjust.[There are] Different formulas in different parts of the world, depending on the conditions. The model is to bring in as many people from the community as we can.”