Liquified Natural Gas | Northwest Coast Energy News

Christy Clark flies to Kitimat, spins on LNG, flies out again

Energy Environment Politics
BC Premier Christy Clark meets with the leaders of the Haisla First Nation at Kitamaat Village, Monday, Sept. 19, 2011. (BC government hand out )

BC Premier Christy Clark made a flying visit to Kitimat Monday, Sept. 19, 2011, dropping into Kitamaat Village to meet with the leaders of the Haisla First Nation and, as part of the flying, boarded a helicopter to take a look at the KM LNG at under construction at Bish Cove, before flying out again.

It was all part of the premier’s campaign style job strategy which sees Clark touring the province this week and unveiling a complete jobs package on Thursday.

The proposed liquified natural gas terminals at Kitimat are not as controversial in this region as the proposed Enbridge Northern Gateway pipeline. There is general support for the LNG projects, allowing for safety concerns about LNG tankers and environmental problems from the construction of the pipeline.

Clark’s visit to the Kitimat region is controversial here because from all appearances, there was little or no substance. If the visit had in been the early decades of the last century, when politicians traveled by train rather than helicopter, it would have been a “whistle stop,” nothing more.

A BC premier visiting the traditional territory of the Haisla First Nation should, of course, make a courtesy call on the leadership in the village, although it appears the visit was short, routine rather than a truly substantial meeting.

As for the rest of the Kitimat region was concerned, the premier’s short in and out photo op was not aimed at helping the people of Kitimat but appeared to be more spinning her jobs strategy throughout the rest of the province which is less familiar with the history of development in Kitimat.

No one in the local media, the Northern Sentinel, Kitimat Daily nor Northwest Coast Energy News were given any information about timing of the premier’s visit, perhaps because local reporters might ask tougher questions than the BC legislature pool traveling with Clark. The Northern Sentinel only found out about the time of the meeting after one of the numerous calls made by local media was actually returned in time for their reporter to be in the village for the premier’s visit.

As of Sunday, no meeting between the premier and Kitimat Mayor Joanne Monaghan was scheduled. At the last minute, after some political arm twisting, the premier did have a brief ten to fifteen minute meeting with Monaghan and Municipal Manager Ron Poole at the village on Monday. (It should be noted that members of Kitimat council will meet with Clark at the up coming convention of the Union of BC Municipalities).

At 14:55 Monday, Sept. 19, Clark (or her PR team) tweeted.

We’re taking steps to get #kitimat’s liquefied natural gas plant running by 2015. A strong LNG industry means local jobs. #bcpoli

The message was quickly retweeted by Clark supporters. That tweet raised eyebrows, since the process for the KM LNG is already well under way, with construction apparently on schedule for the 2015 date when the first natural gas will flow into a tanker. The licence for KM LNG is in the hands of the federal National Energy Board.

What the tweet meant became clearer once the premier’s office issued a news release

Christy Clark’s “more aggressive approach to the development of the natural gas sector” includes traditional small c conservative elements:

Cutting red tape: accelerate the lengthy permitting processes and improve the decision making required to bring large-scale production facilities from a concept to a reality, and that these commitments will be a greater priority for B.C. on a go forward basis.

Skills training: working with industry partners for some time on the future skills required to support a new LNG industry. The goal is to ensure the post-secondary system is able to deliver the targeted training necessary to grow the oil and gas industry, including LNG.

Attracting investment: by working with industry stakeholders and First Nations to remove the barriers and secure the investment required to establish up to three LNG plants by 2020. As of today, the Province is aware of a handful of LNG proposals.

The only practical element in Clark’s announcement was help for the Haisla First Nation in dealing with multiple developments: (as related in the news release)

The Province’s assistance is timely,” said Haisla Nation Chief Councillor Ellis Ross. “Our own training capacity is limited by resources and capabilities, and these have been exhausted given the projects now underway on our territory and the demands they place on our people for skills and training. Our economic future has never looked better, and this assistance will help us deliver on this promise to our community.”

Michael Smyth of The Province (along with a number of Tweeters) noted that most of Clark’s announcement was recycled.

Those same economic storms have buffeted the government, too, and Clark doesn’t have a lot of money to spend on direct job creation — not if she keeps her promise to balance the budget in 2013.

So, expect many re-announcements of old projects. The proposed Kitimat liquefied natural gas plant Clark trumpeted Monday, for example, was approved three years ago.
She’s also expected to cheerlead the Northwest Transmission Line project this week, another one that’s been in development for years.

Without a lot of money to throw around, Clark will talk about getting government out of the way of private-sector job creation. Deregulation and cutting red tape is less expensive than direct stimulus spending to create jobs.

The environmentalists won’t be happy when she starts fast-tracking permits for mining and other resource extraction, but losing “green” votes is the least of her worries.

Veteran journalist Norm Farrell in his blog “Let’s play political football with Kitimat” gives a list of how often a Kitimat LNG project has been announced going back to an Associated Press report from 1981

The Rim Gas Project, which includes Petro-Canada of Calgary, Westcoast Transmission of Vancouver and Mitsui and Co. Ltd. of Japan, wants to deliver and sell liquefied natural gas to Japan from a plant it will build at Bish Cove, six miles from Kitimat.

And Kitimat Tweeter YWGSourpuss posted:

Kitimat has kinda sorta might been getting an LNG Plant since I was a teenager. Meanwhile, Methanex and Eurocan were culled, dust blows…

and then

I see media wonks waffling about LNG/Kitimat/need for cheap energy. Remember Kemano Completion? Ask Rio Tinto re: hole in the mountain.

On the Opposition side of the question, Vancouver Sun columnist Vaughn Palmer looked at an apparent split in the opposition NDP over the LNG issue Wednesday, noting that the environment critic NDP environment critic Rob Fleming is concerned about the controversial fracking process used to retrieve natural gas from shale:

When you look at where the gas would come from, we’re talking about major shale-gas deposits. There are big concerns there, from an environmental perspective, around water usage and whether it’s sustainable, and water contamination when it’s injected underground to bring the gas to the surface – the fracking process – and a lot of greenhouse gases produced.

Palmer reports that the NDP house leader John Horgan has indicated that he and Opposition leader Adrian Dix support LNG exports.

In Horgan’s estimation, it could be piped to the coast, liquefied and shipped out with minimal risk. “Liquid natural gas doesn’t stick to things. It blows up, or it vents. So the environmental consequence of a catastrophe with an LNG tanker is relatively insignificant,” he told me during an interview on Voice of B.C. on Shaw TV.

“So the risk to our coastline from LNG is insignificant; the benefit to British Columbians is quite significant. And it’s our resource, so we’ll get the royalties for extracting it, we’ll get value added by getting it to an LNG facility, and then we’ll get a better price for it in Asia.

Palmer is concerned about Fleming’s caution not to rush things, stating that

For “you can’t rush these things” is precisely the opposite of what industry analysts are saying about LNG development. The window on the Asian market is closing, and if B.C. doesn’t get moving, the opportunity will be gone. Again.

One wonders where Palmer gets his evidence that window of opportunity for the Asian markets is closing? With the Fukishima meltdown, the market window for LNG is actually expanding, not just in Japan but across East Asia. What some in the energy industry are warning about is Canadian gas being exported through the United States, warnings that were prominent at the NEB hearings in Kitimat last June and is largely industry spin trying to hurry the approval process along.

The controversy over fracking will continue, with the energy industry claiming it is safe and the environmental activists saying it is not. What is apparent about fracking as Pro Pubilica have pointed out in their continuing investigation of the issue, is that use of the process on a wide scale is new and there aren’t enough adequate studies of the process. Inadequate study could mean consequences down the road, we don’t know, so there should be some caution.

The blasting continues at the KM LNG site at Bish Cove as the shoreline rocks are levelled to close to sea level. Meanwhile the political spin pitches just as much hot air and debris into the atmosphere.

Northern View: B.C. Jobs Plan’ keys on trade with Asia

Japan seeking LNG from US: Reports

Energy Links

Japan wants to buy more liquified natural gas from the United States, according to reports in the business and energy media.

Bloomberg reported Japan to Boost LNG Imports From U.S. as Nuclear Power Declines

Japan, the world’s largest importer of liquefied natural gas, plans to seek more U.S. cargoes to ensure adequate power supplies after its use of nuclear reactors fell to an all-time low.

Japan’s senior vice minister of trade and industry, Seishu Makino, asked U.S. Energy Secretary Steven Chu at a meeting yesterday in San Francisco to increase LNG exports, Akinobu Yoshikawa, deputy manager for the Petroleum and Natural Gas Division, told reporters today in Tokyo.

Reuters reported Japan to start buying LNG from U.S. by 2015-Nikkei

Japan plans to start importing liquefied natural gas (LNG) from the United States as early as 2015 to secure a steady supply amid growing demand for the fuel, Nikkei business daily reported…

Japanese power and gas utilities would initially import 2-3 million tons of LNG a year, the daily said. Gas extracted from shale rock formations will be liquefied in Texas and Louisiana. The LNG will then be shipped to Japan via the Panama Canal, Nikkei said.

Liquified natural gas from fields in Alberta and British Columbia sold to Japan is a major reason for LNG developments at the port of Kitimat. Testimony at last June’s NEB hearings on the KM LNG export licence application warned of increasing competition from the US for Canadian LNG.

Encana optimistic about natural gas exports, others cautious: CP

Energy Link

Ecana, one of the partners in the KM LNG (Kitimat LNG) is optimistic about prospects for liquified natural gas exports from the west coast of British Columbia, Canadian Press reports from a conference in Calgary.

Encana sees renaissance in natural gas, while others more bearish on prospects

Laurgen Krugel reports

Encana Corp. foresees a “renaissance” in natural gas prices once
terminals begin to pop up along the West Coast to export the fuel to
energy-hungry Asian markets, but others addressing an energy conference
on Tuesday weren’t quite so enthusiastic.

“We think that the prices are going to stay robust in Asia.
You look today in Japan, it’s still US$13 (per 1,000 cubic feet) over
there,” Mike Graham, who heads up Encana’s Canadian division, told the
Peters & Co. event….

John Langille, vice-chairman of Canadian Natural Resources Ltd. said he’s not quite so gung-ho….

:Canadian Natural has a large land position in northeastern B.C.’s shales, but has been focusing most of its attention on developing oil- properties in Western Canada and abroad. It has signalled no interest so far in jumping aboard the LNG bandwagon, though Langille said eventually the gas will have to find its way out of North America.

“And that will happen, but it’s a five-year scenario before that happens,” he said.

…

Japanese utilities using record amounts of LNG: Reuters

Energy

Japan utilities’ LNG usage hits record high in August

Japan’s 10 utilities consumed a
record 4.81 million tonnes of liquefied natural gas in August,
up 15.4 percent from a year earlier, industry data showed on
Tuesday, as they burned more gas to offset a fall in nuclear
power generation.

Shell considering giant floating LNG platform off BC Coast: Alberta Oil

Energy LNG Link

Alberta Oil is reporting that Shell’s plans for a liquified natural gas export facility somewhere on the northern British Columbia coast will likely be a giant floating platform, similar to the platform planned for the coast of Western Australia.

Shell Canada sizes up LNG options offshore B.C.

Although costs, production volumes and timelines haven’t been worked out, industry observers like FirstEnergy Capital are speculating that Shell and its partners are considering building a floating LNG structure off B.C.’s coast. The Anglo-Dutch super-major knows a thing or two about floating LNG projects. In May, Shell received approval from the Australian government for its Prelude floating LNG project. Scheduled to start production in 2016, the Prelude structure will be located in the Browse basin off the coast of Western Australia

The length of the floating prelude platform, at 488 metres according to a diagram released by Shell and reprinted by Alberta Oil, would be longer than the height of the 446.5 metre Skypod/ Space Deck on the CN Tower and longer than the hieght of Kuala Lumpur’s Petronas Tower at 452 metres. (The proportions in the Shell diagram of the CN Tower are not entirely accurate when compared to the information in the Wikipedia entry on the CN Tower)
As reported in April by Alberta Oil Kitimat LNG faces Australian rivals the Western Australian development could rival Kitimat, a point that took up a lot of testimony at the June National Energy Board hearings into KM LNG’s application for an export licence.

Links: Japan seeking more sources of LNG

Energy LNG Links

Post-earthquake Japan is said to be one of the main markets for liquified natural gas that will flow through the LNG terminals under construction and proposed for the port of Kitimat. Since the earthquake Japan has been making major purchases of LNG from both Qatar and Russia.

The Doha, Qatar-based, Gulf Times is reporting: Qatar LNG exports to Japan up

Qatar is about to overtake Indonesia as the third-largest exporter of liquefied natural gas to Japan, which has been increasing LNG imports to generate electricity to offset capacity lost due to the March 11 earthquake and tsunami.
Japan, the world largest LNG buyer, imported 870,072 metric tonnes of LNG from Qatar in July, up 53% on year, finance ministry data showed yesterday.
During the same month, Japan imported 731,557 tonnes of LNG from Indonesia, down 36% from a year earlier, the data showed.
In the first seven months of this year, Japan bought 5.64mn tonnes of LNG from Qatar and 6.33mn tonnes from Indonesia, up 28% and down 15% from a year earlier, respectively.

At the same time, the industry (subscription only) Petroleum Economist newsletter, is reporting that shortages from Qatar is causing concern in the UK natural gas market, Qatar LNG outage rattles UK gas market

UK gas prices jumped over 10% this week after the world’s largest liquefied natural gas (LNG) producer, Qatargas, said it would shut its facilities for rolling maintenance over the coming months. Last year, according to Cedigaz, the UK imported about 20% of the 93.8 billion cubic metres of gas it consumed in the form of LNG, making the country particularly vulnerable to global LNG supply issues.

Japan is still a heavy buyer of liquified natural gas in the spot market, the Platt’s newsletters report. Kyushu Electric secures four spot LNG cargoes over Oct-Nov

Japan’s Kyushu Electric has secured sufficient additional LNG requirements for autumn, with a total of around four spot LNG cargoes for October-November, a source close to the matter told Platts Tuesday.

Kyushu Electric’s additional LNG volumes this autumn could reach 240,000-260,000 mt, assuming that the purchased volumes are the standard 60,000-65,000 mt LNG cargoes, according to Platts calculations.

“Front End Engineering” begins for BC LNG

Energy

The Hart Energy E&P (exploration and production) newsletter is reporting that an Overland, Kansas based company, Black & Veatch, a multi-billion dollar, employee-owned engineering firm founded in 1915, is beginning front end engineering (FEED) for the second proposed Kitimat liquified natural gas facility, BC LNG.

Although no information appears on the Black & Veatch website, the newsletter quotes Tom Tatham, the managing director of Douglas Channel Gas Services Ltd, the company which will contract with energy firms wanting to export through the BC LNG facility as saying: “We are looking to build the majority of the LNG export facility on a standard Panamax barge to minimize the physical and environmental impact in this scenic area.”

(The name Panamax derives from the maximum size that a barge or ship can be to pass through the Panama Canal, which means the LNG from the port of Kitimat could be shipped to anywhere in the world, not just to the projected Asian market)

Black & Veatch has developed a process called PRICO which Tatham says is ideal for this type of application because of its smaller footprint and flexible operations.

Black & Veatch’s engineering planning is scheduled to be complete by January 2012 and will provide a “definitive estimate” that will be used for costing engineering, procurement, construction, testing and commissioning of the facility.

The newsletter quotes says Dean Oskvig, president and CEO of Black & Veatch “The global LNG export market is extremely cost-competitive,” and Oskvig says the company`s process will be scalable and thus allow the partnership to bring liquified natural gas to market at a competitive price.

The Black & Veatch website briefly promotes the PRICO process as simple, flexible, reliable and economic but gives few details.

The company has an Edmonton based Canadian subsidiary.

Japan Quake Is Causing Costly Shift to Fossil Fuels: New York Times

Energy Link

New York Times
Japan Quake Is Causing Costly Shift to Fossil Fuels

Japan, the world’s third-largest user of electricity behind China and the United States, had counted on an expansion of nuclear power to contain energy costs and greenhouse gas emissions. Instead, its nuclear program is in retreat, as the public and government officials urge a sharp reduction in the nation’s reliance on nuclear power and perhaps an end to it altogether.

As its nuclear program implodes, Japan is grappling with a jump in fuel costs, making an economic recovery from the March earthquake and tsunami all the more difficult. Annual fuel expenses could rise by more than 3 trillion yen, or about $39 billion, the government says….

Prime Minister Naoto Kan has called for a gradual move away from nuclear energy, and proposed a goal of generating 20 percent of Japan’s electricity from renewable sources, including hydroelectric plants, by the early 2020s. The Parliament is debating legislation to spur that change…

Japan’s liquefied natural gas imports have jumped for three consecutive months, squeezing global supplies amid strong demand from China and other emerging economies…

NEB gets ready for BC LNG hearings, first step for second Kitimat project

Energy

The National Energy Board has announced it will hold hearings on the second proposed liquified natural gas project, saying, the hearings will “consider an application submitted by BC LNG Export Co-operative LLC (BC LNG) for a 20-year licence to export liquefied natural gas (LNG)
from Canada to Pacific Rim markets.”

Once again under the NEB’s rules of procedure, the hearings will be limited to granting the export licence, with or without conditions and will follow the so-called “market-based procedure” set up for the NEB after deregulation of the oil and gas industry in the late 1980s.

This application is based on projections that the demand for natural gas in Pacific Rim markets will continue to increase substantially over the next 20 years. In its application, BC LNG is requesting authorization to export up to 1.8 million tonnes of LNG annually.

The Board will consider, among other issues, the export markets and natural gas supply, the transportation arrangements, and the status of regulatory authorizations.

However in an apparent departure from the KM LNG hearings where energy lawyers challenged environmental and social issues as not included in the mandate for those hearings, these ground rules say they are now”

The Board will also consider the potential environmental effects of the proposed exportation, and any social effects directly related to those environmental effects.

The public has until Sept. 11, 2011 to register with the board for full intervenor status, request to make an oral statement or to submit a letter of comment.

Letter from NEB to BC LNG (pdf)

KM LNG to buy Eurocan site

The closed Eurocan plant in Kitimat, the day it was sold, July 14, 2011. (Robin Rowland/Northwest Coast Energy News)

KM LNG Operating General Partnership
(Kitimat LNG) has announced that it has entered into an agreement to
purchase the former Eurocan linerboard mill site in Kitimat from West
Fraser Timber Co Ltd.

KM LNG said in a news release that the sale is subject to obtaining government approvals for the
transfer of related permits and licenses. Financial details of the
transaction have not been disclosed:

“The Kitimat LNG partners are very pleased we have reached this
agreement with West Fraser,” said KM LNG President Janine McArdle. “The
purchase of the site marks another significant local investment in
Kitimat and is a great step forward for the Kitimat LNG project.”

The site provides the Kitimat LNG project with a suitable area for a
work camp, lay-down and storage area as the project continues to move
forward with clearing and grading at the LNG export facility site.

The Kitimat LNG export facility is planned to be built on First Nations
land under a unique partnership with the Haisla First Nation.

Kitimat LNG partners Apache Canada Ltd., EOG Resources Canada Inc. and
Encana Corporation are currently in marketing discussions with
potential Asia-Pacific LNG customers.

The partners expect to have firm sales commitments in place by the time
a final investment decision is made. Initial shipments of LNG are
expected to begin by the end of 2015.

West Fraser closed the Eurocan mill at the end of January 2010, throwing about 500 people in Kitimat out of work. Most of the machinery in the plant has been sold and dismantling of equipment and demolition of some parts of the mill are wrapping up.

KM LNG plans to use the site as a work camp and storage area for the construction of the LNG terminal at Bish Cove on Douglas Channel south of the shuttered mill.