The Coastal Gaslink pipeline proposal to bring natural gas to Kitimat for the Shell LNG Canada project is now entering the 45 day public comment environmental assessment period. It opens on March 21, 2014 and closes May 5, 2014.
Coastal GasLink Pipeline is a wholly-owned subsidiary of TransCanada Pipelines. The company is proposing to develop an approximately 650 kilometre pipeline to deliver natural gas from the area near the community of Groundbirch, B.C., to the LNG Canada gas liquefaction facility proposed to be developed by Shell Canada Ltd. and its partners in Kitimat.
An electronic copy of the Application and information regarding the British Columbia environmental assessment process are available at www.eao.gov.bc.ca.
The British Columbia Environmental Assessment Office, with the support of Coastal GasLink, will host four open houses in northern B.C. communities during the comment period.
The proposed Project would have an initial capacity of about two to three billion cubic feet (bcf) of natural gas per day with the potential for expansion up to about five billion cubic feet per day. The company says the expansion scenario assessed in the application does not involve the construction of additional pipeline; the number of potential future compressor stations would change.
The proposed pipeline is subject to review under British Columbia’s Environmental Assessment Act.
Starting on March 21, there are 45 days for the submission of comments by the public in relation to the Application. All comments received during this comment period will be considered. The intention of seeking public comments is to ensure that all potential adverse effects – environmental, economic, social, heritage and health – that might result from the proposed Project are identified for consideration as part of the assessment process.
LNG Canada, the project led by Shell Canada Energy, has passed the first step in the environmental review process for the liquified natural gas plant and terminal.
LNG Canada said Tuesday that the British Columbia Environmental Assessment Office has approved LNG Canada’s Application Information Requirements (AIR) for the proposed project.
The company says the AIR outlines the studies, methods, and information that will be required in LNG Canada’s Application for an Environmental Assessment Certificate.
LNG Canada says it will now continue to gather information and complete studies in support of developing our Environmental Assessment Application.
The company intends submit to the Environmental Assessment Application to the the B.C. EAO later this year.
LNG Canada will hold its next public meeting, an “LNG Demonstration and Presentation” on March 6, 2014 at the Mount Elizabeth Theatre starting at 6 p.m. The company says the event is to “to share information and answer questions about liquefied natural gas (LNG).” Starting at 7 pm there will be a a live demonstration using LNG to explain the science behind liquefaction and the properties of LNG.
For more information about the project’s EA process, www.eao.gov.bc.ca and look for our project under the “Proposed EAs” sections.
The other partners in the LNG Canada project are Diamond LNG Canada, an (“affiliate” of Mitsubishi), Korea Gas Corporation and Phoenix Energy (an “affiliate” of PetroChina).
A map provided by LNG Canada shows the potential footprint of the liquifaction facility and marine terminal next to the Rio Tinto Alcan aluminum smelter. The map was part of LNG Canada’s filing for a BC environmental assessment and shows that the old Eurocan dock would be part of the facility.(LNG Canada)
Rio Tinto has signed an option agreement with the LNG Canada project “to acquire or lease a wharf and associated land at its port facility” in Kitimat.
Since LNG Canada, a joint venture of Shell Canada Energy, Phoenix Energy Holdings Limited (an affiliate of Petro-China Investment (Hong Kong) Limited), Kogas Canada LNG Ltd. (an affiliate of Korea Gas Corporation) and Diamond LNG Canada Ltd. (an affiliate of Mitsubishi Corporation) has not yet made a Final Investment Decision on the project, the option will likely be triggered if that decision is made. There is currently uncertainty about Royal Dutch Shell projects worldwide due to management restructuring at the parent company.
The news release quotes Sam Walsh, chief executive, Rio Tinto as saying: “This is an excellent example of how we can generate meaningful value from our existing assets by selling options on port facilities to LNG Canada enabling it to share one of the best deep water ports on the western seaboard of the country. This innovative approach will provide an expanded gateway for Canadian resources to worldwide markets which has the potential to benefit the communities and economy of British Columbia.”
Andy Calitz, vice president, LNG Canada commented in the news release: “We are pleased to confirm the finalization of this agreement. We believe the LNG Canada project represents the best opportunity to bring the liquefied natural gas industry and its benefits to the people and
communities of British Columbia.”
The deal between Rio Tinto, parent company of Rio Tinto Alcan, for the old Eurocan dock, has been in the works for some time. When LNG Canada filed for its environmental assessment with the province of British Columbia a few weeks ago, the map showed the footprint of the project extended from the old Methanex plant site, where LNG Canada will be located through RTA lands on the Kitimat river estuary to the dock, long before Wednesday’s deal was signed.
Residents of Kitimat discuss the proposed LNG Canada facility with company officials at the Rod and Gun, Nov. 27, 2013 (Robin Rowland/Northwest Coast Energy News)
LNG Canada says it wants to be “first out of the gate” in the competitive race to send BC’s liquified natural gas to Asian markets.
The company held a well attended open house at the Kitimat Rod and Gun on November 27, with the usual array of posters and experts, to mark the beginning of the environmental assessment process for what is formally called the “LNG Canada Export Terminal Project.:
The LNG Canada Export Project is a partnership of Shell,Canada Energy, Diamond LNG Canada, an (“affiliate” of Mitsubishi), Korea Gas Corporation and Phoenix Energy (an “affiliate” of PetroChina) filed a draft application for an Environmental Assessment Certificate with the BC Environmental Assessment Office and Canadian Environmental Assessment Agency on November 8. The 30-day public comment period on the draft Application Information Requirements started on November 13, 2013 and end on December 13, 2013.
The extensive documentation can be downloaded in PDF format from the BCEAO site. The documents can also be viewed at the Kitimat and Terrace Public Libraries and the LNG Canada office in Kitimat at the old Methanex site.
“What we want to be able to do is actually to provide information in a way that we can provide a lot of conversation with the community, so we can really have a dialogue, to give them a place where they know than go to get answers. We do believe that we can be the best project in British Columbia, the only way we can do that is if we have the support of the community,” LNG Canada’s Susannah Pierce told reporters.
“We would like to be first out of the gate. This is a competitive industry and we’re not just competing in terms of providing Canadian gas to the Asian markets, we’re competing with everyone else for the opportunity to deliver product to market.”
The application says that the all-important Financial Investment Decision will likely be “made mid-decade followed by 4-5 years of construction with commissioning of the first phase to follow.”
The first phase would have a first phase of about 12 million tonnes a year of LNG, with another MTPA (million tonnes per anum) in “one or two subsequent phases.”
Federal, provincial and municipal governments or agencies, First Nations and the general public have the ability to comment on the proposal.
An aerial photo map included in the application shows the footprint of the proposed LNG Canada operation. Although the LNG Canada project is based at the old Methanex plant, the map shows that the LNG plant will take up a much larger area than the original. The old Methanex access road would be widened parallel to the Rio Tinto Alcan smelter and a Cyrogenic Pipeline would cross the Kitimat River estuary to the marine terminal.
A map provided by LNG Canada shows the potential footprint of the liquifaction facility and marine terminal next to the Rio Tinto Alcan aluminum smelter. (LNG Canada)
The scope of the project includes one possibly controversial item: “Onsite power generation,” where natural gas would be used to power the cooling equipment to turn the gas into LNG.
The assessment will also look the natural gas receiving and production facility; “a marine terminal able to accomodate two LNG carriers each with capacity up to 265,000 cubic metres (approximately 122,000 DWT) and a materials offloading area; supporting infrastructure and the construction facilities.
The environmental assessment will examine air quality, green house gas management, the acoustic environment (the noise created by the project), soil, vegetation, wildlife, freshwater, esturine fish and habitat, marine resources including fish and fish habitat and marine mammals, water and ground water quality.
The economic and social assessment includes infrastructure, land use, “visual quality,” odour, marine transportation and use, community health and well being, archaeological heritage and human health.
District of Kitimat Council member Mario Feldhoff discusses the LNG Canada project with a company official at the Open House at the Rod and Gun, Nov. 27, 2013. (Robin Rowland/Northwest Coast Energy News)
The assessment process will also “assess potential cumulative economic, health, social and heritage effects from the Project…interacting cumulatively with similar effects of past, present and future projects activities. The current table of projects to be considered for cumulative effects include the Rio Tinto Alcan Aluminum Smelter and Modernization Project, the Kitimat LNG and Douglas LNG terminals, the possible Enbridge Northern Gateway porject, the new use for the old Methanex and Cenovus operations, the operations at the Sand Hill, the former Moon Bay and current MK Bay Marinas.
Projects further away include LNG and other projects and associated pipelines at Prince Rupert, including expansion of the current ports and the redevelopment of Watson Island. Cruise ship and BC ferry operations will be only considered where they impact the shipping routes. Any forestry operations will also only be considered where they impact the project.
Updated to fix typos, including spelling of Feldhoff
Reuters is reporting that the Korean Gas Corp is selling part of its stake in the Shell-led LNG Canada project in Kitimat.
Reuters says KOGAS CEO Jang Seok-hyo told the World Energy Congress that the company is considering selling 5 to 10 per cent of its stake in the LNG Canada project. It currently holds 20 per cent.
The sale is apparently an effort to improve the company’s bottom line. The South Korean government recently began a review of state-owned oil and gas investments with are suffering from poor profits.
Kogas, which is the world’s largest corporate buyer of LNG, is also considering selling part of its 15 per cent holding in the $18.5 billion Gladstone LNG (GLNG) project in Australia.
The Shell LNG Canada project officially opened its Information Centre at the old Methanex site offices in Kitimat on Tuesday, June 25, 2013. About 180 people attended the event, which included a barbeque, kids activities with face painting, a tour of the office/information centre and a chance to community to meet the LNG Canada project team. Shell’s partners in LNG Canada are Mitsubishi, PetroChina and Korea’s Kogas.
Samuel “Sammy” Robinson, Chief Jassee of the Haisla Nation, offered an opening prayer and welcoming remarks on behalf of the Haisla for the project in Haisla traditional territory (Robin Rowland)
LNG Canada project Director Rob Seeley makes opening remarks. “We are confident that the Shell-led LNG Canada Project Team has the combined expertise to safely and successfully design and operate this project. We thank you for welcoming us to your community and look forward to working together to develop a project that we can all benefit from and be proud of.” (Robin Rowland)
LNG Canada’s Craig Jackson explains shipping issues to Kitimat residents touring the LNG Canada open house. (Robin Rowland)
LNG Canada’s Seiichi Tsurumi speaks to Kitimat residents touring the information centre. (Robin Rowland)
Kitimat residents touring the information centre watch a video on LNG tankers. (Robin Rowland)
The LNG Canada information centre and office building during the open house. (Robin Rowland)
A report issued by Ernst & Young, The Global LNG Report, says that there will be strong demand for liquified natural gas over the next 10 to 20 years. At the same time LNG buyers will increasingly push back from “price-sensitive buyers who are likely to be less willing to pay supply security premiums.
That means that the pricing for LNG in Asia will move away from the link to the price of oil, which, so far, has been driving the potential profit picture of Kitimat’s LNG projects.
Ernst & Young says:
Even with reasonably strong demand growth, this implies growing supply-side competition and upward pressures on development costs and downward pressures on natural gas prices. Nevertheless, the very positive longer-term outlook for natural gas is driving investment decisions, both in terms of buyers’ willingness to sign long-term contracts and sellers’ willingness to commit capital to develop the needed projects.
The report says there have been three waves of LNG development.
The first wave was dominated by Algeria, Malaysia and Indonesia, while the second wave has been dominated by Qatar and Australia. The third wave could come from as many as 25 other countries, many of which currently have little or no capacity; but by 2020, these countries could provide as much as 30 per cent of the world’s LNG capacity.
The accounting and consulting firm says the most important LNG exporters will be those in western Canada and the United States “where the source gas is likely to be priced on a spot basis, unlike gas elsewhere in the world which is generally priced (wholly or partially) on an oil-linked basis.”
The report, and the charts that accompany it, show that Kitimat appears to be well positioned in the new LNG market. That’s because the capital cost of developing LNG projects in Kitimat, when
compared to potential return, is a lot lower than in many competing countries.
The one problem Kitimat may face in the future is competition from U.S. “brownfield” developments that could turn import terminals into export terminals.
Ernst and Young says that country most cited as Kitimat’s competition Australia, is facing problems.
LNG project proposals are growing faster than industry’s capabilities to develop them. Generally at the high-end of the cost curve, with development bottlenecks and spiraling construction costs, Australian projects are typically under the most pressure. Sanctioned projects are generally less significantly impacted, but projects still seeking contracted off-take are at substantial risk.
One advantage for Kitimat may be that buyers, worried about the volatility of the market, may be more inclined to sign long term contracts.
Overall Ernst & Young concludes:
The proposed North American LNG export projects are particularly well-positioned, even though the US Gulf Coast projects will give up some of their Free On Board (FOB) cost advantage with higher shipping costs. As substantial volumes of lower-cost LNG move into Asian markets, projects at the high end of the supply curve – namely, many of the Australian projects – will become increasingly vulnerable.
Going forward over the medium-to-longer-term, Ernst & Young expects to see a gradual but partial migration away from oil-linked pricing to more spot or hub-based pricing. LNG sellers are reluctantly facing realities and are offering concessions in order to remain competitive.
Dale Nijoka, Ernst & Young’s Global Oil & Gas Leader concludes: “LNG prices are unlikely to collapse, simply because the cost to supply is high and incentives to develop new capacity must be maintained.”
The National Energy Board has approved an application by Shell Canada’s LNG Canada Development Inc. (LNG Canada) a licence to export liquefied natural gas from a proposed terminal near Kitimat.
The export licence will authorize LNG Canada to export 670 million tonnes of LNG (approximately equivalent to 32.95 trillion cubic feet of natural gas) over a 25-year period. The maximum annual quantity allowed for export will be 24 million tonnes of LNG (approximately equivalent to 1.18 trillion cubic feet of natural gas). The daily equivalent of these exports is 3.23 billion cubic feet per day.
In approving the application, the Board satisfied itself that the quantity of gas to be exported does not exceed the surplus remaining after due allowance has been made for the reasonably foreseeable requirements for use in Canada, having regard to the trends in the discovery of gas in Canada.
