Energy, environment and science in northwest British Columbia
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.
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.
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.
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.
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…
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.
Energy
The governor of Louisiana, Bobby Jindal today announced that the state could be the site of what he calls the “one of the first natural gas liquefaction
facilities in North America.”
The facility will be built by Cheniere Energy which already has a terminal at Sabine Pass in Cameron Parish in the state.
Cheniere says it will spend $6 billion to
expand its existing facility, which will be one of the largest capital
investments in Louisiana history.
That means the Louisiana terminal could rival Kitimat in size and potential. The projected timeline for both shows construction and operational startup would happen at the same time.
A news release from the governor’s office says
The new project will create 148 new jobs and retain 77 existing jobs,
with a total compensation and benefits package that will exceed an
average of $100,000 a year. The new jobs will support another 589
indirect jobs in the area and 3,000 construction jobs will be created by
the project at the peak of construction activity. Cheniere will build
its new facility near the Louisiana-Texas border in Cameron Parish to
handle the shipment of liquefied natural gas (LNG) from the company’s
international LNG terminal.Gov. Jindal said, “Cheniere Energy’s
construction of one the country’s first liquefaction facilities at the
Sabine Pass terminal in Cameron Parish is a huge win for our state. This
multi-billion dollar investment will be one of the largest capital
investments in the history of Louisiana, and build on our incredible
record of job creation projects all across the state. Cheniere’s
facility will grow our economy, increase natural gas production and
become a major exchange in continuing to meet the demand for energy
around the world.”“The construction of Cheniere’s Liquefaction
Project in Cameron Parish will provide key support to Louisiana’s
economy and natural gas industry, which has been transformed by the
development of the Haynesville Shale,” said Charif Souki, Chairman and
CEO of Cheniere. “In only two years, Louisiana’s natural gas production
has doubled as the Haynesville has grown into one of the most prolific
shale plays in the world. Our Liquefaction Project will provide
thousands of jobs in Southwest Louisiana while connecting the state’s
natural gas industry to global markets, making Louisiana the world’s
first dual importer and supplier of LNG. We greatly appreciate the
support that Cheniere has received from the State of Louisiana and the
people of Cameron Parish, who have demonstrated a strong commitment to
our Sabine Pass LNG terminal.”Cheniere Energy anticipates beginning
construction of the facility in early 2012. Hiring of the new permanent
jobs will begin in 2014 and the facility will commence operations in
2015. The final phase of the project is expected by the end of
2018.Adding liquefaction capabilities will transform the Sabine Pass
terminal into a bi-directional facility capable of exporting LNG in
addition to receiving LNG for regasification.
The Louisiana facility would use gas from the Haynesville Shale which is a Jurassic formation on the Texas-Louisiana border. Shale gas that would come through Kitimat comes largely from northeast British Columbia, especially the Horn River Basin.
Both the Kitimat and Louisiana projects are scheduled to begin main construction in 2012 with operations starting in 2015.
The KM LNG facility would have an initial plant capacity of 5 million metric tons per annum (mmtpa) with potential to expand to 10 mmtpa or more. The Louisiana release does not give a figure for the capacity of the plant.
During the recent National Energy Board hearings on KM LNG’s application for an export licence, witnesses repeatedly stressed there could be potential rival export ports for northeast BC shale gas in the United States, mainly in Oregon or Washington states, if the licence was not approved or the conditions were too restrictive. The Louisiana terminal would not likely be a rival for Kitimat for northern shale gas, although as the witnesses at the NEB hearings always stressed there is no way of tracking the origin of the “molecules” in the integrated North American pipeline network.
Energy
The National Energy Board hearings into the application from KM LNG for an export licence to ship liquified natural gas to Asia through Kitimat wrapped up in Calgary Thursday, with the main participants expressing concerns over conditions on the licence proposed by the NEB.
The board panel reserved its decision. No date was given for a possible decision. Unlike the earlier hearings in June which were held in Kitimat, the Phase 2 hearings were held in Calgary and only available to residents of Kitimat by audio webcast
On July 6 and July 8, the board panel issued a list of 12 proposed conditions on the export licence. (The concerns of the Kitimat Rod and Gun were not among the 12. See story here)
Among the conditions the NEB wants to impose are a detailed reporting requirement that would include the name of the LNG tankers loading the natural gas, the quantity of gas and the revenue in Canadian dollars as well as the sales contracts KM LNG may sign with its Asian customers.
Those proposed conditions brought strenuous objections from the proponents of the project, voiced by lead counsel Gordon Nettleton and echoed by other lawyers, saying that the conditions could actually scuttle the entire project. That is because Asian buyers, whether private companies or sovereign (government) agencies, place much stricter emphasis on confidentiality of the agreements than in North America. The lawyers warned that the potential Asian customers could walk away from any deals in favour of less regulated vendors in other countries if the NEB insists on full disclosure, especially if the details could be made public either through the Access to Information Act or by NEB procedures and policies.
Nettleton and the other lawyers recommended a compromise where KM LNG would disclose to the board the total exports each quarter, the aggregate value in Canadian dollars for each quarter, the “heating value” of the aggregate and export totals by destination country.
The lawyers also objected strenuously to conditions proposed to cover environmental and social effects of building the Kitimat LNG terminal and the associated Pacific Trails pipeline.
These include filing a Marine Mammal Protection Plan and answer how KM LNG would react to any potential effects on marine mammals of the ships passing up and down Douglas Channel and the BC Coast.
One of the lawyers for the energy companies wondered why the board panel was interested in the shipping issues.”That’s what shps do, they use
existing shipping lanes,” he said. “Ships do not need permisson [now] to go up
Douglas Channel. [This issue] has been examined bythe appropraite
authorites arnd should be accepted by the board without conditions.”
Other conditions wanted reports on potential effects and probable mitigation efforts for marine mammals, birds, fish and fish habitat, “listed fish and wildlife species,” vessel wake, ballast and bilge water management, fisheries and “First Nations traditional use activities.”
The lawyers mainly objected on legal grounds, since under the hearings for an export licence, (unlike a facility hearing like the Enbridge Joint Review panel) the board is not supposed to be concerned about environmental issues. There were also long, legal arguments whether the pipelines from the shale gas fields to Kitimat where “directly connected” under the legal definition used in the Canadian energy industry. The lawyers also argued that the environmental and social issues addressed in the NEB’s proposed conditions would be covered in parallel investigations by other government agencies, such as a Transport Canada review of the shipping plans for Douglas Channel,
At the same time, all parties pledged that they would be “good corporate citizens” in their undertakings to work with the Haisla First Nation and other residents of the Kitimat region and to respect the local environment.
NEB proposed conditions 1 – 9
A33_-_Letter_to_All_Parties_Phase_II_Update_and_Possible_Licence_Conditions_-_A2A2V5.pdf
NEB proposed conditions 10 – 12
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.
The National Energy Board panel hearing KM LNG’s (also known as Kitimat LNG) application for an natural gas export licence will hear final arguments from the lawyers for the various parties at the NEB offices in Calgary beginning at 9:30 a.m. MT Thursday.
The hearings which began in Kitimat in June, resumed Wednesday in Calgary. Most of the day was spent with testimony and discussion about how various regulations in a number of countries could affect the Kitimat project. Some witnesses testified that the Asian countries which could be the prime market for any liquified natural gas exported through Kitimat are nervous about the reporting and disclosure requirements required by some Canadian regulations. There could be conflicts between those regulations and the customers desire to keep some information proprietary and confidential or, in cases where the LNG is purchased by a national government that government’s national security practices may also prevent some disclosure. Some witnesses worried that the Canadian requirements just might be a deal breaker for some Asian customers who want ease of access as well as security of supply and thus would not want to be tangled in red tape.
There was also some discussion of the need to reconcile the Canadian reporting requirements with those the US Securities and Exchange Commission.
