NEB | Northwest Coast Energy News

International backing for Northern Gateway pipeline grows: new Chinese investment, more Joint Review intervenors

Energy Northern Gateway Links

The Globe and Mail and Reuters are reporting that Enbridge has more Chinese support for the proposed Northern Gateway Pipeline project. One large Chinese group, China Petroleum & Chemical Corp. (Sinopec), is already backing Enbridge’s efforts to build the Northern Gateway.

In Enbridge’s push to the Pacific wins support from China .

the Globe’s Nathan Vanderklippe says:

Sources have now told The Globe and Mail that the list of funders also includes MEG Energy Corp., which is partly owned by CNOOC Ltd., another Chinese state-owned energy company. Each funder gains the right to discounted shipping rates and an option to buy an equity stake at a later date…MEG spokesman Brad Bellows said the company is “not commenting on speculation.” But, he added, MEG is “interested in expanded market access, absolutely.”

On its website, MEG describes itself as “part of the next generation of oil sands development. We are an Alberta-based company that uses Steam Assisted Gravity Drainage (SAGD) technology to recover drillable (in situ) oil from the oil sands.”

Reuters reports

Enbridge declined to disclose any of the Northern Gateway partners. However, Gina Jordan, spokeswoman for the pipeline company, said they include a mix of oil sands producers and Asian refiners.

Several Chinese companies have invested in the oil sands over the past decade to tap what is currently ranked as the world’s third-largest crude deposit as a way to help fuel their booming economy at home.

Last week, Enbridge said it and would-be shippers had agreed on terms for moving oil on Northern Gateway… before regulatory hearings scheduled to start in January.

The Globe and Mail is also reporting that a growing list of international companies are filing as intervenors for the Joint Review Panel hearings slated for January.

Nearly two dozen companies have asked to be “intervenors” … including small Canadian companies, major multinationals like Exxon Mobil Corp. and foreign companies like South Korean conglomerate Daewoo International.

Companies typically intervene when they want to closely follow a project, are interested in using it – by sending crude through Gateway, for example – or have a financial interest in it.

[T]he project holds the promise of dramatically altering Canada’s energy geography, providing for the first time access to a major new – and growing – export market. That has made it an increasing object of global interest.

South Korean trading and construction firm Daewoo International, for example, is hopeful it can provide steel or engineering to the Gateway pipeline. That’s just one part of its Canadian strategy.

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)

Louisiana governor announces LNG project; size, cost would rival Kitimat

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.

Governor Bobby Jindal’s news release

KM LNG hearings wrap with concerns over conditions

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

A34_-_Letter_-_Possible_Export_Licence_Conditions-Environment_and_Socio-Economic_Matters_-_A2A3T7_.pdf

KM LNG final arguments set for Thursday in Calgary

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.

Kitimat LNG hearings to resume in Calgary July 13

The KM LNG (also known as Kitimat LNG) hearings for an export licence will resume before a National Energy Board panel in Calgary on Wednesday July 13, and run to Friday, July 15, the NEB has announced on its website.

This phase of the hearing will consider “the potential environmental effects of the proposed exportation and any social effects that would be directly related to those environmental effects, including any such effects to aboriginal interests”, and “consultation with the public and aboriginal peoples.”

But it appears that the NEB is using its procedures to block consultation with some “aboriginal peoples,” the Coast First Nations. In a letter on its website, the NEB says that an early June submission from Art Sterritt,the Executive Director of the Coast First Nations came too late, since the deadline for submissions was April 26. That means the First Nations group must present a motion before the board panel asking to be heard.

A32-1-_Letter_to_Coastal_First_Nations_-_A1Z9R3_.pdf

Here’s how the Enbridge hearings will proceed

Staff of the Northern Gateway Joint Review panel explain the hearing process to residents of Kitimat at Riverlodge Recreation Centre, June 16, 2011. (Robin Rowland/Northwest Coast Energy News)

It will take more than year for the Enbridge Northern Gateway Joint Review Panel to complete hearings and taking evidence before it even begins to consider a decision whether or not to approve the controversial pipeline proposal.

Even then, the worries of the residents of northwest of British Columbia will be only one factor in the panel’s decision.

The Joint Review panel information town hall reached Kitimat on the afternoon of Thursday, June 16. One of the information sheets handed out at the town hall explained the Joint Review Panel this way:

In deciding if the Project is in the public interest, the Panel will consider whether Canadians would be better or worse off if the Project was approved. The public interest includes all Canadians and refers to a balance of economic, environmental and social considerations that change as society’s values and preferences evolve over time.

(Emphasis in original)

Here is a summary of how the process will work:

This summer, those who wish to formally participate in the hearing process must register with the panel.

For those who wish full intervenor status, the deadline to apply is July 14, 2011.

For those who wish to make oral statements in the community round of hearings, the deadline to apply is October 6, 2011.

Those formal intervenors who wish to request information from Northern Gateway have two deadlines. August 25, 2011 is the deadline for the first round, after which Northern Gateway must respond by October 6. The intervenors then can ask Northern Gateway a second set of questions, with a deadline of November 3, 2011. Northern Gateway must respond by November 24, 2011.

The deadline for intervenors to file written evidence with the panel is December 22, 2011.

Community hearings

On January 10, 2012, the Joint Panel will begin the “community hearings” phase where anyone who met the registration deadline, either as an intervenor or a community participant, can make a presentation to the panel.

These community hearings will be held across northern BC and Alberta, along the route of the pipeline and down the coast, with, sources say, a significant session slated for Kitimat.

The community hearings are expected to take several weeks.

Those who made oral comments to the panel then have until March 13, 2012 to file follow up letters.

Final hearings

The community hearings are then followed by another round of filing by the intervenors and government participants.

On June 16, 2012 the Joint Review Panel will then open the more formal “final hearings” at a location to be determined.

Around the same time, the Joint Review Panel must prepare an environmental assessment report that will be submitted to the Minister of the Environment.

Again, according to the handout material, there is a caveat in the panel’s mandate

The significance of any negative environmental and socio-economic effect is only determined after considering the actions that are proposed to prevent or reduce the effects. (Emphasis in the original)

In other words, as those who have attended Enbridge’s briefing sessions know, the company has outlined a whole series of safety measures, for example, adding navigation aides to Douglas Channel and parts of the coast.

If the environmental movement wishes to challenge the voluminous reports, likely costing millions of dollars that Enbridge has already filed as part of its application to the Joint Review Panel, the environmental concerns will have to be backed up with solid and expensive expert evidence.

Once the Minister of the Environment has the environmental assessment, the government then responds:

The government response will set out whether the Government of Canada agrees or disagrees with the conclusions and recommendations made the Panel by the panel regarding the potential environmental and socio-economic affects of the Project. The Governor-in-Council [ the federal cabinet] must approve the government response. This approved response will be made available to the public.

The decision

After it hears the government response on the environment, the panel makes its decision, whether or not the project can proceed.

The Panel will issue its Reason for Decision which will include a decision whether or not the Project is in the Canadian public interest.

If the Panel decides the Project can proceed, its Reasons for Decision will include conditions that Northern Gateway must meet before, during and after the construction of the Project.

If the Panel decides that the Project should proceed, the Panel will send its decision to the Governor in Council who can either accept or reject the decision but cannot modify it.

The Governor in Council means the federal cabinet, so the final decision will rest with Prime Minister Stephen Harper.

Latest entrant in LNG scramble wants NEB, BC to consolidate approvals: Reports

LNG World News

Progress Energy wants consolidated process for LNG projects in Canada

Progress Energy Resources Corp, which signed a C$1.07 billion ($1.09 billion) shale gas alliance with Malaysia’s state oil company, is pushing for a consolidated regulatory process for pipelines and liquefied gas export plants, its chief said on Monday.

A big driver for Progress’s deal with Petronas is a plan to build an multibillion-dollar LNG plant on the West Coast to take all of the shale gas production from the partner’s lands in the North Montney region of British Columbia….

Progress Chief Executive Michael Culbert said federal and provincial authorities should consider combining regulatory proceedings for multiple plants and pipelines, with so many proposals now in the works.

The current pipeline capacity to British Columbia’s Kitimat region is about 100 million cubic feet a day, far below what will be required to support an export industry, he told reporters after a speech to the Canadian Association of Petroleum Producers investment symposium.

Canadian Press

LNG terminals planned for West Coast have enough gas to go around: executives

Northeastern British Columbia’s shale fields contain more than enough natural gas to feed a myriad of West Coast export terminals in the works, energy executives said at an industry conference Monday.

But some say collaboration may be necessary to ensure the gas makes its way across the Pacific in the most cost-effective way possible.

Penn West president Murray Nunns …said he sees the various LNG proposals joining forces at some point.

“The scale of the initial projects at a (billion cubic feet) or two probably isn’t suitable relative to the size of the resource in Western Canada,” he told reporters.

“I think in the end, it may only end up as one or two facilities but I think they’ll be substantially larger than what’s been considered.”

Joint Review hearings on Enbridge Northern Gateway set for Kitimat in mid-January: sources

The full Joint Review Panel hearings on the Enbridge Northern Gateway pipeline are tentatively set to open in Kitimat in mid-January, 2012.

Knowledgable energy industry insider sources confirmed the likely dates and that the bulk of the hearings will take place in Kitimat to Northwest Coast Energy News Friday after a number of the participants in this week’s National Energy Board hearings on the KM LNG pipeline made inquiries locally about booking meeting rooms and hotel accommodation for several weeks in a stretch, beginning in early January, 2012.

The Joint Review website says: “The Panel will start meeting with participants on 10 January 2012 at locations to be determined.” During last winter’s National Energy Board pre-briefing on this week’s LNG hearings, NEB staff said the location to be determined was always chosen to provide the best opportunity for those involved to speak before the board. While there were fears in Kitimat that the LNG hearings would be held Alberta, those fears proved to be unfounded.

The Joint Review panel is now traveling across BC offering information sessions to the public.
Updated schedule here. It is highly likely that hearings, like the information sessions, will be held in as many locales as possible, but those will likely be mostly about local issues, with the bulk of the concerns before the Joint Review Panel hearings in Kitimat.

A NEB source cautioned that dates are always tentative due to other hearings, staff commitments (some of the KM LNG NEB staff are also assigned to the Northern Gateway hearings) and, as sometimes happens, the lawyers agreeing on postponements.

According to the official website:

The Joint Review Panel for the Enbridge Northern Gateway Project is an independent body, mandated by the Minister of the Environment and the National Energy Board. The Panel will assess the environmental effects of the proposed project and review the application under both the Canadian Environmental Assessment Act and the National Energy Board Act.

The Joint Review panel has much wider powers to hear issues than the NEB did this week in the KM LNG hearings, where the only issue on the table was the partnership’s application for a natural gas export licence.

NEB adjourns KM LNG hearings as partnership talks to coastal First Nation

The National Energy Board adjourned the KM LNG hearings early on Friday pending negotiations between the energy partnership and the Gitxaala, a small coastal First Nation, based in Kitkatla on the northern BC coast.

NEB panel chair Lynn Mercier ruled that the board would not decide on KM LNG’s request for an export licence before Sept. 15, 2011. The panel could reconvene earlier if there is agreement between KM LNG and the Gitxaala.

The Gitxaala, like all coastal First Nations and many other BC coast residents, are worried about increased tanker traffic, whether natural gas or oil, along the BC coast. That worry lead to heated exchanges Wednesday between Robert Janes who represents the Gitxaala and Gordon Nettleton who is lead counsel for KM LNG.

On Thursday, testimony showed that KM LNG has been more successful than Enbridge in reaching agreement with First Nations along the pipeline route. KM LNG has reached agreements with the Haisla, on whose traditional territory the Bish Cove LNG terminal will be built and 14 other inland First Nations, with an agreement with a fifteenth under negotiation.

It appears that KM LNG failed, as late as Tuesday, when the hearings began, to realize the concerns of First Nations along the coast. Corridor talk Thursday indicated that the some sort of deal was being discussed. The NEB hearings were scheduled to begin at 9 am and go all day Friday. Instead the opening was delayed until just after 10:30 when Mercier announced the panel’s decision.