A map of the proposed PNG Pipeline Looping Project, which would extend the current route for 525 kilometres. (BC Oil and Gas Commission photo)

Pacific Northern Gas moves to reinstate full capacity and expand pipeline

Increased supply and demand could mean lower rates for North Coast customers, PNG says

Pacific Northern Gas (PNG) is looking to reactivate and expand their Western Transmission pipeline running from Summit Lake to Terrace, Kitimat and Prince Rupert to service industrial projects in the region.

“Recent changes in market conditions, especially in the LNG sector, have revived interest in PNG’s transmission pipeline capacity,” reads PNG’s application to the BC Utilities Commission submitted on June 28.

Bringing the PNG Western Transmission pipeline to its full capacity would give residential and business customers in the region long-awaited respite from exorbitant rates.

“I’m very cognizant the rates you have are quite high,” said PNG business development director Brock John. He added, though, that compared to other energy sources, natural gas rates have been mostly flat because of its abundance in B.C.

“We’re going to try and get this rate down with reactivation,” added John.

The lack of large industrial customers in the region has affected smaller business and residential customers from Vanderhoof to the coast. Currently, those customers pay the highest delivery rates in the province — as much as two and a half times what Fortis B.C.’s customers pay on the Lower Mainland.

“If you have a line that’s built for 115 million [MMscf – million standard cubic feet], and it’s only running at 35, then you have a lot of costs that you have to apply to those customers that are left on the system,” said John.

“Therefore, one of the main objectives here is to try and get that utilized, which will ultimately result in some reduced rates for residential, commercial and industrial clients in this area.”

Since the loss of PNG’s largest industrial consumers – West Fraser Mills’ Eurocan paper mill and Methanex Corporation’s facility, both in Kitimat – the company has been seeking new contracts to utilize the unused supply.

After some review, the company says they have identified significant potential demand for capacity currently available on PNG’s transmission system, with its maximum capacity of 115 MMscf. Presently the system transports 35 MMscf using a single compressor.

“We have excess capacity of around 80 million [MMscf] per day,” added John.

PNG president Leigh Ann Shoji-Lee and a team of PNG directors met with Terrace city council on July 17 to give an update on the company’s future plans in the area.

READ MORE: Natural gas rates to drop

If the reactivation is approved, the system and all compressors can be reactivated with the option of transporting the full 80 MMscf to Kitimat or Terrace, or have 55 MMscf flow to Prince Rupert and 25 MMscf to Kitimat and Terrace.

If the demand is there, PNG is also looking at expanding their existing line and increasing capacity by another 600 MMscf with significant capital costs.

“We could loop the line and get ourselves another 600 million cubic feet per day. So that 600 million would be for a medium-sized LNG plant.

“The expansion would service small or micro-LNG and other industrial sources along the way. Currently, PNG has an environmental assessment project before the BC Environmental Assessment Office and we’re working slowly towards permitting this project.”

The loop expansion project originally started around four years ago but was delayed when LNG Canada held off on announcing their final investment decision (FID) for their $40 billion facility in Kitimat.

READ MORE: Pacific Northern Gas spends $6 million to move and protect gas line near Terrace

The twin pipeline would follow PNG’s existing route, splitting up from Telkwa and down across the Zymoetz River, reconnecting back with the parallel pipeline down to Kitimat for a total of 525 kilometres.

There is also an opportunity to service additional remote communities along the route. PNG says they are not actively looking at servicing the Nass Valley, but have heard interest from people in the area.

Interested parties with a project may submit bids for a portion of the amount, with a minimum of 10 MMscf and 20-year contract term.

If Terrace is able to secure volumes of 10 to 25 MMscf, it could be used to power a micro-LNG facility at the Skeena Industrial Development Park in the next year and a half.

“We could see some of the volumes starting as early as 2021,” John says.

READ MORE: Terrace Industrial Park build-out continues

PNG is also moving to decarbonize their own supply into renewable natural gas to meet future provincial requirements. Coun. Brian Downie inquired about the utility using the now-closed Terrace landfill as a potential collection site for biogas.

—with files from Rod Link

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