A rendering of the Kitimat LNG terminal at Bisch Cove.

Taking B.C. LNG to the world

The eyes of the energy world are on the North Coast as major international companies race to create (LNG) export terminals.

The eyes of the energy world are on the North Coast right now as major international companies race to create liquefied natural gas (LNG) export terminals to meet a growing demand from Asia.

In total there are 10 multi-billion dollar facilities proposed between Prince Rupert, Kitimat, Stewart, Kitsault and Grassy Point, located north of Prince Rupert near the village of Lax Kw’alaams. The catalyst behind this expansion is simple: Major Asian countries are looking for a new form of clean energy.

China is moving away from coal as its main source of power and Japan is moving away from nuclear power following the disaster at the Fukushima plant caused by the 2011 tsunami. The demand for LNG is massive, according to Dr. Andrew Walker, the vice-president of global LNG for the BG Group. Growth in exports are projected to increase from 240 million tonnes in 2012 to 420 million tonnes by 2025.

Although Walker said industry consensus is that only a maximum of three LNG terminals will become operational, the number of jobs and economic impact associated with the development of LNG cannot be understated with hundreds of millions of dollars already being spent on preliminary work for the terminals.

What follows is a snapshot of the industry proposed in the region.

Prince Rupert Gas

British Gas, more commonly referred to as the BG Group, is proposing to construct an LNG export terminal on Ridley Island in Prince Rupert.

The two-train terminal would occupy approximately 125 hectares and be constructed in two phases. The first phase would include two trains for a total capacity of 14 million tonnes per year while Phase 2 would include the addition of another train for a total capacity of 21 million tonnes per year. The terminal would include two LNG storage containers and the associated trestle and dock infrastructure.

The BG Group has received an export licence from the National Energy Board for up to 21.6 million tonnes per year over the course of 25 years. The BG Group anticipates making a final investment decision in 2016, with the first shipments of LNG leaving Ridley Island in 2020 or 2021.

The total cost of the terminal is approximately $10 billion and, if it proceeds, there would be as many as 3,000 construction jobs and between 400 and 600 full time positions needing to be filled.

Pacific NorthWest LNG

Pacific NorthWest LNG, a subsidiary of Malaysian state-owned energy giant Petronas, is proposing to construct an LNG export terminal on Lelu Island in Port Edward.

The terminal would have the capability of shipping 12 million tonnes of LNG per year through two trains located on the site. A 2.4-kilometre jetty located on the north end of the island would pipe the gas from the terminal to awaiting ships. The company filed its environmental assessment application with both the Canadian Environmental Assessment Agency and the B.C. Environmental Assessment office in early March and already received an export licence from the National Energy Board to export up to 19.68 million metric tonnes of gas per year over a 25-year period. Pacific NorthWest LNG is expecting to make a final investment decision on the project, which will cost between $9 and $11 billion from start to finish, before the end of the year to be operational between 2018 and 2020.

Pacific NorthWest LNG has garnered international interest in the terminal, signing partnership agreements representing 23 per cent ownership with Japan Petroleum Exploration and the India Oil Company taking a 10 per cent stake and Petroleum Brunei for a three per cent stake in the project.

Should the Lelu Island terminal proceed, a maximum of 4,000 workers would be needed during the construction period and 330 full-time, permanent operational jobs would be created.

Kitimat LNG

A 50/50 partnership between Apache and Chevron Canada, Kitimat LNG is one of the farthest along of all the proposals.

The National Energy Board granted an export licence for 10 million tonnes of LNG per year for 20 years in October, 2011. The terminal in Bisch Cove will initially produce five million tonnes of LNG per year with plans to eventually double that capacity. In February, Kitimat LNG awarded the engineering, procurement and construction contract for the $4.5 billion project to a joint venture of Fluour Canada and the JGC corporation of Japan. A final investment decision on the terminal is expected to come later this year.

Should the project proceed, Kitimat LNG anticipates the creation of 2,500 construction jobs over a three-year construction period with another 150 permanent operation positions needing to be filled. Work on a camp at the former Eurocan site is already underway.

LNG Canada

The LNG Canada project combines the experience of Shell Canada, Korea Gas Corp., Mitsubishi Corp. and PetroChina to create an LNG terminal in Kitimat.

The terminal would include two LNG trains with a combined capacity of 12 million tonnes per year. LNG Canada received its export licence for up to 24 million tonnes per year over the course of 20 years last February. The company filed its project description with the federal and B.C. environmental assessment agencies in April and anticipates a final investment decision will be made in late 2015 or early 2016. That would allow LNG shipments to Asian customers to begin near the end of the decade.

In total, the LNG Canada terminal comes with a price tag of approximately $12 billion.

Douglas Channel Energy Partnership

The only project to include First Nations as a major partner, Douglas Channel Energy plans to operate a small barge-based LNG liquefaction facility on the west bank of Douglas Channel south of Moon Bay.

A partnership between the Haisla Nation, LNG Partners, Golar LNG and an unnamed Asian firm, the Douglas Channel Partnership has been awarded an export licence for 1.8 million tonnes of LNG per year for 20 years. The floating terminal will have the ability to produce an initial capacity of 700,000 tonnes of LNG per year with an overall capacity of 900,000 tonnes.

The partners are hoping to begin construction later this year and, because the infrastructure will be built on a barge and then anchored in its permanent location, begin operations in 2015.

Woodside LNG

On Jan. 16, Woodside LNG of Australia became the second company to sign an agreement to develop an export terminal on Grassy Point, this time on the southwestern edge of the site.

Details of the project, which will occupy 693.6 hectares of land purchased from the province for $17 million, are still being determined by the company and are in a preliminary stage.

Aurora LNG

Aurora LNG, a partnership between Nexen, INPEX Corporation and JGC Exploration Canada Ltd., signed an exclusivity agreement with the province of B.C. for 614.9 hectares of land on the northern tip of Grassy Point near Lax Kw’alaams to develop an LNG export terminal on the site.

With the agreement in place, the company moved quickly to file for an LNG export licence for 24 million tonnes of LNG per year for 25 years. Although preliminary, Aurora LNG outlined plans for a natural gas liquefaction plant with LNG storage, a marine jetty and a loading dock capable of handling Q-Flex LNG carriers that can carry between 210,000 and 217,000 cubic metres of gas. Plans call for two LNG trains initially, with two additional trains being built as the market and project economics dictate. The facility would allow for the concurrent loading of tankers at adjacent berths.

The company expects the first shipment of LNG to take place between 2021 and 2023.

Triton LNG

A partnership between AltaGas Ltd. of Alberta and the Idemitsu Canada Corporation, Triton LNG has applied to the National Energy Board for a 25-year export licence for a floating LNG terminal “in the vicinity of Kitimat or Prince Rupert”.

Triton’s plans include a floating liquefaction storage and offloading (FLSO) vessel, complete with two liquefaction trains and storage for up to 200,000 cubic metres of LNG. The FLSO would have a production capacity of 2.3 million tonnes of LNG per year, with the gas being delivered from the Western Canadian Sedimentary Basin through Westcoast Energy Inc.

Triton LNG is expecting to complete the feasibility study for the project in 2014 and says LNG exports could begin as early as 2017.

Kitsault Energy

What was once a major resource community on the coast is now being pitched as the ideal spot for a floating LNG terminal.

The owners of Kitsault Energy, who also own the town itself, are seeking partners for an LNG terminal and cite savings of between $1 and $3 billion for prospective companies because the length of pipeline running from northeastern B.C. would be up to 33 kilometres shorter than accessing Kitimat or Prince Rupert. In December, the company applied for an export licence authorizing the export of up to 20 million tonnes of LNG per year for a term of 25 years. The company intends to initially use smaller floating liquefaction plants beginning in 2018 and adding on to those plants in future years in order to export up to 2.6 billion cubic feet of gas per day.

The company still needs to find partners or investors for planned pipelines, the LNG facilities it wants built at Kitsault and a supply of natural gas itself.

Stewart Energy Group

The Stewart Energy Group filed a gas export application  with the National Energy Board on March 5, 2014, for a floating LNG terminal that would eventually be moved on land. The floating LNG terminal would have an annual capacity of five million tonnes a year of LNG, but the Stewart group says its land-based terminals would increase its export capability by another 25 million tonnes a year, making it one of the largest of the proposed projects in the region.

While the time line for the project is not yet clear, the Stewart Energy Group said it already has off-take supply agreements signed with energy groups in two major Chinese cities.

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