LNG west coast export hype
December 13, 2012
An astounding number of large LNG projects have taken shape for the west coast of BC. If even half of the projects get built Kitimat and Prince Rupert would be booming.
The BC Premier Christy Clark likens the LNG export potential to Alberta’s oil sands. She has sights set on opening three LNG operations in B.C. by 2020, with the first up and running by 2015 (please note BC provincial election is coming up in May-2013). Clark said she’s pushing to ensure B.C. enters the LNG race ahead of other countries, especially the United States.
BC has lots of natural gas, particularly in the Liard and Monteney basins. Indeed, 97% of Canada’s supply comes from western Canada and its expected to grow from 15.3 Bcf/d in 2011 to 17.3 Bcf/d by 2045.
The LNG projects on tap for northern BC are:
- Kitimat LNG (KLNG). A $4.5B project proposed by Apache, EOG and Encana. Liquefaction and Export Terminal (500-700MMcf/day) with planned capacity of 700 million cubic feetof natural gas per day or 5 million metric tons of LNG per year. National Energy Board (NEB) export permit was issued in October 2011 to export 10 million metric tons of LNG over 20 years. Labour force estimate is up to 2500 jobs during construction (three years) and up to 150 permanent jobs for operation. Front-end engineering and design (FEED) will be conducted by KBR; with final investment decision (FID) expected in 2012.
- Douglas Channel Energy Partnership proposes to construct and operate a small-scale natural gas liquefaction facility that will utilize existing capacity of the Pacific Northern Gas Ltd pipeline and convert up to 125 MMscf/day (million standard cubic feet per day) of natural gas into approximately 900,000 tonnes of LNG per annum. FEED studies began in 2011. An export permit was awarded in February 2012. Construction is expected to begin in 2012 with production targeted for early 2014. The project costs are $400 million to $600 million.
- Pacific Northwest LNG project. The proponents are Petronas and Progress Energy (to be acquired by Pertonas) have plans to develop a $9-billion-plus liquefied natural gas plant at Prince Rupert. The project would be create up to 3,500 construction jobs and 300 long-term operational positions The plant capacity would be 2 Bcf/day. The project would start in 2013 and be completed by 2018.
- LNG Canada project. In May 2012 Shell Canada Ltd formally announced development of a proposed two billion cubic feet/ day liquefied natural gas (LNG) export facility near Kitimat, BC. LNG Canada is a joint venture with Korea Gas Corporation (KOGAS), Mitsubishi Corporation, and PetroChina Company Ltd. The project will consist of the construction and operation of natural gas treatment facilities, LNG liquefaction and storage facilities, marine terminal facilities, an interconnecting cryogenic LNG transfer pipeline, and supporting facilities/infrastructure. LNG Canada will initially consist of two LNG processing units referred to as “trains”, each with the capacity to produce six million tonnes per annum (mtpa) of LNG, with an option to expand the project in the future. The partners decision to move the project into development could be taken around the middle of the decade, with start up around the end of the decade, pending regulatory approvals and investment decisions. No price tag was given on the project.
- BG Group PLC in partnership with Spectra Energy is looking at construction of an LNG facility at Prince Rupert, also stands to be among the largest in the world at 4.2 billion cubic feet a day. BG is a leading player in the global energy market with operations in more than 25 countries over five continents. The project theoretically could start in 2015 and be operational by 2020. No project cost is noted.
The south-central Alaska LNG project envisioned by BP PLC, Exxon Mobil Corp., ConocoPhillips Co. and TransCanada Corp. is huge in scale. With a price tag of $45-billion to $65-billion-plus (U.S.), the Alaska project cost includes both a pipeline from the North Slope and LNG port facility costs. The project would use 1.7 million tons of steel, take 15,000 people to build and load three billion to 3.5 billion cubic feet of natural gas a day on to ships bound for Asia. Although it has already seen $700-million in planning expenditures, the Alaska project is just getting started. It will take eight to 10 years to design and build.
The small Kenai Liquefied Natural Gas (LNG) Plant began operating in 1969, after the nearby North Cook Inlet Gas Field was discovered in 1962. Nearly all LNG produced at the plant has been sold via contracts with two Japanese utilities.
The high Asian prices for natural gas, about 5 times the North American price, make LNG exports exceedingly attractive. Alas, no investment decisions have been made, just plans so far. Perhaps soon some of the hype will turn into investments and jobs.