The BC LNG Export Co-operative has submitted its final argument to the National Energy board and now awaits the NEB’s decision on the Co-op’s application for a 20-year export licence.
The Co-op is a 50:50 partnership between LNG Partners LLC – a Houston, Texas based company – and the Haisla Nation Douglas Channel LNG Limited Partnership.
The actual liquefaction will be carried out by Douglas Channel Energy Project Gas Management in which the Haisla again have a 50 per cent share with the rest owned by LNG BC Projects Ltd. which is in turn 100 per cent owned by LNG Partners LLC.
The co-operative will then sell the LNG to Pacific Rim markets.
The natural gas to be liquefied will be delivered through Pacific Northern Gas’ existing pipeline as per an option LNG Partners LLC have with PNG on its unused capacity in that line.
The Co-op plan calls for a barge-based plant which would either be moored or grounded at the project site – district lot 99 on the west side of the Douglas Channel about halfway between the RTA smelter and the proposed Northern Gateway oil terminal.
It proposes a plant that can convert 125 million standard cubic feet (scf) of natural gas a day for an annual LNG production of about 900,000 tonnes.
However, in anticipation of future expansion, the Co-op has applied for a permit to ship out 1.8 million tonnes a year.
To put that in perspective, KM LNG plans to export 5 million tonnes rising to 10 million tonnes once the second phase comes on line – it has already received its permit.
In its final argument to the NEB, the Co-op points out that while KM LNG is being built to exclusively export the natural gas produced by its owners – Apache Canada, EOG Resources Canada and Encana – the Co-op “does not have any specific natural gas producer”.
Instead it offers capacity to “a large number of producers and/or marketers” which would not otherwise be able to access export markets.
“In this sense, the open access structure offered by (the Co-op) can be said to serve a much larger public interest than facilities limited to specific producers.”
On the question of whether there will be enough natural gas available to allow the Co-op to hit its proposed LNG production targets, it points out that the daily production forecast of the members of the Co-op over the term of the licence is four times what is required to run the plant at capacity.
Therefore, “it is clear that there is ample security of supply.”
Turning to pipeline capacity to get the natural gas to the LNG plant, the Co-op notes the currently unused capacity of the existing PNG line of about 100 million scf per day.
While that is 25 million scf/day less than what is required to produce 900,000 tonnes of LNG a year, the Co-op says it is in talks with the KM LNG partners about their changing the design of their Pacific Trails Pipeline (PTP) so it can carry another 150 million scf/day.
“The technical feasibility of undertaking this modification has been confirmed and the parties are discussing the commercial terms under which that might occur,” the Co-op adds.
If the PTP option doesn’t happen, the Co-op says alternatives include expanding the PNG line or coming to an arrangement with “other various Kitimat Arm pipeline alternatives due to the current interest in LNG exports to Asian markets.”
And once it has found a way to tie up delivery of extra natural gas volumes, it would proceed with the second phase lifting LNG production to 1.8 million tonnes per annum.
As it stands now, the plan is to have the first phase operational in 2013 and the second “in or around 2016”.
The next issue tackled is what’s called “Export Impact Assessment”.
The Co-op offers a succinct explanation: “Put simply, the important question is whether the proposed export will prevent Canadians from meeting their energy capacity requirements at fair market prices.”
The Co-op says its proposal does not, pointing out the amount of gas it would use equalled less than 0.5 per cent of the recoverable reserves in the Western Canadian Sedimentary Basin over a 20-year period.
On public interest benefits, the Co-op says exports will open up new markets for natural gas producers, thereby enabling further development of Alberta and BC tight/shale gas reserves which will in turn contribute to both provincial and federal government revenues.
And utilisation of the unused capacity in the PNG pipeline will “provide a significant benefit to all existing PNG ratepayers.”
That’s a reference to the fact that delivery charges currently paid by existing customers per gigajoule of natural gas will drop dramatically once the Co-op starts paying PNG to transport gas to the LNG plant.
Turning to first nations, the Co-op notes the benefits to the Haisla are “manifest” and no other first nation has pointed to any negative affect of the export.
On the environment, the Co-op says, “The BC LNG project is specifically designed to minimize environmental impacts due to its small scale, minimal new facilities and infrastructure requirements, and specific site location.”
In conclusion the Co-op notes that no party had come forward with evidence to dispute its claims as to the adequacy of natural gas supply, market demand, pipeline availability, or any other impact of the project.
“The result is that (the Co-op’s) evidence is entirely uncontradicted.”
It contends the lack of opposition is the result of a plan “that benefits many and disadvantages no-one.”
It therefore submitted the export licence was in the public interest and should be granted by the NEB.