The federal government has reached deep into its pockets to support the development of LNG Canada’s facility in Kitimat.
Federal finance minister Bill Morneau travelled to Kitimat on Monday to announce that Ottawa will invest $275-million for two big-ticket items, one vital for making the liquefied natural gas competitive on the world market, the other to facilitate infrastructure development in the region.
Speaking to a small group of dignitaries and local workers at the Rod and Gun Club, Morneau said the federal government subsidies “would help support the overall advancement of the LNG Canada facility.”
The $275 million will go towards two projects, the first being $220 million provided through the federal Strategic Innovation Fund (SIF) to help fund high energy-efficient gas turbines to minimize greenhouse gas emissions and fuel use at the facility, which LNG Canada has long touted as being the world’s greenest LNG facility once it is complete and in production.
The SIF is designed to attract and support high-quality business investments in Canada’s most dynamic and innovative sectors.
The second project will see the construction of a new bridge over the Kitimat River to replace the ageing Haisla Bridge – the new bridge will be crucial for handling the increased traffic that will accompany the construction of the facility.
The $55 million for the construction of the new bridge is being made through Western Economic Diversification Canada, a federal government department that funds community economic development projects throughout Canada.
Morneau said in his address that the new bridge construction project will create up to 100 jobs over the four-year construction period.
“The Haisla Bridge is a vital infrastructure linking the community of Kitimat to the sites and ports that will export LNG and aluminum to Asia,” said Morneau.
The District of Kitimat has wrestled with the question of what to do with the ageing bridge which is approaching the end of its life and requires considerable ongoing maintenance. Proposals discussed either refurbishing the bridge, or replacing it through a three-way funding split between the DoK, and the provincial and federal governments.
The DoK faced having to borrow $20 million to either overhaul the bridge or as a contribution to replacing the bridge.
Haisla Nation Council chief councillor Crystal Smith said the current bridge was built to support a growing aluminium industry.
“This investment signifies support for a new era, a new time in Haisla history where we’re meaningfully a part of this industry and other industries that we support in our territory,” said Smith. “This provides an opportunity for another level of participation for not only the Haisla but also for other neighbouring nations.”
Kitimat mayor Phil Germuth said the current Haisla Bridge has been identified as a transportation bottleneck for existing and future industry.
“Replacing this piece of infrastructure is vital for Kitimat to continue to serve as a key port location that connects our national economy to international markets. The municipality doesn’t have the financial capacity to tackle this project ourselves,” said Germuth.
He said the district was encouraged by the federal government’s support for the community and Northern B.C.
“We are also appreciative to LNG Canada for their efforts in helping us secure this funding. The new bridge will allow Kitimat to continue connecting Canada to the world.”
Speaking at the press conference, incoming LNG Canada CEO Peter Zebedee, who replaces current CEO Andy Calitz from July 1, said he is faced with “the daunting task of delivering this great project and sharing its benefits with customers in Asia who are hungry for cleaner forms of energy.”
“The District of Kitimat, the province of B.C. and the government of Canada all recognize the challenges companies like ours face building major projects in Canada,” said Zebedee, who is currently Shell’s vice president Canada Manufacturing in Edmonton.
“For projects to proceed, not only must they share benefits and meet our environmental commitments, but they must also be competitive,” said Zebedee, referring to long-held concerns that LNG Canada’s liquefied natural gas wouldn’t be able to beat the price per unit charged for liquefied natural gas by producers like the U.S. Zebedee said the challenge “is not for the faint-of-heart” and that the company couldn’t do it alone.
“I won’t lie – it wasn’t easy and we still face questions every day about whether we can get it done given the competitive challenges all over the globe,” added Zebedee.
One of LNG Canada’s competitive advantages and a reason why the Joint Venture Participants gave the project the green light is Kitimat’s proximity to Asian markets – the company said last year that the relatively short shipping distance to North Asia is about 50 per cent shorter than the trip from the U.S. Gulf of Mexico and avoids the Panama Canal.
In the design of the facility, LNG Canada opted for natural gas turbines for the liquefaction process to reduce fuel use and minimize greenhouse gas emissions, a move that will result in the facility being one of the lowest carbon dioxide-emitting LNG facilities golabally.
In his address, Skeena MLA Ellis Ross said the investment in Kitimat is vital when considering that the region will drive the economy of Canada in a significant way over the next 10 years.
“We need to keep supporting LNG and economic development in Kitimat. Chevron KMLNG is right behind. LNG Canada opened the door to LNG in Kitimat,” said Ross. “Pacific Traverse Energy wants to ship propane out of Kitimat. Cedar LNG is right after that. We’re going to have a huge economic impact on Canada, B.C. and the rest of the region.”