Resource World Magazine

64 www.resourceworld.com O C T O B E R / N O V E M B E R 2 0 1 8 Oil Patch Report by Bruce Lantz O n October 1, 2018 the 8,000 residents of Kitimat, BC learned that a major LNG export project worth up to $40 billion is going forward. The LNG Canada joint venture is led by Royal Dutch Shell [RDSA-NYSE] with Petronas, Korea Gas [036460-KRX], Mitsubishi Corp. [8058-JP] and PetroChina [PTR-NYSE]. In Vancouver, Prime Minister Justin Trudeau was on hand to formally announce that the project will go ahead, accompanied by BC's Premier John Horgan, LNG Canada and First Nations leaders. The LNG Canada project will send natural gas from Alberta and the Montney and Horn River plays in northeastern BC, delivered by a TransCanada Corp. [TRP-TSX, NYSE] pipeline to Kitimat, where it will be transformed into liquid natural gas and shipped to Asian markets now dependent largely on coal. It would eliminate 60-90 million tonnes of CO 2 worldwide annually. Shipping liquefied natural gas from Kitimat to Japan would take about eight days as opposed to approximately 20 days from the US Gulf coast, offering a huge competitive advantage. Waiting in the wings is the $3.5-billion Kitimat LNG project spearheaded by Chevron Corp. [CVX-NYSE] and Woodside Petroleum [WPL-ASX], which is expected to make its FID in the next couple of years. The Haisla First Nation has proposed a small-scale Cedar LNG project and is supportive of the other proj - ects as well. While construction was initially planned to start in 2015, the LNG Canada project was delayed in 2016 as the industry dipped due to sagging oil prices and an unfavourable supply-demand outlook, but the partners stayed the course and as outlooks have improved of late, predictions are for a 2020 operational start. Initial production is expected to hit 6.5 million tonnes per year (MPTA) with the potential for expansion to 26 MPTA. The first phase would create employment for 4,500 people and the same number of indirect and pipeline jobs. "This would mean a positive boost that would create thousands of person-years of work," said Mike Dewar, Director of Economic Development for the District of Kitimat, in an interview. "The largest private infrastructure investment in Canada's history, it would bring wealth and prosperity to the entire North." The project would mean billions in taxes which would go toward education, health care and environmental sustainability, he added, "a tremendous benefit." An industry town built by Alcan in the 1950s to support its aluminum smelter, Kitimat's main employer now is aluminum pro - ducer Rio Tinto Plc [RIO-NYSE, ASX, LSE]. Over the years the community has seen its fortunes rise and fall, but now there's a feeling of optimism running through the community, which had to weather the industry's recent turmoil. Kitimat has witnessed a 'fair bit' of preparatory work in and around the community, he said. That includes groundwork at the terminal site, work camps, marine site preparation including dredging underway in September, reopening an existing work camp in Kitimat and securing other housing capacity, a Horizon North camp at the town's entrance and construction of the Haisla Centre in down - town Kitimat with suites for LNG Canada executives. "We've watched LNG for numerous years and right now things look quite optimistic," Dewar said, noting that the two LNG propo- nents have thus far spent approximately $1 billion each developing their projects, including engineering, legal, community and First Nations engagement, infrastructure preparations, etc. The project has its hurdles, though. One is a jurisdictional challenge on TransCanada's Coastal GasLink by Smithers environ - mental consultant Mike Sawyer who says the project, approved by the BC government, must also have National Energy Board approval. But Dewar said the provincial government has a fiscal framework in place and he remains upbeat. A small town on British Columbia's coast is breathing easier Shane Nickolson, Director, Pre-Construction, Energy and Environment, Graham Construction. Photo courtesy Graham Construction & Engineering Inc. Rod Graham, President and CEO of Horizon North. Photo courtesy Horizon North Logistics Inc.

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