Issue link: http://resourceworld.uberflip.com/i/1078872
64 www.resourceworld.com F E B R U A R Y / M A R C H 2 0 1 9 Oil Patch Report by Bruce Lantz P roponents are optimistic that a second liquefied natural gas (LNG) plant will be operational in British Columbia by 2023. Woodfibre LNG is proceeding with plans for its $1.8-billion plant 7 km southwest of Squamish, with construction set to begin this year. David Keane, President of Woodfibre LNG Ltd., recently announced that the project is moving forward after some delays. The plant will be one-ninth the size of the $40-billion LNG Canada project announced earlier last year, Canada's first such project. Late in 2018, another LNG project, the $25-billion WCC LNG pro - posed by Imperial Oil [IMO-TSX] and Exxon Mobile [XOM-NYSE] for Tuck Inlet near Prince Rupert, BC, stalled, pull- ing out of the environmental assessment process. And LNG Canada suffered a set- back when Petronas [PTG-MK], with a 25% interest in the project, announced it would cut production by 50-200 million cubic feet/day from wells in northeast BC capable of producing 700 mcf/d, due to low natural gas market prices. "While it's true we originally planned to be in operation by now, a lot of external factors impacted our schedule," Keane said. "There was of course the drop in the price of natural gas (and) two major changes in government (federal and provincial). The federal government, for example, intro - duced changes to the regulatory process that we had to meet." But Keane said both governments have recognized that they need to remove some barriers to BC LNG project competitiveness and have done so. Thus the firm is now working through some permitting, includ - ing a facilities permit from the BC Oil & Gas Commission, and working to clean up the site, once home to the Woodfibre pulp mill. They expect to award an engineering, procurement and construction contract early this year. The project has the blessing of the Squamish Nation after undergoing that nation's first independent environmental review, the first industrial development to do so. The review resulted in 25 condi - tions for Woodfibre LNG, Fortis [FTS-TSX] and the province – 13 specific to the LNG plant. "We've already met some of the con- ditions including switching cooling technology from seawater cooling to air cooling," Keane said. "Recently Squamish Nation chiefs and council voted to approve the impact benefit agreements for the project… Another condition of the…envi - ronmental agreement." Woodfibre LNG is licensed to export about 2.1 million tonnes of LNG annu- ally for 40 years from the brownfield site of the former pulp mill operations for a century. It is already zoned industrial and has a deep water port on a waterway used for decades for commercial shipping. According to the Woodfibre website, an LNG carrier will travel through Howe Sound 3-4 times monthly, accompanied by at least three tugboats, at least one tethered to the carrier, and will have two expert pilots on board. Woodfibre ship - ping will increase large vessel movement in the Sound by less than 1%, "which is very manageable." Despite concerns of some environmen- tal groups, LNG has one of the best safety records in the shipping industry, with no loss of containment of LNG at sea in the industry's 60-year history, the report said. LNG demand is growing as Canada seeks new markets, mostly in Asia, to replace its former top customer, the US, which has become its major competitor. Keane said "a number of contracts" will be finalized by start-up, among them one with the China National Offshore Oil [883-HK]. But environmentalists say exports will boost carbon emissions, both through gas extrac - tion and the liquefaction process. Woodfibre LNG Project moving ahead Artist's rendering of the Woodfibre LNG facility on Howe Sound, British Columbia. Images courtesy Woodfibre LNG Ltd.