Resource World Magazine

o c t o b e r / n o v e m b e r 2 0 1 5 www.resourceworld.com 55 company Petronas will proceed with an $11-billion LNG plant at Prince Rupert, and wants to hit production of 2 bcf/d by 2019/20. Unfortunately, Petronas now faces concerns about safety and integrity issues in its offshore Malaysian operations. Encana [ECA-TSX] has stalled its drill- ing program due to the downturn but is continuing construction of two major gas compressor stations in the Northeast and the expansion of a $100 million water treat- ment hub to serve its Montney operation. With the recent announcement of the Steelhead floating LNG plant on the Saanich Inlet and another at Sarita Bay on the Alberni Inlet, both on Vancouver Island, BC has 21 LNG proposals pend- ing with more possible, the ministry says, including new domestic LNG operations. Twelve projects have received export licenses from the National Energy Board while three export facilities and four associated pipelines have received BC Environmental Assessment Certificates. Two projects have had their Environmental Assessments approved by the federal Environmental Assessment Agency. "The natural gas sector is vital to BC's economy as it provides government with over a billion dollars annually," said the ministry spokesperson, "revenue that is used to pay for vital services like health care and education. Now, British Columbia has a unique opportunity to create thou- sands of new jobs while also facilitating positive environmental change with the world's cleanest-burning fossil fuel." The ministry estimates that if even five LNG plants are built, the economic activ- ity will contribute up to $1 trillion to the province's GDP and create up to 100,000 jobs: 58,700 direct and indirect construc- tion jobs; 23,800 permanent direct and indirect operations jobs; and thousands of induced jobs as households have more income. Also, industry exploration and natural gas production will increase gov- ernment royalty collections that support programs like health care and education. "New revenues will support important programs and services and may also be used to reduce the provincial debt," the spokesperson said. Others are seizing the opportunity. For example, Fortis BC is expanding to capi- talize on LNG prospects and to reinforce its existing system. The Eagle Mountain- Woodfibre gas pipeline project being prepared for environmental assessment would reinforce the natural gas pipe- line that runs between Coquitlam and Woodfibre, near Squamish. Fortis also is applying to expand their Tilbury LNG storage facility in Delta, BC, to meet the projected growth of LNG as a cleaner transportation fuel, and they're request- ing expressions of interest to dispense LNG under Rate Schedule 46. In addition, their Revelstoke Natural Gas Conversion Project would see the conversion of that community's current propane system to natural gas. But hurdles remain. The Fort Nelson First Nation recently won a potentially precedent-setting decision from the BC Environmental Appeal Board cancelling the water license of a fracking operation in northeastern BC. nexen, owned by Chinese state-controlled CnOOC Ltd., said cancelling the license would jeop- ardize hundreds of millions of dollars in investment. Also, 10 First Nations leaders across northern BC have formed an alliance to highlight environmental concerns ranging from fracking to exporting LNG. They say they're worried about the pace of fracking and note that the proposed Lelu Island ter- minal site would be next to Flora Bank in the Skeena River estuary, raising concerns about the impact it could have on juvenile salmon habitat. Some argue that nearby Ridley Island would be a better site for an LNG terminal, but the Prince Rupert LNG project of BG Group PLC [BG.L- LSE], which is merging with Shell, holds the development rights for land on Ridley. Government is working to mitigate such concerns, the ministry spokesperson said. "We have implemented comprehensive regulations for shale gas development that include preventive measures for seismic events. These regulations are reviewed regularly to ensure BC has a safe, long-term future in natural gas supply and export. We want to ensure First Nation commu- nities can participate and benefit from the generational opportunity that LNG development is bringing. Benefits-sharing agreements are part of our path to partner- ship – offering First Nations the necessary resources to better participate in economic development. They also provide industry with the certainty needed to make project investment decisions." Among the initiatives is the LNG Environmental Stewardship Initiative, allocating up to $30 million over three years for co-designed projects that First Nations communities will have a direct hand in managing. CAPP feels LNG will start flowing by 2019 at the rate of 700 mcf/d, with some smaller projects in the BC Lower Mainland possibly coming online sooner. But Mueller said much depends on the risky regulatory process and getting speedy approvals of LNG project permits. He remains optimistic for both LNG and natural gas overall. "This is a very nimble industry. It can turn up and turn down depending on the market." n Fueled by the interest in LnG (liquefied natural gas), the industry in BC is surviving despite current challenges that see gas prices below $2.70. and that isn't surprising, given the 50-year history natural gas operations have in the province, starting with the first find at Clarke Lake in northern BC in 1956 and followed by finds at Yoyo and Sierra early the following decade.

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