A new regime: Bill 12 grants province authority over B.C. LNG port development

By Jillian Mitchell

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The BG Group’s proposed $16 billion LNG facility on Ridley Island near Prince Rupert will create an estimated 3,000 jobs during construction. Photo courtesy of the Port of Prince Rupert.

 

Recent legislation passed to regulate liquefied natural gas (LNG) development on federal port lands will offer immediate benefit for two of the province’s largest LNG projects—the proposed Pacific Northwest LNG project and the Prince Rupert LNG project.

Bill 12: the ins & outs

Bill 12, the Federal Port Development Act (FPDA), will allow for authority and enforcement of provincial law on any LNG development occurring on federal port lands.

The bill, which was brought to the B.C. Legislature in February 2015 by Deputy Premier and Minister of Natural Gas Development Rich Coleman, created a joint federal-provincial arrangement that put a provincial LNG regulatory system in place.

Under the new legislation, the BC Oil and Gas Commission will take over regulatory, administrative or judicial control of industrial activities in B.C. ports. The localized regulatory body is anticipated to create a seamless regulatory environment for development and operations, as well as peace of mind for investors.

As part of the spring 2104 trade mission, Premier Christy Clark & Rich Coleman, minister of natural gas development, spoke at a luncheon that connected LNG industry reps.

As part of the spring 2104 trade mission, Premier Christy Clark & Rich Coleman, minister of natural gas development, spoke at a luncheon that connected LNG industry reps.

According to Minister Coleman, the province outlined two points of focus for the bill: first, the creation of LNG projects that were self-sustaining and able to cover the costs of implementing an LNG facility; and second, the practicality of utilizing an experienced governing body.

“We sat down with the Port Authority and Transport Canada […] and we came to the conclusion that since we already had an agency, it would be better if we moved to an agreement between us and the federal government that we would take over [LNG development and operations in B.C.’s federal ports],” Coleman shares. “The Oil and Gas Commission has had the experience of permitting and working with gas plants for a number of decades now. They have the expertise.”

Bill 12 & B.C.’s proposed LNG ports

The first to be considered under Bill 12 is Pacific Northwest LNG and Prince Rupert LNG, which together, represent a $27-billion investment, among additional economic and social benefits.

With an $11-billion price tag, the Pacific Northwest LNG port proposed for Lelu Island would contribute more than $1 billion annually to federal, provincial, and municipal governments in various taxes and royalties. The facility, which will liquefy and export natural gas produced by Progress Energy Canada Ltd., is anticipated to create an estimated 330 long-term careers (i.e. facility operation); 300 new local, spin off jobs in the community; and upwards of 4,500 jobs during construction. The project has been granted a license to export 19.68-million tonnes of LNG per year for 25 years beginning in 2019. Construction is forecast to begin in 2015.

Similarly, BG Group’s proposed $16-billion LNG facility on Ridley Island near Prince Rupert will create an estimated 3,000 jobs during construction, and between 400 and 600 full-time positions, as well as spin-off jobs within the community. The site, which will be built and operated by Spectra Energy, is anticipated to boast a production capacity of up to 21 million tonnes (nearly 29 billion cubic metres) of LNG per year. Construction is anticipated to start in 2016, with an in-service date sometime in 2019.

“We are working to promote and enable trade in a way that is environmentally sustainable, socially responsible, and economically beneficial for Canadians,” says Don Krusel, president and CEO of the Prince Rupert Port Authority, the organization that administers both ports. “Liquefied natural gas is a product that producers are eager to see moving to Asian markets. The two developments under consideration within our jurisdiction obviously signify enormous economic potential for our region and the nation. If these projects proceed, they would represent another step forward in the process of diversifying Canada’s northwest trade gateway.”

The Port of Prince Rupert is North America’s shortest trade route to Asia, and current shipping traffic handles over 23 million tonnes of goods. The Port of Prince Rupert supports 5,840 person years of employment and contributes $1.2 billion in total gross domestic product to British Columbia’s economy.

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Bill 12 & the Canada Marine Act

Bill 12 was designed to complement Transport Canada’s Canada Marine Act (CMA), more specifically, the 2014 amendments. The CMA, which received Royal Assent in June 1998, governs the marine sector in Canada and sets out the comprehensive legislative framework for the National Ports System comprised of 18 independently managed Canada port authorities. The 2014 amendments aim to facilitate project development and future growth at Canada’s marine ports, specifically those focused on the development of an emerging liquefied natural gas industry.

“Regulatory regimes often involve complex administrative, enforcement and quasi-judicial bodies and systems. In this particular case, for liquefied natural gas regulatory oversight, the province of British Columbia has an established and comprehensive regulatory regime in place to administer and enforce effective regulatory oversight over the proposed LNG facilities,” says a spokesperson for Transport Canada. “There is currently no comparable federal regulatory regime specifically designed to regulate the design, construction, operation and maintenance of liquefied natural gas projects.”

Marine traffic and LNG shipping will not be affected by the new bill, but will defer to regulations outlined by the CMA.

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