Kitimat LNG: Spring activity update

By Kathy Smith

Artist rendering of the proposed Kitimat LNG facility.  Image courtesy of Apache Canada Ltd.

Artist rendering of the proposed Kitimat LNG facility. Image courtesy of Apache Canada Ltd.

 

Kitimat LNG partners Apache Canada Ltd., EOG Resources Canada, and Encana Corporation are making steady progress after receiving their 20-year export licence from the National Energy Board last fall. The LNG facility will be located at Bish Cove on Haisla First Nation land approximately 650 kilometres north of Vancouver.

The Pacific Trail Pipeline (PTP) will transport gas from Summit Lake to Kitimat through a 463 kilometre underground line. PTP will connect with existing transmission lines which provide extensive access to natural gas throughout B.C.

The Kitimat LNG project continues to meet many milestones and is currently in the Front-End Engineering and Design (FEED) stage.

“The proposed Kitimat LNG facility and PTP go hand in hand,” says Paul Wyke, spokesperson for Apache Canada. “Right now, we’re finishing up the FEED studies on the facility and pipeline and those will give us more certainty around the costs, construction timelines, and labour requirements we need before both of these projects go before the boards of the partners for a Final Investment Decision (FID).”

The partners are also in the throes of negotiating long-term gas sales contracts with potential Asia-Pacific customers, Wyke adds.

“Inking those contracts are certainly another piece of the puzzle that needs to be in place prior to FID,” he says.

“Both projects are receiving great support from the communities they’re in and our relationships and partnerships with First Nations are excellent and continue to grow. That strong involvement and support certainly benefits both projects.”

As far as construction timelines go, Wyke says many changes can occur throughout complex engineering processes, so it’s difficult to forecast hard dates as to when the Kitimat LNG facility and PTP will commence operations.

As to where the natural gas for the Kitimat LNG facility will come from, Wyke explained that the export licence allows for supply to come from anywhere in the Western Canadian Sedimentary Basin.

“We have a lot of options as to where that natural gas can be sourced from and there’s definitely a vast supply waiting to be tapped.”

Aerial photo of the Kitimat LNG Facility. Image courtesy of Apache Canada Ltd.

Aerial photo of the Kitimat LNG Facility. Image courtesy of Apache Canada Ltd.

In terms of managing gas transmission from the Horn River Basin to Kitimat, Horn River Basin Producers Group (HRBPG) chair Rob Spitzer said, “The [Horn River] wells are relatively prolific and I think you would find that the magnitude is going to be manageable given the potential lead time for the Kitimat LNG project to get off the ground.”

“Eyes are on the Horn gas, but there’s no direct linkage and there’s work to be done to see how Horn River fits in with other potential gas supply for Kitimat.”

Many factors influence where each market chooses to get their gas from, explains Spitzer, adding that a lot of it has to do with diversification of supply.

“All buyers value diversity of supply because at the end of the day they don’t want to put all their eggs into one basket.”

Access to market is another factor.

“The location of Kitimat has very competitive sailing times to the Asia-Pacific region when compared to other LNG proposals around the world,” says Wyke. “Also, potential customers are looking to regions that have a stable resource base, governments that support energy, and assurance that the resources are being developed responsibly.”

The B.C. government strongly supports the development of LNG export projects in the province through its Natural Gas strategy and LNG strategy.

“We’re certainly encouraged by the province for recognizing the potential here and embracing LNG as a big part of the energy mix,” says Wyke.

“The Kitimat LNG project represents a phenomenal opportunity to create a new market for Canadian natural gas. B.C. and Canada have an abundance of natural gas and require new markets to optimize returns from this resource to support jobs, economic growth and public services in B.C. and across the country,” adds Wyke.

Once completed, the Kitimat LNG facility will be able to ship a secure, stable, long-term supply of liquefied natural gas from Canada to international markets.

Other companies in the HRBPG are also looking at separate LNG opportunities. In addition, BC LNG, a partnership between family-owned LNG partners from Houston, Texas and the Haisla First Nation, received a 20-year export licence earlier this year. They are planning a floating terminal (barge) off Kitimat from Pacific Rim export.

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