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Two LNG Projects Gain Ground in BC

Two liquefied natural gas (LNG) import terminals planned on the Pacific Coast of British Columbia took important steps forward last week. One day after the Kitimat LNG project, which would be built on an Indian reserve near Kitimat, BC, received environmental approval, another BC LNG project, the C$350 million Prince Rupert LNG terminal proposed by WestPac LNG Corp., initiated the regulatory review process.

WestPac's project, which would ship most of its product in liquefied form by barge or rail to regional markets, would be built on Ridley Island, an industrial park seven miles outside of Prince Rupert. Service is expected to begin in 2011.

Calgary-based WestPac filed project plans last week with the Prince Rupert Port Authority, a federal agency that will be the lead regulator for the project. WestPac previously entered into a memorandum of understanding with the Port Authority for a 30-year lease on 100 hectares on Ridley Island, which is adjacent to existing grain and coal shipping terminals.

The LNG terminal will include liquids stripping facilities, 1 Bcf of storage, barge facilities, rail and 130 MMcf/d of vaporization capacity. The gas from the project is expected to be used mainly in the province to support regional industrial growth and economic development.

"When built, our terminal will provide the Northwest Coast, Vancouver Island and the Lower Mainland of BC with access to a reliable supply of natural gas that should contribute to future economic development and power possibilities," said WestPac President Mark Butler.

The Prince Rupert Port Authority operates the deepest harbor in North America offering easy and ice-free navigation access that can accommodate LNG tankers. "The port will rigorously assess the proposed terminal, beginning with a full environmental assessment," said Don Krusel, CEO of the Port Authority. "We know numerous ports around the world operate safe LNG facilities, and we're confident that WestPac will develop and operate their facility to the highest standards."

Krusel also said the LNG facility fits well with the port's strategic plan to diversify operations and grow a dynamic and sustainable business that will also help ensure the long-term economic health of Prince Rupert and the region.

"An unrestricted supply of natural gas becomes a catalyst for future investment and jobs because the availability of abundant, secure supplies of natural gas will remove bottlenecks that have constrained growth and development in the past," said Prince Rupert Mayor Herb Pond in a statement on the project.

WestPac noted that LNG facilities are not new to British Columbia. A liquefaction facility has operated in the Tilbury Island region of Greater Vancouver since 1971. In fact, the Prince Rupert terminal originally was intended to be a gas liquefaction project until the North American gas market started driving prices sharply higher because of growing demand.

The BC Environmental Assessment Office (EAO) last week approved a provincial environmental assessment certificate for Calgary-based Kitimat LNG Inc. to construct and operate its own BC LNG terminal in Bish Cove, about nine miles (14 kilometers) south of Kitimat, which is about 80 miles southeast of Prince Rupert. The project, slated for start up in 2009, still requires approval by Canada's Minister of Environment and will need the necessary provincial and federal permits before construction begins. The proposed facility is expected to cost about C$500 million. Storage facilities, regasification, send-out pipelines and a marine terminal are slated to be constructed.

EAO's required Comprehensive Study Review was prepared by all of the affected Canadian stakeholders, including Haisla First Nation, and it found no "significant residual effects as a result of the project." Kitimat LNG and the Haisla signed an agreement-in-principle for the terminal in December.

However, the provincial environmental certificate contains 243 commitments that Kitimat LNG must implement throughout the various phases of the project. Among other things, Kitimat LNG has to abide by all new emission reduction standards, include mitigation measures to protect the coastal tailed frog, provide spill response procedures to protect fish and fish habitat, conduct a habitat assessment to determine habitat loss, and conduct a marbled murrelet survey as part of Canada's Coastal Waterbird Survey Program.

In December 2005, Kitimat LNG and the Haisla signed an agreement-in-principle to locate the terminal on Bish Indian Reserve No. 6, subject to it being confirmed as suitable in the environmental assessment. In April, Kitimat LNG and the Haisla signed an impacts and benefits agreement. The project is expected to bring 700 construction jobs and about 30 full-time positions. More information on the environmental certificate may be found at www.eao.gov.bc.ca.

Nine LNG projects have been announced in Canada. The Canaport LNG terminal in St. John, NB, and the Bear Head terminal on Cape Breton Island, NS, already have been approved by regulators.

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