NGI The Weekly Gas Market Report / NGI All News Access

Kitimat LNG Export Momentum Building

Canadian provincial and federal authorities are sending signals that they mean business when they talk about a shift in energy export strategy into overseas markets and away from traditional reliance on the United States.

British Columbia (BC) got in step by swiftly approving a capacity increase for a pipeline planned to serve a lineup of liquefied natural gas (LNG) terminal projects at Kitimat on the province's north Pacific Coast. At the same time, the federal government committed C$35 million to a two-year program of upgrading Canadian LNG and oil tanker safety management as part of an overhaul of national regulatory agencies that is intended to accelerate project approvals.

The BC Environmental Assessment Office recently approved a resizing to 42 inches in diameter from 36 inches for Pacific Trail Pipelines. The switch results in an immediate increase of about one-third in planned initial capacity to more than 1 Bcf/d. With additions of compressor power, Canadian industry analysts rate the up-sized jumbo pipe as capable of eventually carrying up to two Bcf/d.

Pacific Trail, a conduit running from east to west across the central BC interior to Kitimat, is intended to be a receiving line for growing production from developing northern shale gas fields. The construction schedule calls for deliveries to start in late 2015.

The pipeline project belongs to the same team -- Apache Canada Ltd., EOG Resources Canada Ltd. and Encana Corp. -- that owns KM LNG, which obtained a 20-year export permit from the National Energy Board (NEB) last year as the first entry in the Kitimat tanker terminal lineup (see NGI, Oct. 17, 2011). Space has also been booked on Pacific Trail by the second entry, which likewise obtained a 20-year NEB export license last winter and Canadian approval earlier this month: BC LNG Export Co-operative, sponsored by Haisla First Nation at Kitimat and Houston-based LNG Partners LLC (see NGI, April 16).

The combined, total potential capacity of the first two tanker terminals planned at Kitimat approaches 2 Bcf/d. At least three other Canadian producer groups have disclosed that planning for additional LNG export projects is under way (see NGI, Feb. 13).

The current operators of BC gas pipelines, Spectra Energy and TransCanada Corp., are working on service increases for northern production areas and are always on the lookout in the Calgary capital of the Canadian gas industry for additional growth opportunities. In the BC capital of Victoria, Premier Christy Clark has made provincial support for shale gas production, transportation and export growth an economic plank of her Liberal party's platform for a provincial election due soon.

Clark also immediately joined both front-runners in Alberta's April 23 election campaign -- Conservative Premier Alison Redford and Wildrose Alliance leader Danielle Smith -- in endorsing a national regulatory reform program unveiled by the Conservative regime in Ottawa. Fleshing out intentions declared in the spring federal budget, Natural Resources Minister Joe Oliver announced an array of measures to tighten up the national regulatory apparatus. The changes range from reducing the number of federal agencies with project approval authority to enacting new legal technicalities that will be designed to accelerate the process by limiting the ability of environmental groups to mount delaying actions.

A patchwork of about three dozen federal environmental directorates and bureaus will be subordinated to three authorities with power to make decisions: the NEB, the Canadian Environmental Assessment Agency and the Canadian Nuclear Safety Commission. As a means to reduce notorious duplication of efforts in the Canadian scheme of divided federal and provincial jurisdiction over resources and the environment, the cabinet in Ottawa will have clear legal power to delegate project reviews to provincial agencies when their rules are up to national standards. A further legal clarification will give the federal cabinet the same final say on environmental assessment agency rulings that it has always had as a ratification power over NEB decisions.

Oliver, a former Toronto investment banker with an MBA from Harvard, announced the regulatory reform package with great fanfare from a podium set up on an assembly line in a Toronto factory that makes coatings for pipelines. Refusing to be distracted by howls of protest from environmental groups, Oliver declared that the Canadian government "is focused on jobs, growth and long-term prosperity. The emerging economies in Asia and around the world provide the potential to create even more jobs and growth, now and for the next generation."

©Copyright 2012 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus