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BC's LNG Plans Advance Painted Pony Petroleum Deal

A plan to make a realistically modest start on international exports of liquefied natural gas (LNG) from British Columbia (BC) took a step forward Monday when Painted Pony Petroleum Ltd., a Calgary-based BC shale gas developer, secured a path onto the lone pipeline currently available to the province's northern Pacific ports.

The producer signed long-term contracts with Spectra Energy Transmission (Westcoast) for delivery of 220 MMcf/d. The service reaches entry points to Pacific Northern Gas (PNG) and Nova Gas Transmission Ltd. (NGTL).

The NGTL link provides a route to markets across Canada and the United States. But feasibility work is under way on twinning PNG, which is currently a utility line serving about 40,000 customers in the Kitimat and Prince Rupert regions. The schedule calls for a construction decision as early as late 2015.

Painted Pony predicted its gas could begin voyaging overseas as of 2018, via PNG and the Douglas Channel LNG export terminal proposed by Altagas Ltd., Idemitsu Kosan Co. of Japan, EDF Trading Ltd. of Britain and Exmar NV of Belgium. PNG is a subsidiary of Altagas, a Calgary-based specialist in processing and transmission.

Douglas Channel is the smallest BC terminal project. The scheme has a long-term export license for up to 250 MMcf/d from the National Energy Board (NEB). The design calls for a low-cost floating plant on a barge to be moored at a site already leased from the Haisla aboriginal community in Kitimat.

In a statement announcing the Spectra (Westcoast) deal, Painted Pony said it is "confident a strong demand for LNG exports will develop for British Columbia gas producers. This contract provides a mechanism for transportation into LNG export schemes."

Idemitsu, Japan’s second-largest petroleum firm, has described Douglas Channel as a model of scalable development that starts small to keep costs reasonable and has built-in ability to grow at a market-driven pace.

Work also continues on the biggest entries in the 18-entry west coast LNG export project lineup, with sponsors announcing every advance for them as elements in a highly politicized economic development strategy avidly supported by BC's Liberal provincial government.

TransCanada Corp. announced "positive" benefits agreements by its C$4.8 billion (US$3.8 billion) Coastal GasLink pipeline project with six aboriginal communities on its proposed route across 670 kilometers (420 miles) of BC forests, mountains and muskeg swamps.

All six are inland groups in northern BC: Wet'suwet'en First Nation, Skin Tyee Nation, Nee-Tahi-Buhn Band, Yekooche First Nation, Doig River First Nation, and Halfway River First Nation. All also stand to gain from supply development that the proposed pipeline would foster.

The attitude of coastal native communities, which would not be enriched by drilling and production but only see pipeline and terminal activity, is not unanimous.

As TransCanada put finishing touches on its inland agreements, a Vancouver coalition of the Sliammon, Klahoose, Sts'ailes and Shíshálh Nations called for an overhaul of BC's LNG strategy to stiffen native consultation and environmental requirements.

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