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Comprehensive Environmental Study Planned for Canadian Keltic LNG Project

Canada's federal government angered some environmental groups last week by ordering an environmental study rather than a review panel for the liquefied natural gas (LNG) import terminal proposed by Keltic Petrochemicals in northeastern Nova Scotia.

The study process does not include public hearings, and representatives of the Sierra Club of Canada said that's the main reason companies have had more success siting LNG terminals in Atlantic Canada rather than the northeastern United States. The two other LNG terminals that have been approved in Canada, Irving Oil's Canaport project in St. John, NB, and Anadarko's Bear Head terminal on Cape Breton Island, NS, also went through similar or even less stringent reviews.

The Keltic terminal is one part of a massive $5 billion integrated energy project that also would include a petrochemical complex and gas-fired cogeneration power plant in Goldboro, NS, adjacent to the Sable gas processing and treating plant, where natural gas and liquids arrive onshore from the Sable Offshore Energy Project.

Canadian Environment Minister Stephane Dion said the comprehensive study process chosen for Keltic would "address the specific concerns raised by the public, business groups and local government regarding shipping, and safety in the area of the proposed project." A spokesman for the Canadian Environmental Assessment Agency said although there are no public hearings in the study process, there are three opportunities for the public to comment on the environmental aspects of the project. He said the average length of time for a comprehensive study is about one year.

The minister based his decision on the report and recommendations submitted by Transport Canada (TC) and Fisheries and Oceans Canada (DFO). In the 36-page report, the two government departments listed 25 possible negative environmental effects, including disturbing gold mine tailings, air pollution, disturbing the habitat of the roseate tern and adverse effects on fish habitat.

The Sierra Club said the project should have to go through a full-panel review, in which public hearings determine the scope of the environmental assessment required and then determine whether the assessment is adequate before rendering a final decision. The Sierra Club said the Goldboro project could threaten sensitive marine life and poses a safety risk to the community.

TC and DFO will continue their respective comprehensive studies and submit final reports to the environment minister. At that time, the public will have an opportunity to provide comments on the findings and recommendations of each report before the environment minister renders a final decision.

TC's environmental assessment will include the construction, operation, maintenance, modification and decommissioning of the LNG terminal, marine transfer pipelines, LNG storage tanks, marginal wharf and the re-gasification plant. It also will include any temporary marine facilities and structures and equipment that are connected with the movement of goods between ships and shore and shipping within 25 kilometers of Country Island. DFO's environmental assessment will focus on the construction and operation of the marginal wharf, which does not include shipping, but does include docking and deberthing of vessels.

Keltic's project includes petrochemical plants, a marginal wharf, three LNG storage facilities with a gross capacity of 160,000 cubic meters each, regasification facilities with sendout capacity of 1 Bcf/d, and a cogeneration facility. The proposal also includes construction of a highway between the development site and Antigonish. The project is expected to be in service in 2009.

Last month Keltic signed an agreement with The Netherlands-based Petroplus International BV for management and operation of the proposed import terminal, including LNG supply procurement. The two companies announced the signing of a memorandum of understanding to advance development of the project, which has been under consideration for five years.

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