Commercial support may emerge for a plan to revive a mining ghost town in northern British Columbia (BC) as another entry in the lineup of projects for exports of liquefied natural gas (LNG) from Canada’s Pacific coast. Meanwhile, the number seven is a symbol of fortune and intelligence in China, and that luck is being pressed by the Asian-owned Woodfibre LNG project, the seventh to emerge for Canada’s west coast.
After eight months of fishing for industry support, Kitsault Energy last Monday said it has a nibble in the form of a memorandum of understanding with an overseas enterprise willing to explore possibilities of the scheme. The identity of the tentative partner and the size of its potential share were not disclosed, apart from a statement that “an Asian oil and gas major” is interested. More partners will be sought, added the aspiring LNG export firm.
Kitsault, named after its early aboriginal inhabitants, is an historic silver and molybdenum mining hot spot at the head of a Pacific fiord, 35 kilometers (22 miles) from the southern border of the Alaska Panhandle and 850 kilometers (530 miles) north of Vancouver. Production ceased in 1982. Attempts to revive the 350-acre site have been under way since 2005, when it was bought for a reported C$5.7 million by an entrepreneur from India, Krishnan Suthanthiran, a Canadian citizen and founder of a health care supplies firm based in Springfield, VA, called Best Medical International.
Until he announced the LNG plan and said he was trawling for industry partners at a business conference in Ottawa last winter, work on reviving the mining ghost town concentrated on another imaginative proposal for an ecotourism resort and conference center named after his mother: Chandra Krishnan Kitsault, which means heaven on earth.
His LNG idea calls for a northern BC coast energy megaport to be built in stages, with investment eventually reaching up to C$30 billion in floating and land-based processing and terminal facilities plus an array of associated facilities. The tentative schedule calls for initial output as early as 2017. No regulatory applications have been filed yet with Canadian federal or provincial authorities.
The second LNG project that made the news last week was Woodfibre, proposed by Pacific Oil & Gas Ltd., a Singapore arm of Indonesian paper, palm oil, construction and energy conglomerate Royal Golden Eagle International. While the first six BC LNG terminal schemes settled for remote sites at the northern industrial ports of Kitimat and Prince Rupert, Pacific chose a prominent spot in the most populated and affluent southwest region of the Canadian province (see NGI, July 15).
Woodfibre was named after its location at a closed lumber mill now undergoing environmental reclamation, midway along a heavily traveled scenic route celebrated as the Sea to Sky Highway. The planned terminal, at the head of a fjord-like yachting playground known as Howe Sound, is just 50 kilometers (30 miles) away from Vancouver and 60 kilometers from the mountain resort town of Whistler, site of the 2010 Winter Olympic Games.
The tanker route to the LNG loading dock passes between spots treasured as local jewels in southern BC: Horseshoe Bay, a ferry terminal in one of Canada’s wealthiest neighborhoods, and the Sunshine Coast, a cluster of growing artist and retirement colonies. Pacific has an agreement to buy the site for C$25.5 million from Western Forest Products Inc., which ran a pulp mill on the 212-acre lot for 94 years before operations shut down in 2006.
Unlike mammoth proposals for Kitimat and Prince Rupert terminals, Pacific’s current export license request to the National Energy Board (NEB) calls for a modest initial introduction of Canadian gas into the global LNG trade. The application seeks a 25-year permit to export 2.6 Tcf of gas, or 105 Bcf/d at a daily rate of 300 MMcf, beginning between 2017 and 2021.
The modest size of the scheme would hold down the number of tanker return trips through Howe Sound to a maximum of four per month, Pacific says. The company adds that it expects thorough federal and provincial environmental reviews of the terminal proposal and allied pipeline additions under discussion with FortisBC Energy (Vancouver Island) Inc. and Spectra Energy (Westcoast).
In a letter sent to Pacific, the NEB confirmed that Canada’s seventh Pacific Coast project has a potentially long reprieve from the hardest part of current gas and oil traffic growth projects. A time-saver procedural change, enacted in 2012 in the name of preventing duplication of regulatory reviews, has permanently dropped environmental scrutiny from the issues list for export license cases, the NEB said.
Pacific is keeping all market options open, saying its Canadian gas can come from a full range of its own drilling, potential partners, and purchases from producers or dealers. Supply agreements have been reached with Tenaska Marketing Canada and EDF Trading North America. The same flexibility goes for overseas sales, where Pacific vows to target a wide range of marketers and consumers.
Although Woodfibre is the second-smallest entry in the LNG lineup before the NEB, the project has strong overseas connections and encourages high expectations for Canadian gas to grow into a mainstay of Asian markets. Pacific’s overseas operations include ownership interests in a Chinese LNG import terminal licensed for up to 1 Bcf/d, and two new gas-fired electricity generating stations under development in China for combined output of 2,340 MW. The projects are initial forays into “clean” power, replacing traditional reliance on coal, by partnerships between the company and Chinese national and state energy enterprises.
“Natural gas supply from Canada is highly attractive in the Pacific Rim markets,” says the company. “Canada is seen as a desirable source of natural gas supply because of its political and regulatory stability. Thus, the Pacific Rim represents a substantial market opportunity for Canadian producers.”
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