Canadian political leaders are refusing to let project delays and shaky markets lower high expectations for rapid development of liquefied natural gas (LNG) exports from unconventional drilling in northern British Columbia (BC).

Gestures by provincial and federal cabinet ministers expressed the optimism after BC LNG Export Cooperative last week disclosed a two-year postponement, until mid-2015, of its plan to be the first to load gas tankers for voyages to Asia from new terminals proposed on BC’s northern Pacific coast at Kitimat and Prince Rupert.

BC LNG, also known as the Douglass Channel LNG Project, is the smallest entrant in the race to move gas from BC’s coast. The partnership of Kitimat’s aboriginal Haisla Nation and LNG Partners LLC of Houston had set 1Q2013 as a target startup date after gaining approval from the National Energy Board (NEB) for a 20-year export license (see NGI, Feb. 6, 2012).

In addition to postponing its startup date, the company has lowered its first-year delivery target to 700,000 metric tons, about 25% or less the size of other BC export projects that are backed by U.S., European and Asian oil, gas and tanker shipping conglomerates. BC LNG has secured agreements to add two potential participants to the project: Golar LNG Ltd. and TMV Corp.’s Tenaska Marketing Canada

Golar, a Bermuda-based tanker firm, has “purchase and off-take” arrangements, and BC LNG agreed to take on responsibility for feed gas supply. Tenaska entered the picture by agreeing to work with BC LNG to obtain supplies. Golar said “participation in the project and its commitment to the LNG off-take remains subject to the company reaching agreement with…Douglass Channel” for financing and permit approvals so that the project may proceed on a “firm basis.”

Golar is also a candidate to provide the proposed Kitimat terminal with a floating system, rather than building a plant on land. Golar last November agreed with Keppel Shipyard Ltd. to build the first in a planned fleet of floating LNG vessels capable of pumping out up to 2 million metric tons/year for loading onto outbound long-distance tankers. It already operates three floating storage and regasification vessels for accepting inbound tanker deliveries and converting their cargos into pipeline shipments to gas users.

The projects, said Golar, are aimed at taking advantage of an emerging niche in the global LNG trade for alternative terminals that cut costs and reduce environmental issues compared to new sites on land.

In Dawson Creek, starting point for the Alaska Highway and gateway to the northern gas region, grants of US$200,000 were announced for this year to a Farmers Advocacy Office, to cover costs of its assignment to maintain peace between homesteaders and industry as unconventional drilling using hydraulic fracturing (fracking) spreads. The idea behind the office, which opened as a pilot project in 2010, is to prevent Canadian counterparts to the fear, loathing, environmental science duels and protest lawsuits that drilling and fracking technology ignited across the United States.

“A major commitment of our BC natural gas strategy is to work with communities and stakeholders to develop a made-in-BC approach to local engagement…so job-supporting work can move forward and northeast BC can continue to prosper,” said BC Energy Minister Rich Coleman of the grant.

Northern civic leaders echoed the provincial minister’s hopes. At the Peace River Regional District, a Dawson Creek coalition of northern BC municipal authorities, chair Karen Goodings called the government-supported advocacy office “key to keeping respect between the oil and gas industry and landowners.”

Coleman has also let the industry and financial markets know that the provincial Liberal administration accepts international investment in the province, emphasizing the open-door attitude when NEB approved separate merger plans of Progress Energy by Malaysia’s Petronas, and Nexen Inc. by Beijing’s China National Offshore Oil Co. (see NGI, Dec. 17, 2012).

The approvals were offset by new federal restrictions against foreign takeovers of corporations with Alberta oilsands operations, but no fences were erected around BC shale gas.

“We support the direction the federal government has taken with respect to CNOOC and Petronas’ bids to invest in British Columbia,” said Coleman. “This is another positive step in the development of BC’s LNG industry and will allow for major LNG investments in the province.”

In Vancouver, BC, Canada’s Aboriginal Affairs and Northern Development Minister John Duncan said regulatory formalities had been completed to enable the KM LNG, a partnership of Chevron Canada Ltd. and Apache Canada Ltd., to build a proposed terminal on reserve land leased from the Kitimat native community, Haisla Nation.

Duncan also announced an agreement to turn administrative, environmental monitoring and regulatory compliance activities for the proposed KM LNG terminal to provincial government experts.

The BC attitude is not expected to change even if current political polls are right and the partisan stripe of the government is poised to change in a provincial election scheduled for this spring.

Although the ruling Liberals and rising New Democratic Party have been competing with each other to show the greenest opposition against new pipelines to proposed tanker terminals for Alberta oilsands exports on the BC coast, neither contender to form the next government has cast environmental doubts on the outlook for LNG or shale gas projects.

The BC attitude will be on display at an international conference on LNG that the BC government will stage Feb. 25-26 at the Vancouver Convention Centre. Coleman said the event for global investors and industry will include explanations of the supportive BC attitude by all concerned, from aboriginal participants in LNG projects to provincial and local authorities.

Energy specialists in the Toronto-based, international law firm of Blake Cassells & Graydon LLP draw a sharp contrast between the Canadian fossil fuel industry’s main development fronts — oilsands and LNG — in a 2013 outlook briefing.

“Amid the debate over oil pipelines throughout North America, there has been little public backlash against and significant support from government and aboriginal groups for the development of LNG facilities at Prince Rupert and Kitimat,” said the firm. For the oilsands, and especially pipeline projects to widen American markets and open up new Asian outlets, “the regulatory review and approval process, which has become increasingly politicized both in Canada and the U.S., will continue to challenge firms.”

©Copyright 2013Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.