LNG

Keynote speakers at the first Gastech Virtual Summit, including Ministers from Singapore and Canada and the head of Integrated Gas at Royal Dutch Shell, have voiced optimism about the future of LNG and natural gas and their managed role in the energy transition.

TC Energy will close the sale of a majority stake in the Coastal GasLink Pipeline to two equity funds by June and will also offer 20 Canadian First Nations a 10 percent share of the project to bring feed-gas for LNG processing on the Pacific Coast of British Columbia.

TC Energy, the Canadian pipeline company building feed-gas links to LNG projects in North America, is planning huge investments to transport more Appalachian shale gas and constructing the Coastal Gaslink in British Colombia as well as the natural gas “infrastructure backbone” of Mexico.

Chevron Corp. has revived its almost dormant Canadian Kitimat liquefied national gas project originally proposed with Apache Corp. for Bish Cove in British Canada by applying to regulators for export capacity of up to 18 million tonnes per annum.

Chevron, the operator of two LNG export plants in Western Australia, now has Australian company Woodside Petroleum as its partner after Woodside purchased assets from Apache in 2014, including stakes in Wheatstone LNG in Australia and the Kitimat venture in BC.

“Chevron and Woodside have applied for a new licence for their Kitimat LNG plant in northern British Columbia that could see it nearly double in size,” said Chevron.

The companies have submitted the application to Canada’s National Energy Board with a revised plant design that may include up to three LNG processing Trains instead of two.

“Chevron and Woodside have re-evaluated the originally proposed two-Train, 10 MPTA LNG plant development concept, with a focus on improving Kitimat LNG cost of supply competitiveness relative to other global LNG projects,” Chevron said in a statement.

The re-launching of the Bish Cove project follows a final investment decision made in October 2018 by the Royal Dutch Shell-led LNG Canada joint venture.

Both plant sites are almost adjacent and are located about 650 kilometres north of the province’s largest city, Vancouver.

Shell and its Asian partners, including PetroChina, Petronas of Malaysia, Japan's Mitsubishi and Korea Gas corp. have started work at the brownfield site, also near Kitimat, and which had been an energy products terminal before being acquired by Shell in 2011 when the Chevron project was already progressing nearby.

The Shell project includes a US$5-billion pipeline of 670 kilometres being developed by TransCanada Corp. to bring the feed-gas from the Montney shale basin in northeast BC to the Pacific Coast.

Shell will initially produce 14 MTPA of LNG and has an option to increase its capacity to 28 MTPA.

Feed-gas for Chevron’s Kitimat plant will come from the large upstream shale-gas resources in the 322,000 net acres it has in the Horn River and Liard Basins of northeast BC.

Chevron will then transport the gas on the proposed Pacific Trail Pipeline to the site at Bish Cove.

The US major noted that its Kitimat LNG project was the most mature of the proposed Canadian LNG ventures and it also has an established partnership with the Haisla First Nation who live in the Kitimat area.

“We have key federal and provincial environmental approvals and licenses in place and substantial early work on the LNG site and pipeline route is underway,” said Chevron.

Chevron has a 50-50 partnership with Woodside in the Kitimat venture, though they have yet to disclosed cost estimates or investment and construction schedules.

The Kitimat joint venture said in March 2018 that it had been drilling some appraisal wells in the Liard Basin, though there has been little progress over several years on the plant development front.

However, some environmental and LNG export permits and First Nations benefits agreements are still in place for the liquefaction plant.

The Canadian Pacific Coast province of British Columbia, once briefly known as the North American centre of liquefied natural gas export development, plans to introduce new legislation on tax credits for LNG ventures to re-launch BC as a potential provider of clean fuel for Asia.

BC provincial Finance Minister Carole James said the proposed changes would bring thousands of jobs to the region and boost the economic prospects for the population.

“British Columbians are counting on us to attract LNG investment that meets strict conditions: delivering jobs and financial benefits to BC, creating economic partnerships with Indigenous peoples and protecting our clean air, land and water,” said James in a statement.

“This legislation completes the process of creating a fiscal framework that invites investment while supporting those conditions,” added James.

The province previously had at least a dozen large-scale projects backed by the world’s leading energy companies then policies pushed by the federal government in Ottawa since 2015 made projects uneconomic and coincided with an oil price slump.

The one surviving large-scale venture in the province is the Royal Dutch Shell-led LNG Canada, which has become the largest private sector investment in Canada's history with planned spending of C$40 billion (US$30.2Bln).

Shell and its four partners, Mitsubishi Corp. of Japan, Malaysian energy company Petronas, Chinese major PetroChina and Korea Gas Corp., agreed in October 2018 to start immediate construction at the brownfield site near Kitimat that had been an energy products terminal before being acquired by Shell in 2011.

Shell is pressing ahead while recognizing that it was likely not possible to get unanimous support for a major infrastructure venture project in BC.

The project includes a US$5-billion pipeline of 670 kilometres being developed by TransCanada Corp. to bring the feed-gas from the Montney shale basin in northeast BC to the Pacific Coast.

Supporters of LNG projects and the jobs they bring believe the opening up of the abundant shale-gas basins will give scope for other ventures to be developed on the BC coast.

The tax measures could particularly help smaller scale LNG export ventures previously proposed by First Nation groups to give their people jobs and security stretching 30 to 50 years into the future.

The Finance Minister said the BC legislation brings together the final fiscal elements of the policy framework for natural gas development set out by provincial Premier John Horgan a year ago.

The provincial government said it was already offering LNG developers performance payment agreements and industrial electricity rates on par with other industrial users in BC.

The legislation proposes to amend the Income Tax Act to implement a natural gas tax credit for LNG development in BC and to repeal the Liquefied Natural Gas Income Tax Act that created barriers for investment in the energy sector.

The tax credit will be available from 2020 and can be used to reduce BC’s corporate income tax rate from 12 percent to 9 percent.

“The legislation will repeal the Liquefied Natural Gas Project Agreements Act that left British Columbians vulnerable to footing the bill for special industry tax and regulatory protections,” stated James.

“Once complete, these steps will deliver the fiscal setting needed for LNG Canada’s proposed $40-billion project in northern British Columbia, expected to create 10,000 construction jobs and up to 950 permanent jobs in the Kitimat processing terminal,” said James.

“Additionally, this project is also on track to be the cleanest of its kind in the world, meaning it will fit within the greenhouse gas (GHG) reduction targets of government’s CleanBC climate action plan,” stated the minister.

“Our government’s vision is to make life better for British Columbians in all regions of our province,” said James.

“Along with providing services people need, like affordable child care and interest-free student loans, that also means delivering new jobs and opportunities through resource development that is environmentally responsible,” added James.

The province’s Green Party Leader Andrew Weaver said he believed the new legislation sent mixed messages about the government's commitment to addressing climate change.

“Continuing to push for LNG development is short-sighted and works directly against CleanBC objectives,” said Weaver.

He described the decision as “a generational sell-out” that would only serve to increase greenhouse-gas emissions. 

Pieridae Energy, the Canadian exploration and production company and developer of the Goldboro LNG export project in Nova Scotia with German-backed funding and sales accords, has signed a benefits agreement with First Nation people in the Atlantic coast province.

Pieridae said the agreement was negotiated with the Assembly of Nova Scotia Mi’kmaq Chiefs and has now been ratified.

Energy projects such as pipelines and industrial or energy plants are obliged under Canadian laws to recognise the land rights of Aboriginals in Canada who have spent decades establishing treaty commitments and seeking implementation of their rights.

“This benefits agreement establishes the framework under which the Mi’kmaq of Nova Scotia will benefit economically from the development, construction and operation of the Goldboro LNG Project,” said Pieridae.

The Calgary-based company, headed by Chief Executive Alfred Sorensen, is on the venture list of the Toronto Stock Exchange for small commodities companies.

Pieridae said a memorandum of understanding signed in 2013 originally outlined the relationship between Pieridae and the Mi’kmaq in Nova Scotia and the deal “underscores Pieridae’s commitment to ongoing engagement and relationship building” with the First Nations communities in Nova Scotia.

The Goldboro LNG project has been given the final go-ahead by the Nova Scotia Utility and Review Board after previously receiving its environmental approvals.

The final investment decision for the LNG venture is now expected by June 2019.

German utility Uniper is one of the Goldboro project’s customers and Pieridae has also received confirmation of eligibility in principle for up to US$1.5 billion of untied loan guarantees from the German federal government.

Pieridae proposes to produce 10 million tonnes per annum of LNG at the planned Nova Scotia plant.

The company has additionally signed a 20-year supply agreement with Uniper for 5 MTPA of its production and has embarked on a strategy of securing feed-gas resources for liquefaction.

In anticipation of the start of the design and construction process, Pieridae engaged Canadian consultants Hatch Ltd to act as its engineering adviser and the First Nations agreement was one of the last major issues outstanding.

“Nova Scotia is unceded Mi’kmaq territory and the management of our lands and resources is a priority for our Nation,” said Chief Terrance Paul, Co-Chair for the Assembly of Nova Scotia Mi’kmaq Chiefs.

“As we look to ensure responsible development and environmental stewardship that reflect a Mi’kmaq voice, it’s important that we can bridge that gap with industry,” said the Chief.

“This agreement with Pieridae is an example of how companies can respect our Mi’kmaw Rights and Title, and also provide an opportunity for Mi’kmaq participation in development on our lands,” he added.