Kitimat LNG plant takes step forward
Scott Simpson
Vancouver Sun
10-Jun-2005
A Calgary company's plan to build a $500-million liquid natural gas plant near Kitimat took a major step forward on Thursday, with an announcement that the project is now in the hands of British Columbia's environmental assessment office.
Kitimat LNG Ltd. is proposing to construct a deepsea receiving terminal for liquid natural gas (LNG) 18 kilometres south of Kitimat in Elmsley Cove.
The plant's owners foresee bringing in liquefied gas from suppliers in a maritime region known as the Pacific Basin, and "re-gasify" it in tanks at the Elmsley Cove terminal before piping it to local industries and on into the Western North American gas pipeline network.
The site is about 12 kilometres from a Pacific Northern Gas pipeline.
"There's the local market, a regional market, and then there's the greater British Columbia market," said Kitimat LNG president Rosemary Boulton in a telephone interview from Calgary.
"Some of the gas has the opportunity to move into the Pacific Northwest of the U.S. and on down into California -- or it can flow east into Alberta."
Sending gas to energy-rich Alberta isn't as implausible as it sounds -- Boulton noted that the province's oil sands project requires vast amount of natural gas to serve as fuel during processing.
Kitimat has three major industries, Alcan, Methanex and Eurocan, each of which could emerge as major customers for gas from plant -- although Methanex recently said the future of its plant is uncertain due to rising North American gas prices.
Boulton estimates the project would employ 700 people during construction, leading to 50 permanent full time jobs when the project is operational.
The privately owned company, an offshoot of Calgary's Galveston Energy, hopes to be in business by 2008. It secured an initial $50 million in financing in January 2005.
LNG is a comparatively rare commodity in North America, but there are about 35 proposed projects on the books in Canada, Mexico, and particularly the U.S., and it's expected that the continent will derive 20 per cent of its gas from liquefied imports by 2020.
Improvements in LNG transportation and handling methods have slashed costs by half since 1989, making it an economically viable participant in the North American market.
"Ultimately we'd like to source gas from the Sakhalin Island project which is just north of Japan, in close to Russia. That's the shortest supply destination for us," Boulton said.
"The project economics are making sense."
She added that there are "lots" of LNG projects coming on in the Pacific Basin in the 2008-2010 time frame "so it would certainly fit in well with our supply portfolio."
The B.C. Environmental Assessment Office will now undertake a 180-day review of the proposal, which has support from the community of Kitimat and unanimous support of city council.
The company also began consulting the Haisla First Nation since May 2004 when it declared an interest in the project.
"I guess the only thing that may throw a wrench into the gears is if the environmental assessment process doesn't finish in a timely fashion," said Kitimat Mayor Rick Wozney.
Kitimat LNG Project site at the Environmental Assessment Office
Posted by Arthur Caldicott on 10 Jun 2005