The issuance of a key permit required for the development of the LNG Canada project by Shell is an exciting development, as it moves the project one step closer to fruition.
The facility permit from the B.C. Oil and Gas Commission outlines the requirements for design, construction and operation of the proposed liquefied natural gas facility in Kitimat, B.C. While this alone does not guarantee the project will move forward, it is an indication that the proponents of the project still see benefits of establishing an LNG plant in B.C.
These benefits are considerable: the climate of B.C.'s north coast is colder and therefore requires less energy to liquefy natural gas than in other areas, such as the Gulf Coast; there are abundant gas fields relatively close to the plant; the north west coast of B.C. is considerably closer to many markets than competing jurisdictions; and B.C. has an abundant supply of engineers, planners and construction workers that are fully capable of building and operating a complex plant.
Given the economic doldrums facing other resource-based sectors in B.C. with the collapse of oil prices and the malaise in the minerals and metals markets, the B.C. engineering community recognizes the importance of projects such as LNG Canada moving forward. For many firms, the development of an LNG industry will buffer the impact that the downturn of the resource sector is having.
B.C. engineers bring their technical knowledge and commitment to public safety to every stage of the LNG process. Engineers and geoscientists provide expertise in identifying sources of natural gas and in ensuring that the extraction of the natural gas is done safely and in accordance with the latest standards. Engineers specializing in natural gas projects design and monitor the construction and on-going operations of the pipelines that take the gas from the fields to the plants.
The liquefaction plants that will take the temperature of the gas to negative 160 degrees Celsius will be in done in strict accordance with international engineering standards. Even the ancillary infrastructure surrounding these plants will be designed by engineers to standards that are among the best in the world.
Once the gas is ready to be shipped, it will be loaded onto a tanker in port facilities that will be designed by engineers experienced in marine terminal design. Tanker routing is subject to the Transport Canada TERMPOL Review Process, involving over 20 in-depth studies, including navigation and risk assessments. Engineers play an integral role in identifying risks and developing strategies to mitigate these risks.
The attention to these details is reflected in the fact that since 1964, one LNG tanker has entered Tokyo harbour every 18 hours, and there has not been a single incident involving a tanker in that harbour in more than 50 years.
There is no doubt that the scope of the LNG Canada project is enormous. The liquefaction plant will cost up to $40 billion and the costs of the pipelines and the extraction will cost billions more. Against this scenario we have seen the price of natural gas drop from just under $6 to under $2.50 per million British thermal units.
The important consideration is that these are projects with a lifecycle of over 50 years. The odds are that given the growth in the world economy over time -- and the increased demand from developing economies that require gas to not only power their growth, but also as a cleaner alternative to coal-power -- there will be growing demand for LNG, and the investment today will be seen as a shrewd move in the years to come.
Keith Sashaw is president and CEO of the Association of Consulting Engineering Companies British Columbia (ACEC-BC).
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LNG stands for "liquefied natural gas." Natural gas gets chilled to -160 degrees Celsius so that it can be converted into liquid form. After it has been liquefied and compressed, it takes up much less space — about 1/600th less than natural gas. (Pictured: B.C. Premier Christy Clark speaking after an event for FortisBC's Tilbury LNG facility expansion project in Delta, B.C., on October 21, 2014.)
LNG is odourless, non-toxic, non-corrosive, and less dense than water. It is a by-product of decaying organic matter in rock layers formed below the earth’s surface millions of years ago. As the matter decays, the gas is trapped or isolated in the rock formations, which prevent it from surfacing.
Natural gas is a cleaner fossil fuel than coal, but carbon is still emitted when natural gas is burned, according to the Union of Concerned Scientists.
As of December 15, 2014, the provincial government had 21 proposed LNG projects lined up, mostly in Northern B.C. or along the south coast and on Vancouver Island.
Outlined in the LNG Strategy One Year Update, released in 2013, the provincial government has three key priorities to achieve the goal of three LNG facilities by 2020: Keep B.C. competitive in the global LNG market, maintain B.C.’s leadership on climate change and clean energy, and keep energy rates affordable for families, communities, and industry.
The province wants to use the estimated revenue (about $100 billion) from LNG projects to diminish provincial debt, reduce cost burdens for families and local communities, and support services such as education. Premier Christy Clark (pictured) said last year British Columbians would begin seeing revenue from LNG in 2017.
Groups opposing LNG development in B.C. cite risks for fire, low demand for imported LNG, and greenhouse gas concerns, according to non-profit organization Dogwood Initiative.
Environment Minister Mary Polak (pictured) brought in legislation requiring LNG to meet emission standards in October 2014 in order to make the industry much cleaner. Otherwise, corporations could face penalties. The target for greenhouse gas emissions is set at one-third below 2007 levels by the year 2020.
A factsheet by the B.C. government suggests the vast majority of run-off from rivers is untouched by industries. However, four Skeena River First Nations near Prince Rupert oppose the Petronas LNG project due to fears of what it could do to the salmon habitat, CBC News reported. (Pictured: Skeena River)
Premier Christy Clark said that B.C.’s natural gas supply is estimated at over 2,933 trillion cubic feet. With industry extracting about four trillion cubic feet of natural gas each year, that means B.C. has over 150 years of natural gas in supply, CTV News reported.
Malaysian energy giant Petronas delayed construction of an LNG terminal in Prince Rupert in December 2014, saying conditions weren't right to follow through with the project at the time. The $36-billion dollar deal would bring LNG across the Pacific in tankers to the Asian market. (Pictured: Petronas towers in Malaysia)
The provincial government signed an economic partnership agreement with two First Nations along the planned pipeline route for Kitimat LNG last April. Haisla Nation Chief Ellis Ross held a summit to address the job possibilities LNG developments near Kitimat would bring, and voiced his hopes that people from the area would be the first ones considered for these jobs. (Pictured: Kitimat)
In December 2014, Premier Christy Clark denied the NDP’s claims that she was planning on hiring temporary foreign workers to build LNG plants. “We believe that British Columbians have to be first in line for these jobs, but it's also true that there will be some need for some temporary workers to come in and support these projects when there are peaks in production and construction because we simply don't have enough people," she said. (Pictured: Clark tours FortisBC's existing Tilbury LNG facility before the groundbreaking for an expansion project in Delta, B.C., on October 21, 2014.)
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