LNG Canada going ahead
KITIMAT — People in this North Coast town are looking forward eagerly to the boom that will come with construction of a $40-billion megaproject to export liquefied natural gas to Asia.
LNG Canada’s partners – Royal Dutch Shell Plc, Malaysia’s Petroliam Nasional Bhd, Mitsubishi Corp., PetroChina Co. and Korea Gas Corp. – have approved the final investment decision, people with direct knowledge of the plans told Bloomberg on Sunday on the condition they not be named. A formal announcement is expected this week.
PetroChina and Korea Gas announced approvals of their share of the investment on Friday. The other partners declined to comment on the Bloomberg report.
“I know it will bring a lot of change to the town,” said Chris Wang, who moved here from Ontario a year ago.
“I think it will be a good thing. Right now, a lot of the restaurants, when you go out on a Friday, Saturday night, will be pretty empty and quiet.”
At the site of the planned liquefaction plant just outside of town, work has already been underway for some time. Sunday, heavy equipment hauled, spread and compacted earth at a whirlwind pace. The site, large enough to hold a small town of its own, was encircled by hundreds of metres of orange, temporary fencing signed LNG Canada.
The first phase of the company’s twophase LNG facility is expected to take five to seven years to build, said Susannah Pierce, director of external relations for LNG Canada.
Residents in Kitimat say the peak 7,500 construction jobs and 800 operational jobs could transform lives and the community.
Gilbert Noseworthy, who was out buying groceries downtown, said he hadn’t yet heard the news that an investment decision was coming.
“I just arrived here from Edmonton. Actually, I was hoping to get work with LNG,” he said.
Noseworthy said he’d worked in the gas industry in Alberta for the last 25 years as a heavy hauler but had come out to Kitimat in search of new opportunities after that province experienced a downturn. So far, he has not found work.
Down the street from the grocery store is City Centre Mall, where several shops sit empty and sport vacancy signs on their windows. Shopkeepers inside the mall said a positive decision could help boost the local economy.
Wang said when the market in Kitimat recently began to rise he jumped in and bought a house. People have been saying prices could double when the new project really gets going, he said.
Wang said he had worked for a while in Calgary in the natural gas industry, but on the extraction side.
He now works at the Rio Tinto aluminum smelter, where in this town, “everyone has a connection to the plant.”
TransCanada has completed benefit agreements with all 20 elected First Nation bands along its Coastal GasLink pipeline route from Dawson Creek to Kitimat. The pipeline would feed the terminal.
First Nations have viewed the environmental dangers of gas, which evaporates during a spill, as less than that of an oil spill, particularly in the ocean or on inland waterways. The last First Nation to sign a benefit agreement was the Haisla Nation in Kitimat.
The Kitimat export terminal will be the closest North American LNG port to Asian markets. The shipping time to Tokyo is about eight days compared to 20 days from the U.S. Gulf.
LNG Canada proposes to eventually export as much as 26 million tons of gas per year. The investment approval is only for the initial two LNG liquefaction units, capable of 13 million tons a year. But the odds that LNG Canada will double capacity in a second phase “is all but an inevitability” because of the economies of scale, National Bank of Canada analysts said in a May report.
But the project is politically sensitive. LNG facilities could dramatically increase greenhouse gas emissions and further imperil B.C.’s pollution-reduction targets, which Green Leader Andrew Weaver has warned would cause him to end his support for the minority NDP government and potentially force an election.
Reports said the federal government agreed to waive import tariffs on steel plant modules built overseas that were estimated to add $1 billion to the cost of the project.
The go-ahead for LNG Canada could encourage other projects to follow suit, creating facilities needed to soak up Western Canada’s glut of natural gas, producers say.
The projects would eventually provide a market for gas companies that are now discouraged from increasing production by low prices linked to fierce U.S. competition and Canadian pipeline capacity shortfalls, said Steve Laut, executive vice-chairman of Canada’s largest natural gas producing company, Canadian Natural Resources Ltd. of Calgary.
“If you get one plant through, there will be a second and third plant that will follow much easier, and that makes a difference,” he said after participating in a recent panel discussion at the Global Business Forum in Banff, Alta.
“I think it gives confidence to the other proponents; they can see they can get through the process.”