B.C. bands show signs of LNG peace over pipe
We have actually identified ... significant cost reductions
The road to starting a liquefied natural gas industry in British Columbia has been long and fraught with U-turns, but TransCanada Corp. says there is room for optimism after it won significant aboriginal support for two massive gas pipelines.
The Calgary-based company has been quietly working on the two proposals, known as Prince Rupert Gas Transmission (PRGT) and Coastal GasLink Pipeline, for about two years to to link rich gas fields in northeast B.C. to proposed liquefaction projects on the coast.
The first, a 900-kilometre line that would cost more than $5 billion, would wind through the northern part of the province and feed two to 3.6 billion cubic feet of natural gas a day to the Petronas-led Pacific NorthWest LNG project in Lelu Island near Prince Rupert.
The second, a 750-kilometre pipeline that would cost $6 billion and would be sited further south, would ship a similar amount into the Royal Dutch Shell PLC-led LNG Canada project in Kitimat. The two LNG projects have exclusive use of the pipelines.
Their cost and complexity are similar to the stalled Northern Gateway bitumen pipeline proposed by Enbridge Inc., and the TransMountain bitumen pipeline expansion proposed by Kinder Morgan that is being reviewed by regulators. Both are struggling with aboriginal push-back.
“I think we will get the vast majority of the nations to support the projects,” Alex Pourbaix, TransCanada’s president of development, said in an interview Thursday. Each line crosses the traditional lands of 19 First Nations.
The company got there by raising the bar on aboriginal consultation and accommodation — billions in business opportunities, hundreds of millions in ‘value-sharing’ payments, a whopping 1,600 meetings so far to explain its plans — such as showing how a pipe is laid or how water crossings are protected.
The first and most important step is winning trust, said Dean Patry, president of PRGT.
“We had success by illustrating that you don’t have to choose between your salmon, or your hunting and fishing, or your land, and the project,” he said. “We strive to demonstrate that you can have both.”
Wilf Adam, chief of the Lake Babine Nation whose traditional territory straddles 20 per cent of the PRGT right of way, got behind the PRGT project to ensure his band would have a say over its impact on the environment, and particularly the fish his community depends on.
“We looked at it very carefully,” he said. “We studied it, we talked with our experts, and the conclusion we came up with is that if we sit on the side, they will build a pipeline, and we will have no involvement in it. We needed to be part of it so that we put in the safeguard for the environment and for where the pipeline should go and where it shouldn’t go.”
While opposed to Northern Gateway, the 2,500-member band is comfortable with gas because if the pipeline ruptures, it evaporates, he said. The band has locked up at least $100 million in benefits over 40 years. Agreements in support of PRGT have also been signed with the Gitanyow, Kitselas, Doig River, Halfway River, Yekooche and Nisga’a Lisims First Nations. Similar agreements have been signed in support of the Coastal line, but they have not yet been announced.
TransCanada believes the aboriginal progress bolsters the two LNG projects.
They have yet to announce final investment decisions, but Pourbaix believes they’re on their way.
“From everything we have seen, this remains a compelling economic opportunity for these developers, that is what they tell us,” he said. “They are collectively spending very, very significant amounts of money advancing these projects.”
The Petronas project was hurt last month by a decision by the Lax Kw’alaams First Nation near Prince Rupert to reject a $1.14 billion in benefits over 40 years.
The Shell project could be reassessed in light of the oil major’s takeover of BP Group PLC, which was planning a competing plant.
Meanwhile, declining LNG prices in Asia are raising questions about whether Canada’s West Coast LNG is too far behind in an already-crowded field of up-and-coming suppliers.
But Patry said the Petronas and Shell projects are more advanced than the 20-or-so proposed in B.C., are proposed by multinationals used to commodity price cycles and that are keen to take advantage of cost savings for labour, services and equipment offered as a result of the downturn in oil and gas prices.
“There is a silver lining in the pressure that the oil and gas sector is under,” Patry said. “Whereas a year ago, the chief concern you had was managing the supply chain and managing the cost, we have actually identified and captured significant cost reductions on our pipeline projects.”
If the Pacific Northwest project announces an investment decision in the coming months, Pourbaix said construction of the associated pipeline would start in the fall.
That would make it the first new energy pipeline through British Columbia to finally take off. It’s a big if, but wouldn’t that be something.