Providing coverage of Alaska and northern Canada's oil and gas industry
August 2007

Vol. 12, No. 32 Week of August 12, 2007

B.C. LNG plant on the move

Hit by cost inflation, WestPac relocates closer to major markets, but encounters early environmental opposition; argues the benefits new site

Gary Park

For Petroleum News

Privately held WestPac LNG has derailed plans for an LNG terminal on the northern British Columbia coast, citing runaway construction costs as one of its reasons, and proposed a more ambitious undertaking closer to major markets.

It now plans to build a C$2 billion LNG import terminal and 600-megawatt gas-fired power plant for the northern tip of Texada Island, which lies in Georgia Strait between Vancouver Island and the B.C. mainland.

WestPac President Mark Butler told a news conference July 31 that projected costs of his company’s original plan for a terminal on Ridley Island near Prince Rupert have soared to more than C$1 billion from C$300 million, largely because of a surge in nickel and stainless steel prices.

“It became increasingly apparent that the escalating cost of materials would make it imprudent to continue with that development model,” he said.

Butler said combining both an LNG receipt terminal and power facility offers greater benefits to B.C. residents, by offering a “stable, secure” supply of gas to users on Vancouver Island and the Greater Vancouver region, giving them access to a clean-burning fuel option for vehicle fleets and boosting B.C.’s hopes of achieving energy self-sufficiency by 2016.

By optimizing the use of a Terasen gas pipeline on Texada, the cost of gas to residents could also be reduced, he said.

Environmental assessment by fall of ‘09

WestPac estimated an environmental assessment for the project should be completed by fall 2009, following by three years of construction, with the facility coming into service in 2013.

That would be two years later that the timetable for the Ridley Island terminal, which was designed to open a regasification facility for 500 million cubic feet per day in early 2011.

Butler said Ridley Island could yet serve as a satellite LNG terminal.

As with the original plan, WestPac hopes to import LNG from Asia and the Middle East.

Butler said LNG tankers would arrive at Texada every seven to 10 days, adding only 1 percent to annual traffic at the busiest point in Georgia Strait.

The company said 33,000 ship cargoes of LNG have been safely transported around the world without serious incident, with LNG carriers entering Tokyo harbor every 20 hours.

Environmentalist calls proposal ‘high risk’

But environmentalists wasted no time raising their concerns.

Jay Ritchlin, a marine conservation specialist with the David Suzuki Foundation said the plan is “high risk” for the environment and the local community.

Brushing off WestPac’s assessment of the impact on Georgia Strait marine traffic of LNG tankers, he said LNG vessels are a “massive security concern.” If an LNG tanker were to ignite there would be a “massive explosion,” Ritchlin said.

Karen Campbell, with the Pembina Institute, said the ecological value of the Sunshine Coast and Gulf Islands should not be put at risk, while Oonagh O’Connor with Living Oceans Society doubted the shipping channel could accommodate the two-mile buffer zones some regulators require for LNG tankers.

Meanwhile, Kitimat LNG is pushing ahead with its plans for a deepwater LNG terminal at Kitimat, near Prince Rupert.

It has received key federal and provincial approvals and is the only LNG terminal on the West Coast of the United States and Canada that is fully permitted.

That project currently carries a C$500 million price tag and expects to start processing 600 million cubic feet per day in 2009. It has access to pipelines serving B.C., Alberta, the U.S. Pacific Northwest and California. l

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