Kitsault formalizes LNG export plans

Gary Park

For Petroleum News

Plans by a Canadian entrepreneur to turn a British Columbia mining ghost town into a hub for LNG exports and a possible oil refinery have taken a big stride forward, along with some innovative twists in the LNG sector.

Vancouver-based Kitsault Energy has formally entered the regulatory sphere by applying to Canada’s National Energy Board for approval to export up to 20 million metric tons a year of LNG, equivalent to 960 billion cubic feet per year of gas supplies from the Western Canada Sedimentary Basin, WCSB.

The initial proposal involves the use of floating LNG liquefaction facilities, FLNG, constructed in modules with annual capacity of 4 million to 5 million metric tons per year each. The first unit is scheduled to come on stream in 2018.

Kitsault is wholly owned by Krish Suthanthiran, who has invested in medical research, commercial real estate and energy companies since immigrating to Canada from India 45 years ago.

Although the driving force behind the scheme, Suthanthiran has outlined ideas that see Kitsault using several models for exporting, including a tolling strategy or one where project partners will own their gas supplies and contracts and be responsible for sales and delivery.

The NEB application said the company may or may not be involved directly in the purchase and sale of gas used in LNG exports.

The company also said it is forming partnerships and commercial arrangements for access to LNG markets that position it to source gas in the WCSB.

A terminal would be located at the former town site at Kitsault, where a molybdenum mine was abandoned in 1982, but which still has infrastructure for a population of 1,200, including 90 occupant-ready family homes and 150 two- and three-bedroom condominium units.

The site is at the head of a 30-mile long ocean arm and is 85 miles north of Prince Rupert, where six LNG proponents are evaluating plans for liquefaction plants and tanker terminals.

So far, the NEB has issued seven permits totaling about 92 million metric tons per year for LNG exports from British Columbia and is processing three applications for another 64 million metric tons per year, while four more proponents are conducting feasibility studies.

Kitsault said gas supplies will be transported to the LNG terminal by a 400-mile pipeline to be permitted, built and operated by an unidentified third-party pipeline company.

Each FLNG unit and subsequent liquefaction trains are expected to need 200 megawatts of power delivered to the project by a government-owned BC Hydro transmission line.

The company said gas sources will be owned by “the project, project partners or others accessing the LNG terminal on a tolling basis.”