Houston-based Spectra Energy has signed an agreement with BG Group to develop a new natural gas transportation system in northeast British Columbia to serve the United Kingdom company’s plans for an LNG export facility at Prince Rupert.
Designed to carry 4.2 billion cubic feet of gas per day, the pipeline will cost up to C$8 billion, according to Doug Bloom, president of Spectra Energy Transmission West.
The project will be jointly owned, with BG agreeing to contract for all of the proposed capacity.
The possible 48-inch diameter line will cover 510 miles from the gas field to BG`s proposed export terminal at Prince Rupert, the largest deepwater natural harbor in North America.
BG disclosed earlier this year it was assessing the feasibility of building the first LNG plant in the Prince Rupert area, although other proposals are in the works for the Kitimat port to the south.
For now BG is not willing to discuss its upstream options beyond saying that the gas for the potential LNG project would be sources from what is already and what will continue to be a very liquid market.
The company will not discuss whether it has any thoughts of buying an upstream company.
‘Warm reception’ from First NationsSpectra and BG expect to spend several years working with stakeholders and through the permitting process for the planned transportation system and are currently consulting with the British Columbia Environmental Assessment Office on the scope and issues it needs to address.
Spectra has also been in contact with key aboriginal communities along the planned pipeline route and reports a “warm reception and a lot of interest.”
That is in contrast with the wall of First Nations resistance to the Enbridge and Kinder Morgan plans to ship oil sands bitumen from Alberta to British Columbia ports.
Based on what it has learned so far, Spectra is indicating it hopes to start construction about 2015, targeting an in-service date towards 2020.
Bloom said his company expects there will be significant growth in drilling and production activity to fill the pipeline.
Spectra President and Chief Executive Officer Greg Ebel said the partnership project offers British Columbia a “unique opportunity to access new markets, strengthen its energy infrastructure, engage stakeholders in economic growth and job creation and ultimately secure the province’s position as a competitive energy leader.”