Vaughn Palmer: B.C. near to benefits, and emissions, from huge Kitimat LNG plant

Opinion: A decision on a Phase 2 looms, with no decision whether it will be powered by burning natural gas or by hydroelectricity

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KITIMAT — B.C.’s first major LNG terminal is nearing the finish line, after years of talk and more than a few doubts about when — if ever — the province would begin shipping its natural gas in liquefied form to Asian markets.

The $40-billion LNG Canada project is more than 90 per cent complete. Come mid-2025, operators expect to begin filling LNG tankers at the rate of one every two days or so.

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Last week, I was able to tour the project’s massive presence on the Kitimat waterfront.

The first stop was the work camp. Or lodge as they prefer, since it has its own pub, gymnasium, movie theatre and access to a supply of Starbucks coffee.

The latter is a source of friction because Kitimat does not have its own Starbucks and the construction site is closed to the townspeople.

The lodge has enough single occupancy rooms for 4,500 workers and it was full last week. The most recent workforce stat was 9,391, including local hires and those on rotation.

The workforce rotation is two weeks on site and a week at home, which makes for a steady stream of charter flights in and out of the Terrace airport. The commuters come from elsewhere in B.C. or Canada.

The second stop on the tour was the two production trains, where the natural gas will be chilled to the necessary -160 C. They tower over the site, flanked by an LNG storage tank, one of the largest in the world.

Also prominent was a skyscraper-height stack where excess gas will be flared into the atmosphere. LNG Canada has been briefing Kitimat residents on a process that is expected to generate controversy starting in a matter of weeks.

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One local critic has suggested, albeit with exaggeration, that the impact of the flaring can be imagined from the opening visuals of Blade Runner, the 1982 science fiction film starring Harrison Ford.

The tour proceeded down a road and bridge to the tanker dock. The bridge had to be reinforced because the heavy LNG modules were constructed overseas, barged to Kitimat and hauled to the terminal site.

Those LNG tankers will be escorted in and out of port by the battery-powered low-emission tugs of HaiSea Marine, a joint venture between Seaspan and the Haisla Nation, on whose traditional territory the terminal is located.

The HaiSea Marine contract is worth $500 million. The cumulative value of LNG Canada spending to B.C. approaches $5 billion, including almost $4 billion for local and Indigenous-owned companies.

The NDP government is heavily invested in the success of LNG, and not only because of jobs and contracts.

This year’s budget and fiscal plan forecasts natural gas royalties will more than double to $1.43 billion over three years, owing to “increased natural gas volumes related to production requirements of LNG.”

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The New Democrats inherited the drive to develop an LNG industry from the previous B.C. Liberal government of Premier Christy Clark. She forecast the first terminal would be operational by 2015, but failed to bring one home before she was driven from office in 2017.

Incoming NDP Premier John Horgan was also on record as supporting LNG: “It would take a natural resource that belongs to British Columbians and find a better market in Asia.”

One of his early actions was to see what it would take to persuade LNG Canada to proceed. The result was a revised package of incentives and regulatory relief valued at $6 billion over 40 years. In return the province was expected to realize revenues of $22 billion over the same period.

The Greens, the NDP’s partners in power-sharing, were opposed to LNG. Horgan gambled — correctly it turned out — that the B.C. Liberals would support the changes.

Soon after the relief was approved in 2018, Shell and its partners gave the go ahead to proceed.

Horgan continued to support the project during the long, bitter standoff over construction of the Coastal GasLink pipeline, bringing natural gas from northeastern B.C. to Kitimat.

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The pipeline is now completed, ready to provide feedstock to the terminal when the first two LNG trains are up and running.

Last week’s tour of the site circled a space set aside for a third and a fourth train, which could double production and benefits to the province.

Shell and its partners have not made a final investment decision on whether to proceed. The key consideration is whether Phase 2, like Phase 1, would be powered by natural gas turbines or by clean, green electricity from B.C. Hydro.

Further reliance on natural gas would be hard to square with the B.C. target for reducing emissions. But there might be a holdup in securing a reliable supply of electricity for Phase 2.

The NDP would sooner not face that issue in an election year, given the continued opposition to further LNG development within the ranks of the government’s own supporters.

Yet, however reluctant the New Democrats are to approve Phase 2, the progress on display in Kitimat is a tribute to their determination to make LNG Canada get this far during their seven years in office.

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