Article

Kitimat LNG plant secures federal export licence

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by Richard Gilbert

The National Energy Board has granted a 20-year export licence to Canada's first proposed liquid natural gas (LNG) plant in Kitimat B.C., which will export the product to Asian markets.

The National Energy Board has granted a 20-year export licence to Canada's first proposed liquid natural gas (LNG) plant in Kitimat B.C., which will export the product to Asian markets.

“The Kitimat LNG project represents a remarkable opportunity to open up Asia-Pacific markets to Canadian natural gas and we’re leading the way in being able to deliver a long-term, stable and secure supply to the region,” said Janine McArdle, Kitimat LNG president.

“This export licence approval is another major milestone for Kitimat LNG as we move forward and market our LNG supply.”

Kitimat LNG partners Apache Canada Ltd., EOG Resources Canada Inc. and Encana Corporation plan to build the Kitimat LNG facility on Bish Cove, about 650 kilometres north of Vancouver.

The LNG export facility is being built on First Nations land under a unique partnership with the Haisla First Nation.

Under the terms of the 49-year lease arrangement between the Kitamaat Village Council, Indian and Northern Affairs Canada, and Kitimat LNG, the Haisla would receive both lease and taxation payments.

Currently, the partnership is carrying out a front end engineering and design (FEED) study, which will provide the design, construction timelines, costs and labour force requirements for the project.

The FEED study is expected to be complete by early in 2012, followed by a final investment decision by the partners.

Once this is done, they will make plans for a capital investment decision on the first phase of the development.

Kitimat LNG signed a deal to purchase the former Eurocan industrial site in Kitimat, B.C. from West Fraser in July.

The site provides the Kitimat LNG project with a suitable area for a work camp, lay-down and storage area, as the project continues to move forward with clearing and grading at the export facility site.

The proposed $ 4.2 billion LNG project involves the construction of marine on-loading, LNG storage, natural gas delivery, liquefaction and LNG send-out facilities.

Encana Corporation bought part ownership in the proposed LNG export facility in March.

In the same month, Apache Canada and EOG Canada awarded the FEED contract for the project to KBR.

Apache Canada and EOG Canada made a deal earlier in February to buy 50 per cent interest in the Pacific Trail Pipelines Limited Partnership (PTPLP) from Pacific Northern Gas Ltd. (PNG) for $50 million.

This was the remaining share in the project the partners did not own already.

PTPLP is planning to build a 463-kilometre (287-mile), 914-mm (36-inch) diameter underground line from Summit Lake, British Columbia, to the LNG export terminal in Kitimat

Export volumes for the Kitimat LNG project are expected to be supplied by the natural gas resources in B.C. and Alberta, in particular Horn River Basin and the Montney geological formation.

Analysts expect Japan’s nuclear crisis to drive up liquid natural gas demand, as the country struggles to make up lost power supply, providing a growth market for this new export capacity.

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