February 20, 2012

Co-op receives licence to export

A unique partnership between the Haisla First Nation and a Texas-based company has been granted a federal licence to export liquefied natural gas (LNG) from a small-scale facility on the Northwest coast of British Columbia to Pacific Rim markets.

'Our people have ownership in BC LNG and can look forward to sustained revenue opportunities for 20 years," said Ellis Ross, chief councillor of the Haisla Nation.

“Other industrial projects on our lands pay us rent and provide other benefits, but this is a business opportunity that we vigorously pursued and which now makes us a participant in a growing global industry.”

BC LNG Cooperative is a 50:50 joint venture partnership between the Haisla Nation and LNG Partners of Houston.

The joint venture has been authorized by the National Energy Board to export 36 million tonnes of LNG, over a 20 year period.

This is equivalent to about 47.9 billion cubic metres of natural gas.

Tom Tatham, BC LNG managing director, said a final investment decision is expected in April and construction will proceed so the proposed facilities will be completed in the first quarter of 2014.

BC LNG is planning to construct and operate a liquefied natural gas export terminal at Bish Cove near the Port of Kitimat.

The project involves the construction of a shoreline LNG tanker berthing and uploading jetty, tug boat berth, several pipelines and the upgrading and extension of the access road.

The proposed LNG terminal will take delivery of gas via a pipeline lateral, about 15 kilometres long, from the Pacific Trail Pipelines.

This pipeline will be connected to the existing Spectra Energy’s Westcoast Pipeline system.

The construction of the terminal will employ 150-200 people over 18 to 24 months. The total cost of the project will be between $360 and $450 million.

Once operational the facility will employ about 30-40 permanent employees.

BC LNG’s export proposal is unique because the operating model involves the company liquefying gas for members of a co-operative, which is comprised of natural gas producers, marketers and LNG buyers.

The members of the co-operative will submit bids to provide natural gas to be liquefied or purchase LNG.

A committee will review the bids and choose opportunities that will yield the greatest margin to the co-operative.

There are currently 13 parties in the cooperative and additional members may join upon request.

BC LNG’s export model permits smaller natural gas market participants in Canada to play a part in exporting the gas.

The proximity of the terminal to the existing natural gas transmission infrastructure is one of the advantages of this project and ensures easy access to the Kitimat Terminal.

The liquified natural gas would be exported to Asian markets in China, India, Japan, South Korea and Taiwan, as well as other potential markets in the Pacific Rim.

Another unique feature of this project is that the partnership is based on direct negotiation between a proponent and a First Nations group, without government involvement.

As a result, this is one of the only agreements in Canada that addresses the impacts of both new and existing projects.

An agreement between Rio Tinto Alcan and the Haisla Nation was ratified in February 2010, which defined a transfer process to sell the privately owned land to the Haisla.

The Haisla consider the transfer of land from Rio Tinto Alcan to be compensation for the unjustified infringement of Haisla rights and title interests.

Alcan completed construction of the Kitimat aluminum smelter in 1954, which was the largest engineering and construction project ever undertaken by a private enterprise in Canada.

The facility was located in traditional Haisla Territory and resulted in a rapid increase in the local population.

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