png's western pipeline reactivation and a budding new LNG industry
By Tom Hackney
May 6, 2021
Pacific Northern Gas Ltd. (PNG) has applied for BCUC approval to reactivate and recommission parts of its Western Transmission Gas System (WTGS) to serve new load from two LNG businesses.
WTGS pipes natural gas from near Prince George to the Kitimat-Prince Rupert area. For more than a decade, it has been operating at less than 20% of capacity because of the loss of several major customers, including the Methanex chemicals facility and the West Fraser Eurocan pulp mill in Kitimat and the Skeena Cellulose pulp mill in Prince Rupert. Much of the pipeline capacity was mothballed.
In 2020, PNG held an auction to assess the demand for reactivating its unused pipeline transmission capacity. As a result, PNG has now signed four new supply contracts and wants to spend $88 million to restore and enhance WTGS’s capacity.
The contracts are to supply natural gas to companies developing new niche industry of small-scale LNG delivery.
Top Speed Energy has two of the contracts. It describes itself as a company that is:
“… leading the global development of an LNG virtual pipeline to facilitate the adoption of a cleaner and more economical fuel and power alternative.”
“With over 30 years of combined operational and management experience, we currently serve the Canadian market with local, door-to-door supply for remote oﬀ-grid community power and heating, as well as propane and diesel displacement. We also serve similar markets in the USA, SE Asia, and FE Asia.”
Top Speed has liquefaction plants in Terrace and Prince Rupert, with a combined total of 220,000 tonnes of LNG per year of capacity (versus ~ 12 to 24 million tonnes per year for a large plant like the proposed LNG Canada facility). The new supply contracts with PNG would enable Top Speed to expand capacity at these two plants.
Top Speed ships LNG in modular cylinders loaded onto flatbed trucks. It claims the potential for 10% to 30% fuel cost reductions and 15% CO2e emissions reductions compared to diesel fuel. Top Speed also offers marine bunkering service for LNG to replace the use of bunker fuel.
Port Edward LNG has the other two PNG contracts. Its business model appears to be similar to that of Top Speed, though apparently emphasizing marine transport over trucks:
“Port Edward LNG is a British Columbia company proposing to build and operate a small-scale Liquefied Natural Gas facility in Port Edward, near Prince Rupert. We will supply LNG for export and domestic customers looking to switch from carbon-intensive fuels, such as coal or diesel, to cleaner natural gas. This is not LNG as you know it. Port Edward LNG would be just over one-percent of the size of a large LNG project, liquefying gas for export in small quantities via conventional container ship.”
Port Edward LNG would be powered by BC Hydro electricity and would liquefy 150,000 tonnes of natural gas per year.
The markets would be northern communities in Canada and Asia.
PNG’s new customers both claim their operations would reduce GHG emissions, but BCSEA is concerned with any expansion of fossil fuel use. We should be phasing out fossil fuels, not merely achieving marginal reductions. (Also, GHG emissions reductions from switching to natural gas may not be achieved at all if the rate of methane leakage is too high at any point in the supply chain.)
The BCUC review of PNG’s application will not allow interveners to directly discuss such sustainability issues. From a regulatory perspective, the reactivation proposal and the new contracts are good news because they will allow PNG to spread its capital costs over more ratepayers and thus bring rates down for all customers.
BCSEA will need to find creative ways to bring in a discussion of long-term sustainability. Perhaps the government’s new sectoral targets for GHG emissions reductions will help.
Wednesday, May 26, 2021