Tilbury LNG storage expansion: fortis's case for system "resiliency"

By Bill Andrews and Tom Hackney

March 17, 2021

FortisBC Energy Inc. (FEI) has just applied to the Utilities Commission for permission to build a new 3 billion cubic foot (85 million cubic metre) LNG storage facility on Tilbury Island, tripling its LNG storage capacity at that site (see FEI’s application and workshop presentation).

FEI says the Tilbury LNG Storage Expansion (“TLSE”) is needed to boost “resiliency” to provide gas to customers in the event of a major system disruption. FEI wants a back-up ability to maintain gas supply to lower mainland customers for three days during a “no-flow” event on the Enbridge T-South pipeline that brings natural gas southward from the gas facilities in northwest BC. Such an event happened in 2018, when the pipeline ruptured. Service was interrupted for two days, but in less favourable circumstances the outage could have been longer.

FEI points out that electricity planning standards typically seek to achieve system redundancies, so that the failure of any one generating station or transmission line will not cause blackouts. FEI argues it should take the same approach. It says BC’s gas system has less redundancy than gas systems elsewhere in North America because BC has relatively few interconnecting natural gas pipelines.

The consequences of a major failure of gas supply can be more disruptive than for electrical blackouts. Gas grids have an advantage over electric grids in short interruptions because pent-up pressure (“line pack”) in the pipes keeps gas flowing to customers during an outage. But when an interruption lasts many hours or several days, the line pack is consumed, gas pressures drop and air may enter the pipes. Then, for safety reasons, the utility must carry out extensive work to re-establish the integrity of the system, including inspections of each customer’s supply. This causes major delays in re-establishing service, in contrast to the instantaneous re-establishment of electricity when a black-out ends.

FEI has not previously advanced this concept of resiliency or the proposed three-day supply standard, and these do not appear to be common standards for North American gas utilities. The original Tilbury LNG facility, built in 1971, is operated to meet regularly expected winter peak loads rather than occasional major disruptions. So we can expect an interesting theoretical discussion before the Commission decides whether to accept or reject them.

BCSEA is intervening in the proceeding (see BCSEA intervention submission). We want to test the concept of resiliency and whether is could be achieved in other ways, at less cost. This is a complex question, involving the complex interactions of all BC’s gas facilities, as well as those in nearby US states. BCSEA supports having a robust energy supply, but we want to minimize investments in new gas infrastructure that further commit society to fossil fuel use.

FEI proposes to oversize its LNG storage project by 50% above what it needs for its proposed three-day supply standard. FEI says this is justified, based on cost efficiencies, improved resiliency and “ancillary benefits” that include accommodating future load growth. This raises the question: could the “ancillary benefits” include boosting LNG gas sales, to the benefit of FEI and the detriment of climate action?

FEI has been working to boost sales in other areas. For example, it has expanded its regular LNG dispensing service and worked to develop LNG sales to marine vessels. In 2019, FEI built a new LNG storage tank for its dispensing service, and it is considering further development at the Tilbury site to dispense LNG directly to marine vessels.

The current project would cost $769 million. FEI calculates that an average residential customer consuming 90 GJ per year of gas would see a rate increase of about $6.12 per year over six years under the rate structure that it proposes.

From BCSEA’s perspective, the big question about BC’s natural gas system is whether it should be wound down or maintained (or even expanded) as we seek to move BC away from fossil fuels to sustainably produced energy and enhanced energy conservation (see: Competing visions for BC’s low carbon energy future).

But when one gets into the details of operating our still necessary gas system, one is constantly confronted with present needs that must be balanced against long term objectives.

Policy, News

Monday, March 22, 2021