New Floating Liquefaction Terminal Proposal for BC

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Canada's Pacific Coast, which was once expected to host as many as 20 LNG export projects, may finally be seeing a revival, as a floating liquefaction project has been proposed on Nisga'a Nation territory in northern British Columbia (BC). Calgary-based Rockies LNG, Texas-based Western LNG, along with the Nisga'a Nation, have filed a project description notice with BC and federal regulators for the proposed 12 million ton per year (1.7 billion cubic feet per day) Ksi Lisims LNG -- Natural Gas Liquefaction and Marine Terminal. The 30-year project is expected to include two or three floating liquefaction units. The project will convert natural gas from the Western Canadian Sedimentary Basin (WCSB) of northeastern BC and northwest/central Alberta into LNG for export to Asian markets, according to documents submitted to the BC Environmental Assessment Office. The project is to be located at Wil Milit on the northern end of Pearse Island on Portland Canal, just south of the border with Alaska (see map). It is downriver from two LNG export proposals that fizzled last decade (NGW Jan.14'13). Motivated Partners A key component of the Ksi Lisims LNG project is that it has First Nations support. “Attracting an economic base to the Nass Valley has long been a priority for the Nisga'a Nation,'' said Nisga'a President Eva Clayton. The nation has been "actively pursuing" development of an LNG export facility in the Nass River area since 2014, according to regulatory documents, and the site "is one of the prospective sites initially identified and proposed by the Nisga’a Nation." The other partners are motivated as well. Rockies LNG is an Alberta-based limited partnership comprising seven Calgary-based gas producers -- a group eager to find a Pacific Coast outlet for their gas assets. Western LNG is a Houston-based company engaged in the development of North American LNG export facilities. Western LNG is staffed by gas industry veterans, but Ksi Lisims appears to be its only current project, according to its website. Analysts are cautiously optimistic about the prospects of BC having another liquefaction facility to compete with -- or complement -- the Royal Dutch/Shell-led LNG Canada project at Kitimat. "We consider this announcement very early days given the size of the floating project and necessity for offtake agreements to secure funding of which we suspect customers will favor shorter-cycle brownfield development or lower supply cost greenfield development given our projected oversupply for the global LNG market in the back half of the decade," said Tudor Pickering Holt (TPH) in a note. TPH also expressed skepticism about floating liquefaction. "The nascent floating LNG industry only has two operating facilities in the world," it said, citing Shell’s 3.6 million ton/yr (0.51 Bcf/d) Prelude facility, which cost an estimated $10 billion-$15 billion, and Petronas' 1.2 million ton (0.17 Bcf/d) PFLNG1. Green Power The project is expected to use hydropower with natural gas as backup power. This will be combined with carbon-mitigation methods. Two possible gas supply pipeline projects have received regulatory approval and are being evaluated for the site. Environmental Assessment Certificates (EACs) are valid through November 2024 for TC Energy’s Prince Rupert Gas Transmission (PRGT) project and Enbridge’s West Coast Gas Transmission (WCGT) project. The EACs would need to be amended to support a route change. The Ksi Lisims LNG project is located north of what looks to be a growing cluster of LNG exports around Kitimat. The LNG Canada megaproject is currently under construction and if it proceeds to an expected second identical phase alongside the much smaller 4 million ton/yr (0.57 Bcf/d) Cedar LNG, BC could see a total export capacity of about 40 million tons/yr (5.7 Bcf/d) around Kitimat -- larger than Qatar's planned Phase 1 expansion (NGW Jun.14'21). Michael Sultan, Washington

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