Blog: Canada’s slow waltz on LNG

One thing is for sure: The anticipated increase in demand from global LNG customers is fast accelerating activity among LNG suppliers.

The U.S. government, for one, is racing to approve a number of new LNG-for-export plants. Two plants are already operating. Eleven more are in the environmental review process, and at least six more are being thought about.

One planned U.S. operation is being reviewed for the Oregon coast. Another is being proposed for Alaska.

These last two possibilities are worrisome, as they would hack at one of BC’s big competitive advantages: We can offer much shorter shipping times to key Asian customers than can LNG plants on the U.S. Gulf Coast. And shippers leaving BC would not have to pay US$380,000 for a one-way, east-to-west passage through the Panama Canal.

So the U.S. under Donald Trump is sprinting.

What has Canada’s record been so far? A sluggish slow waltz.

Here’s the classic example:

Pacific NorthWest LNG filed its formal Project Description with the Canadian Environmental Assessment Agency (CEAA) in February 2013.

The CEAA then posted it publicly on its website on 19 February 2013. That action kicked off a government-and-public review process that, we were told at the time, could take two years.

Two years? In fact, the final approval came on Sept. 17, 2016, meaning it took:

  • 3 years, 7 months, 9 days (1,317 days)

In contrast, look at Cheniere Energy Inc.’s experience with the U.S. Federal Energy Regulatory Commission (FERC).

Cheniere filed the Project Description for its Sabine Pass LNG project in Louisiana on 31 January 2011 and the formal evaluation began.

On 16 April 2012, the project got the FERC order authorizing Cheniere to begin construction. The elapsed time:

  • 1 year, two months, 17 days  (442 days).

Cheniere’s first export cargo of LNG left by carrier for Brazil on February 24 last year, and well over 200 more have since gone to 25 different countries. On average, Cheniere is sending off a loaded LNG carrier every three or four days; and in one recent week dispatched six loaded ships.

(And now we learn that BC’s public-sector pension plan has invested millions of dollars in Cheniere.)

Did Canada’s plodding process play a part in the cancellation of Petronas’s Pacific NorthWest LNG project? And thus the loss to the Lax Kw’alaams Band and the Metlakatla First Nation of multi-million-dollar benefits?

Nobody in the BC LNG industry is quite saying that, but Petronas-owned Progress Energy Ltd. did say this: “Delays and long regulatory timelines can ultimately have an impact on whether projects go ahead or not.”

Calgary energy consultant Dave Tulk is even more firm: He says that applying the same slow regulatory process to any further Canadian LNG proposals would be “the definition of insanity.”

We now have encouraging news on the BC government’s new “framework” for LNG development. But we don’t yet know what the federal government will build into its new regulatory process, or what BC will do as it revises its environmental assessment procedures.

A speedier approach is obviously needed, although time must be allowed for full First Nations engagement and meaningful participation as envisaged by government ministers and the United Nations Declaration on the Rights of Indigenous Peoples.

BC’s energy minister, Michelle Mungall, said this week she hopes LNG Canada‘s project at Kitimat will make a positive Final Investment Decision later this year.

LNG Canada, meanwhile, said it is working on documentation needed for that decision by its joint-venture participants, And Shell, one of those participants, said LNG Canada will name its prime contractor in April.

But, right now, LNG Canada is seeking speedy answers from Ottawa on new import duties on Asian steel products. This last item would add massive costs to prefabricated components for LNG plants that the industry says will have to come from Asia.

Could our government please (as it were) hit the gas?

— Erwin Tom, councillor, Wet’suwet’en First Nation, and a director of the First Nations LNG Allianc