LNG Canada: setting the benchmark

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“We’ve got a good story. . . .  And we’ve got a good product that we’re going to export that will make the world better.”

That was Peter Zebedee, CEO of LNG Canada, speaking to MPs on Parliament’s Standing Committee on International Trade.

Here’s how he told the story:

“We fully support this committee’s efforts to examine how the export of Canadian clean technologies and products can help shape and support a low-carbon future and I’m happy to talk to you this morning about how LNG Canada fits into that strategy, both here at home, but also abroad.

“As you know, LNG Canada is a joint venture with five international partners, Shell, Petronas, PetroChina, Mitsubishi, and Kogas from Korea. And so, while we here at LNG Canada are proudly Canadian, and I myself am proudly Canadian born, raised and educated, we do indeed have a very global outlook.

“To start with, we began with a very bold vision. And that was setting the benchmark for economically, environmentally, and socially responsible LNG development in Canada, working collaboratively with First Nations, Indigenous groups, and local communities, non-governmental organizations, and local, provincial and federal levels of government.

“Our liquefied natural gas and export facility is now in its third year of construction in Kitimat,  British Columbia, and is located on the traditional territory of the Haisla Nation.

“It does represent the single largest private-sector investment in Canadian history, and it’s already begun to benefit communities and provincial and national economies with meaningful lasting employment and social investments.

“To date, the value of our awarded contract and procurement in British Columbia, alone, is worth over $3 billion. Revenues from our project will start flowing into governments as we enter into production and we’re delivering low-carbon LNG to customers, as this will reach tens of billions of dollars over the course of our 40-year life.

“And we are on track to deliver our first cargo by the middle of this decade.

“LNG Canada will provide a security of supply for global LNG markets that rely on Canada’s natural-gas reserves to advance their economies, and to reduce global GHG emissions as natural gas replaces higher emitting sources of energy, such as coal.

“This is important in the context of commitments Canada has made in reducing GHGs, while helping our international partners meet their own climate-change commitments.

“While we’ll be the first major LNG company in Canada to export internationally, we’re entering a highly competitive global market looking for low-carbon energy.

“Our project is advantaged by access to low-carbon natural gas right here in British Columbia. We’re located in an ice-free harbour, year-round, and that’s at the end of the Douglas Channel in Kitimat, about 650 km north of here in Vancouver.

“Our shipping distance to North Asia is about 50% shorter than from the US Gulf of Mexico and avoids the Panama Canal.

“So together with our EPC contractor, JGC Fluor, we’ve designed a project that has the lowest carbon intensity of any large-scale LNG plant anywhere else in the world.

“And the GHG emissions from our Kitimat operations will be lower than any other facility. It’s a full 35% lower than the world’s best-performing facilities, and 60% lower than the global weighted average for equivalent plants.

“This is all underpinned by our use of energy-efficient gas turbines and the latest methane-mitigation technologies ,and that’s what’s going to help  us to reach our low emissions standards. “LNG Canada will use BC natural gas that’s produced with the highest standards  . . . using renewable energies from the BC Hydro grid.

“And a good example putting these standards into practice is Shell’s Saturn Gas Plant, located in northeastern British Columbia, which is fully electrified.

“As I mentioned, natural gas is displacing coal for power use and production in cities with air-pollution problems, where renewable resources are limited and where consistent energy supplies or firm power is required.

“We know that future population growth and development around the world will require more energy with fewer CO2 emissions and to that end, LNG provides 50% lower CO2 emissions than coal.

“That’s really the big reason why LNG is displacing coal in so many places and why that represents an opportunity for Canada, which has an abundance of lower carbon natural gas. And demand is indeed growing in places like China where natural gas is expected to almost triple by the year 2040.

“LNG from all sources, including ours, will make up 60% of China’s demand for imported natural gas, and global LNG demand is expected to hit 700 million tons by the end of the year 2040. And according to Shell’s latest market outlook report, that’s up from 360 million tons in 2020. So it’s almost doubled.

“Asia is expected to drive about 75% of the growth as LNG substitutes for higher-emissions energy sources. And that’s going to tackle items such as air-quality concerns, while at the same time meeting emissions targets.

“Of course, this isn’t to say that LNG will displace more carbon-intensive forms of energy all on its own. You’ve already heard how the clean-tech sector in Canada is an increasingly busy place with hundreds, if not thousands of companies driving innovation and finding new export opportunities.

“We believe that LNG is but one tool in the low-carbon toolkit, and that toolkit, obviously, includes renewables. While natural gas complements renewables as a base low power, due to intermittencies in energy supply, it is not likely to displace it fully.

“Nor is LNG going to slow the buildout of renewables in electricity sectors in countries such as China, and mostly that’s due to pricing. Renewables, in the long term, are less expensive than natural gas and LNG.

“As technologies continue to develop, and businesses, builders, homeowners (are)  going to turn to energy-saving efficiencies, such as retrofits. Energy requirements in general will change, and they may even decrease in certain scenarios.

“We’re certainly starting to see those changes in our resource sectors; as I already mentioned, Shell’s fully electrified plant at Groundbirch BC. The fact is, we’re starting to see innovation and advancements up and down the value chain. These are absolutely critical as our sector turns its focus to reaching carbon neutrality. I

“In the past year, and excitingly so, we’ve seen net-zero LNG shipments reaching ports in Asia and Europe. We’re excited to be entering an environment where net-zero can actually be achieved. And I think this is critical because (of) trading space in the LNG marketplace going forward; our project has a 40-year lifespan.

“And it really means, for us, identifying those opportunities across the value chain, from the upstream, at the point of production and indeed, on the shipping routes.

“Picking up on that, I’d like to point out another example that demonstrates how the LNG Canada project is creating momentum towards a lower-carbon future and at the same time, creating local opportunities.

“HaiSea Marine is a local partnership, formed between the Haisla Nation and North Vancouver-based Seaspan. And HaiSea has a large contract with LNG Canada to build and operate escort and harbour tugs required for the export facility in Kitimat.

“They are going to use battery-electric power and natural gas instead of diesel fuel, and they’re going to form one of the greenest tug fleets ever assembled. They’re designed by Canadian Vancouver naval-based architects and marine engineers, Robert Allen.

“These new escort tugs are expected to reduce carbon dioxide emissions by up to 10,000 tons per annum compared to their diesel-fuel alternatives, and major reductions in other offsides and particulate matter as well.

“So in addition to creating local, long-term jobs that will benefit the Haisla and other nations on BC’s northern coast, HaiSea Marine really plugs into the full value chain proposition I talked about.

“The lower-carbon Canadian natural gas, world-leading emissions that our Canadian Kitimat export facility, advantageous exports to international markets.

“And these markets are in countries that are focused on bridging to low-carbon energy sources and ultimately to ultra-low to zero-emitting sources.

“Together with our partners, and support and encouragement from all levels of government , LNG Canada will play an important role in this energy transition.”

“We’ve got a good story. We’ve got the opening up of what will be the first LNG industry in Canada. It’s a good story for Canadians, at all levels. Both for political parties, but also for everyday Canadians and workers. And we’ve got a good product that we’re going to export that will make the world better.”

He was asked about Article 6 of the Paris Agreement on climate change, which would establish an international system for countries to trade credits from emissions reductions.

His response: “I think, we certainly, obviously support the implementation of Article 6. We think carbon offsets and trading are essential components of future growth in the LNG industry, both for LNG Canada, but also for other players.

“But beyond that, we will have to look for the implementation of  . . . solutions and technological-based solutions to reduce the carbon footprint of LNG production in Canada to support future growth. So we think it’s kind of a basket of all of those things that are going to be required going forward.

  • Watch his video appearance before the committee, starting at 11:17:36 at https://bit.ly/3hjoFib and again at 12:51:23.

(Posted here 17 May 2021)

 

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