LNG Canada’s look at the potential for expansion has taken a significant step.
The company has begun discussions with potential contractors in China for building modules for proposed Phase 2 expansion of the Kitimat plant.
China built 215 modules, of varying sizes, that have gone into LNG Canada Phase 1. The first major module, weighing more than 5,000 tons, was received in March 2022. The final module, pictured below, arrived July 17.
The Phase 1 plant now heading for completion at Kitimat will be able to export up to 14 million tonnes of LNG a year. Phase 2 expansion would double that output to 28 million tonnes.
For comparison, Woodfibre LNG will be able to export 2.1 million tonnes a year. The Haisla Nation’s planned Cedar LNG project would produce 3 million tonnes a year. And Nisga’a Nation’s proposed Ksi Lisims LNG project would produce 12 million tonnes a year.
(The largest single LNG-for-export plant in the world is Cheniere Energy’s Sabine Pass operation in Louisiana at 34.56 million tonnes a year. It’s expected to hit 54 million tonnes by 2030.)
Meanwhile, Shell (a 40% partner in LNG Canada) estimates world demand for LNG will reach 700 million tonnes by 2040.
LNG Canada’s CEO, Jason Klein, points out that Phase 1 “is designed to be the world’s best, lowest-carbon-producing, LNG facility.”
But a key question remains for a Phase 2 addition to LNG Canada: Can B.C. Hydro provide the power that LNG Canada wants for its natural-gas liquefaction process? Power that would mean the company could meet B.C. government emission standards?
If not, would B.C. allow Phase 2 to go ahead, but burning natural gas for its power, while waiting for B.C. Hydro to catch up?
Says Klein: “While our Phase 2 final investment decision must also take into account overall competitiveness, affordability, future GHG emissions, and, of course, timelines, our discussions with government have been encouraging.
“Premier Eby and his government are aware of the benefits that further LNG development in B.C. can offer, and how it is already helping advance reconciliation with First Nations and Indigenous peoples.
“We were also pleased to see Premier Eby and the premiers from the other western provinces and territories refer in a joint statement . . . to the role that Canadian LNG exports can play in reducing global emissions, and in global energy security.”
Using B.C. Hydro power for Phase 2 would require 400 megawatts of additional power.
Even after the Site C hydro dam goes online in late 2025, Hydro has to cope with increasing demand for power all over B.C., not just for LNG Canada. Hydro will issue in 2024 a call for additional power supplies
But obtaining the power is only one problem. Getting the power to where it is needed is another. It can take eight or more years to build a new transmission line. ‘Obviously, that’s not an acceptable situation,’ said Premier Eby.
Hydro is working on plans for an expanded transmission-line system from Prince George to Terrace, that would support LNG Canada’s Phase 2, and the Haisla’s Cedar LNG. The line could include First Nations equity. But at this point it’s still only a plan.
“Hydro is not keeping up,” Premier Eby says. “It takes eight to nine years to fulfil a request from industry for the kind of electricity that they’re looking for. . . . We have to speed that up.”
To which end he has appointed a special task force to find ways to expedite approvals for generating stations and transmission lines.
Says LNG Canada’s Klein: “We have identified the potential opportunities to further advance electrification on Phase 2, aligned with the availability of sufficient, reliable power.
“We strongly encourage BC Hydro and the provincial government to find the pathways needed to unlock the potential of additional electric power to a number of industries and businesses in the north, including Phase 2.”
Klein said it is possible to build Phase 2 using conventional natural-gas turbines, and then switch them for electric-drive when the power and infrastructure becomes available.
“What we have said is, if and when BC Hydro can provide sufficient reliable power, we would swap out those turbines for electric motors.
“That would require BC Hydro to make new investments, particularly in transmission infrastructure, to get those electrons down to Kitimat.”
That could also enable LNG Canada to switch to electric e-drives for its Phase 1 plant, which will burn natural gas to provide power when it starts up in late 2024 or in 2025.
And then there are the Cedar and Ksi Lisims LNG projects, which also propose e-drives, and would have to meet B.C.’s requirement for new LNG plants — having a credible plan to have net-zero emissions by 2030.
Expansion of LNG Canada would also mean increasing the capacity of the Coastal GasLink pipeline by building new compressor stations. That can be done.
So at this point the challenge is for B.C. Hydro to come up with the power for LNG Canada, and for Premier Eby’s task force to find ways to come up with it faster.
(Posted here 06 September 2023)