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Energy and Resources Chevron seeks to revive Kitimat LNG with plans for electric plant

The Kitimat LNG site at Bish Cove, located on Haisla Nation reserve land near the community of Kitimat, B.C.

Amber Bracken/The Globe and Mail

Chevron Corp. has submitted a revised plan to regulators to build a terminal to export liquefied natural gas from northern British Columbia, hoping to start construction by 2023.

California-based Chevron, through Chevron Canada Ltd., wants to revive the much-delayed Kitimat LNG project that it co-owns with Australia’s Woodside Petroleum Ltd. New designs for the export terminal promote electric-motor technology in a bid to comply with British Columbia’s clampdown on carbon emissions.

Various owners have poured hundreds of millions of dollars into site preparation near Kitimat, but the project has been stalled for the past couple of years. Chevron and Woodside are now pursuing “an all-electric plant powered by clean, renewable hydroelectricity from BC Hydro,” Chevron regulatory manager Darcy Janko said in a letter last week to the B.C. Environmental Assessment Office.

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Mr. Janko said the electric drive “features an advanced compact module design, with lower LNG storage requirements.”

In 2014, there were more than 20 B.C. LNG proposals vying to be the first out of the gates. Despite much hype from the previous BC Liberal government, only the Royal Dutch Shell PLC-led LNG Canada consortium is constructing a terminal to export the fuel to Asia.

The Chevron-Woodside site is at Bish Cove, located on Haisla Nation reserve land near Kitimat. LNG Canada’s terminal is being built on a Kitimat industrial site that is located on the Haisla’s traditional territory.

While the BC NDP government supports LNG Canada, the province has discouraged any new LNG projects in an effort to meet provincial climate targets for reducing greenhouse gas emissions.

Chevron-led Kitimat LNG, also known as KLNG, said in a 186-page filing to B.C. and federal regulators that it would operate at a level below British Columbia’s limit for “emissions intensity” of 0.16 carbon-dioxide equivalent tonnes for each tonne of LNG produced.

“The KLNG plant will outperform current best-in-class global LNG plants and the more stringent government of B.C.’s LNG intensity benchmark,” according to the submission. “The KLNG expansion project will utilize electric-motor-drive technology for all liquefaction process and utility compressors, pumps and fans, and will purchase power from BC Hydro.”

The filing said that Kitimat LNG staff made changes resulting in “substantial reductions in LNG unit costs, execution risk and emissions, and more effective utilization of the Bish Cove site.”

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Chevron and Woodside plan to make a final investment decision in 2022-23, with the goal to complete construction of the first phase by 2029.

Shell-led LNG Canada will use natural gas in the liquefaction process in which high-efficiency General Electric LMS100 turbines supercool gas into liquid form, while relying on hydroelectricity for a supporting role, including auxiliary power.

LNG Canada is aiming for 0.15 carbon-dioxide equivalent tonnes for each tonne of LNG produced. Last month, federal Finance Minister Bill Morneau confirmed that Ottawa will contribute $220-million toward the gas turbines through the Strategic Innovation Fund. LNG Canada plans to begin exports by early 2025.

Kitimat LNG originally targeted having an export capacity of 10 million tonnes a year of LNG. The revised plan calls for the first phase to have a capacity of 12 million tonnes a year, followed by further expansion that would increase the total to 18 million tonnes a year.

The first phase would have two “trains,” or separate LNG cooling processes, which turn natural gas into a liquid for eventual export. Each train is being designed to handle six million tonnes a year of LNG exports to Asia.

One small-scale B.C. proposal, Woodfibre LNG near Squamish, is considered by industry experts to be viable in the short term. Woodfibre plans to export 2.1 million tonnes a year.

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Kitimat LNG, which received an export licence from the National Energy Board in 2011, has gone through a series of ownership changes. In 2015, Woodside bought a 50-per-cent stake in the project from Houston-based Apache Corp.

The B.C. Environmental Assessment Office has requested to take the lead in the review of the expanded proposal, and co-ordinate with the Canadian Environmental Assessment Agency (CEAA), which must first determine whether a federal assessment is required.

If federal Environment Minister Catherine McKenna approves the provincial regulator taking the lead, “British Columbia also commits to provide an assessment report and aboriginal consultation record,” Kevin Jardine, associate deputy minister for the B.C. environmental office, said in letter dated July 10 to CEAA president Ron Hallman.

Mr. Hallman and Ms. McKenna have not filed responses yet.

Kitimat LNG’s proposed Pacific Trail Pipeline would transport natural gas from the Summit Lake area in the B.C. Interior to the export site at Bish Cove.

Part of Pacific Trail’s route would go through the Wet’suwet’en Nation’s unceded territory. Seven Wet’suwet’en hereditary house chiefs have led a campaign to oppose TC Energy Corp.'s Coastal GasLink, which is being constructed to carry natural gas from northeast B.C. to LNG Canada’s Kitimat site.

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Those hereditary chiefs also oppose Pacific Trail, but Kitimat LNG said 16 elected band councils along the route support the pipeline venture.

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