FortisBC, a subsidiary of Fortis Inc. (TSX:FTS), will push forward with its $400 million LNG facility expansion in Delta after favourable developments from the British Columbia government.
These include a direction to the BC Utilities Commission that it exempt the Surrey-based company from providing a certificate of public convenience and a “necessity review” for the expansion on Tilbury Island.
FortisBC said this would help the company to rapidly and cost-effectively supply liquefied natural gas to the B.C. marketplace, particularly the transportation sector.
“This announcement will also result in increased LNG supply, creating opportunities for industrial users and remote communities, bringing economic development and new jobs to B.C.,” said John Walker, the company’s president and CEO.
The expansion is expected to include a second tank and a new liquefier, both to be in service by mid-2016. The expansion will add approximately one million gigajoules of LNG storage, as well as 30,000 to 60,000 gigajoules of liquefaction capacity per day. The company said it would also provide 300 person-years of construction jobs and about $4 million a year in taxes to various levels of government over time.
FortisBC expects to finance the expansion as part of its natural gas regulated rate base.
However, the investment is subject to FortisBC board approval and additional regulatory and environmental permits and approvals, including from the B.C. Oil and Gas Commission.
B.C.’s energy and mines minister, Bill Bennett, said the provincial government wanted to “get out of the way” and allow the transportation fuel component of the LNG industry to develop quickly.
As part of government's direction, the utilities commission will set the LNG dispensing rate at $4.35/gigajoule, which is intended to cover the cost of the transportation of the gas to the facility, liquefaction and dispensing. Fortis BC said this would help the transportation sector transition to adopt LNG as a fuel source and allow northern and remote communities to switch to LNG, away from fuels like diesel.
The company said converting fleets and vehicles to natural gas not only helps the province meet its greenhouse gas reduction goals but also helps improve air quality.
