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Kitimat LNG commits to electrification

Electrifying LNG plants would use about two-thirds of Site C dam’s power
Kitimat LNG partners have applied to the NEB to expand planned capacity of LNG plant.

A promise made in Kitimat today that the Chevron-Woodside Kitimat LNG project would use electric drive would be a game-changer, if fulfilled, not just for the LNG industry in B.C., but for independent power producers.

At a conference on LNG hosted by the Haisla First Nation in Kitimat today, April 3, Rod Maier, vice president of public affairs for Chevron Canada, said the Kitimat LNG project would use e-drive, according to the First Nation LNG Alliance.

He was quoted as saying it would be “the Tesla of LNG plants.”

That is no mean pledge, as it would significantly lower the project’s greenhouse gas emissions profile, and significantly increase the demand for power. It would also meet the strict new best-in-class emissions benchmarks set out in the CleanBC plan.

A spokesperson for Kitimat LNG could not be reached to confirm the pledge to use e-drive.

Most LNG plants power their liquefaction process by burning natural gas, which produces carbon emissions. Electric drive is a lot cleaner, and lot more expensive.

“The significance of e-drive is that it would substantially reduce, but not completely eliminate, greenhouse gas emissions from the LNG facility at Kitimat,” said David Austin, a lawyer specializing in energy at Stirling Law.

“From this perspective it’s very good news. But like all LNG projects, the proof will be whether it’s ever built.”

The amount of power that would be needed for a large LNG plant using e-drive would be roughly two-thirds of the power that would be produced by Site C dam, according to Jihad Traya, an energy adviser for Solomon Associates.

While Site C’s nameplate capacity is 1,100 megawatts (MW), it will have an average generating capacity of about 650 MW, Traya said.

Each train powered by electricity would take about 200 MW. The Kitimat LNG project calls for two trains. If the Pacific Trail Pipeline that would supply the plants with natural gas was also electrified, that would mean the electricity demand from that one project could consume as much power as the new Site C dam will produce.

That might mean that independent power producers – pretty much shut out of B.C. with the sanctioning of Site C dam – could be back in business in B.C.  But before anyone gets too excited, Traya points out that the Kitimat LNG project is still a decade away.

LNG is typically sold under long-term contracts, so sanctioning of new LNG projects tends to come in waves, with projects timed to meet contract renewal windows.

The LNG Canada project is being built to meet the next window, around 2024. According to documents filed with the National Energy Board (NEB), the Kitimat LNG project would be timed to meet the one after that – in 2029.

Although Chevron and it joint venture partner, Woodside Energy International, already have provincial and federal environmental certificates for the Kitimat LNG project and associated Pacific Trail Pipeline, the joint venture recently applied to the NEB to double the export capacity that was originally approved and extend their export licence from 20 to 40 years.

That application is all about keeping the project in play, Traya said. The project was originally approved in 2011.

“They’re nearing their sunset clause,” Traya said. “So you go back, apply for your 40-year licence. You’re pushing the string along.

“However, we’ve always said that we believe that there’s sufficient room for another LNG project off the west coast of Canada. The Chevron project has always looked like it has potential. It has its own set of issues, but under an expansion, and under the right set of circumstances around the fiscal regime, it can and may have the potential to work.”

But as he points out, Chevron, like Royal Dutch Shell, is a global player with a number of potential new projects on the drawing board. Deciding which one gets a final investment decision will all come down to making the numbers work.

Committing to e-drive could make the project more challenging, from an economic standpoint.

“The ones that are electric drive are always at a disadvantage for competitiveness,” Traya said.

“However, for it to work, if the power is delivered directly to the plant gate at some industrial rate comparable to what is in the Lower Mainland, it might work. And there might be some adjustments to the fiscal terms to make it net neutral for Chevron.”

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