With the continuing requirements for new sources of gas in North America Kitimat LNG is a new LNG importation terminal project currently being constructed on the west coast of Canada in northern British Columbia. The Kitimatproject, which will be the first of its kind on the west coast (the only fully permitted LNG terminal on the west coast of North America), will consist of a modest import terminal with jetty and port facilities for tankers, and the linking 470km Pacific Trails pipeline loop, which will run from Kitimat to Summit Lake and provide a direct connection into the Spectra Energy Transmission pipeline system and thereafter direct access to the North American energy market.
The Western Canadian Sedimentary Basin will supply natural gas to the Kitimat LNG Terminal. At the Terminal, the gas will be chilled to minus 160 degrees Celsius. At this point the natural gas becomes liquefied natural gas (LNG), later to be stored in full containment tanks and then shipped in specially-designed marine vessels to markets in Asia, where demand for clean natural gas is strong and growing. Kitimat LNG Terminal addressed all the government regulatory and state of the art engineering and safety standards.
The pipeline will require an investment of around C$1bn. The LNG project is scheduled to become operational along with the new Pacific Trails Pipeline in 2010. Kitimat has already cleared its environmental assessment certificate from the British Columbia Environmental Assessment Agency. It has also received the Federal environmental approval for an LNG regasification terminal.
Natural gas supply
The natural gas supply to the LNG Terminal was assured by an agreement signed in 2006 with Liquified Natural Gas Ltd of Australia to supply 1.8 million metric tons of gas a year to the Kitimat terminal, which would be purchased on a delivery basis. This quantity of gas represents around 25% of the total yearly capacity of the terminal.
A direct connection to Spectra Energy’s Westcoast Pipeline system via Pacific Trail Pipelines’ Kitimat-Summit Lake Loop takes natural gas from the Western Canadian Sedimentary basin to the Kitimat LNG Terminal.
Added, with 57 Tcf of proven natural gas reserves in Canada, major international and Canadian producers have announced significant resource potential in the Horn River Basin and Montney areas of British Columbia and Alberta. With combined recoverable natural gas reserves of 70 Tcf, the resource potential of these two basins is expected to be more than the Canada’s natural gas resources.
The pipeline project is being developed by a consortium called the Pacific Trail Pipelines Limited Partnership. This partnership consists of a 50/50 partnership between two companies, Pacific Northern Gas (PNG) and Galveston LNG.
The project goal for Pacific Trail Pipelines is to develop a natural gas transmission pipeline system from Kitimat to Summit Lake in British Columbia to serve the Kitimat LNG Inc import terminal near Kitimat.
Kitimat LNG Inc is a subsidiary of Galveston LNG (there is also a possibility that a 250MW to 500MW combined cycle cogen power plant may be developed next to the LNG terminal). The new terminal will have access to the natural gas market via its own associated Pacific Trail Pipeline which will link in not only to the Spectra Energy Transmission Pipeline (formerly Duke Energy) but also the Alliance Pipeline and the TransCanada Pipeline.
The new terminal will also provide natural gas supply for some large industrial users such as the Canadian oil sands projects in Alberta and also power supply companies. The pipeline project was originally called the Kitimat to Summit Lake Looping Project (KSL Project).
Kitimat pipeline project
The pipeline project consists of a looping of the existing PNG pipeline between Kitimat and Summit Lake to increase capacity from 115 to 1,000 million cubic feet of natural gas a day and operate a bi-directional pipeline system (east-west and west-east). There will be one compressor station on the new loop system and it will be able to vastly increase the transport of gas across the Province.
The eastern section of the 36in-diameter 470km pipeline will be constructed within, or next to, the right-of-way established for the existing PNG pipeline system between Summit Lake and Endako (situated west of Fraser Lake). However the western half of the project will be constructed mostly within a new right-of-way, which is adjacent to other existing linear developments, such as roads and power lines, between Endako and Kitimat.
The decision to move the western section from the existing PNG right of way avoids the difficult terrain through the Telkwa Pass, as well as the environmentally sensitive areas in the Zymoetz (Copper) River valley.
LNG receiving terminal
The terminal is being constructed in Elmsley Cove, which is situated about 18km south of the all-season deepwater port at Kitimat, which is large enough to handle ships of 325,000t and with ten miles of waterfront, previous plans had also named Bish Cove as a possible site.
The facility will have a 610 million cubic feet a day send out capacity and will have three storage tanks each with 160,000m³ capacity. There will also be regasification equipment, a liquids recovery units, marine berthing and unloading ship jetty and on-site utilities and support buildings.
The pipeline link will connect the terminal to a potential 11.5 billion cubic feet a day supply market (three billion to Alberta and British Columbia, 2.5 billion to the Pacific Northwest and six billion to California). The terminal is ideally placed for LNG supply contracts from Australia (15 days by ship), Russia (Sakhalin Island, 7.5 days by ship), Indonesia and Malaysia.
There was a protracted environmental and siting study for the project that was concluded in June 2005 when the Elmsley Cove site was chosen as the most suitable. The project undertook long consultation with First Nation (the Haisala native people) about the siting of the terminal and the route of the associated pipeline.
In July 2005 the FEED (Front-End Engineering and Design) contract was awarded to TGE (Tractebel Gas Engineering) and this was completed by August 2006. Site preparation work began for the terminal in late 2007 and permission for several access roads had still to be granted.
The construction of the project is proceeding on a turnkey basis with the EPC contractor responsible for employing all subcontractors for the project. There are likely to be around 700 personnel on site during the construction and then 50 to run the facility when it is completed. The EPC contractor has not yet been announced.
The LNG import terminal’s location provides maximum transportation logistics flexibility due to its relative proximity to the key markets in the Pacific Basin and North America.
The LNG supplied by the terminal will be free of pre-defined destination clauses. The terminal also has the potential for addition of regasification capabilities in the future. The deepwater attributes of the marine site removes the need for breakwater or dredging.
Mitsubishi UFJ Securities, the financial advisor of Kitimat, solicits interest in the Project (the Process). Kitimat seeks equity, Terminal Use Agreement and off-take interests.