LNG Canada is unlikely to spark a fracking frenzy

Nelson Bennett

October 24, 2018

Groundbirch general manalger Rej Tetrault, left, with Tim Braun, lead operator, at a well pad that has six producing wells | Nelson Bennett

Companies already produce enough natural gas to provide half of LNG Canada’s needs

In unconventional gas production such as horizontal drilling and hydraulic fracturing, about 80% of a new well’s gas comes up in the first three years, before output goes into a long, slow decline.

But these wells can produce gas at low levels for up to 20 years.

Shell Canada already has 500 wells in production in its Groundbirch operations south of Fort St. John, and once the LNG Canada plant and Coastal GasLink pipeline are built, its gas production will shift from east to west. As a 40% partner in LNG Canada, Shell is obliged to supply 40% of the gas.

All of the partners in the LNG Canada partnership, except Korea Gas Corp., have substantial natural gas assets in northeastern B.C. Production from those assets is expected to fill roughly half of LNG Canada’s gas needs for Phase 1, a two-train plant.

In other words, there are significant amounts of natural gas being produced now by the LNG Canada partners that can shift west to Kitimat. The LNG Canada project alone therefore is unlikely to trigger the kind of fracking frenzy that some have predicted.

Starting about two years before LNG Canada’s plant goes into production, Shell expects to bring in its drilling rig. The company expects it will need to drill about 20 to 30 new wells each year over two years to meet additional demand from LNG Canada and to replace production from some of the wells whose production will have declined by then. From then on, the LNG Canada partners will need to drill about 200 new wells per year for the life of the LNG plant.

“Last year, B.C. drilled 608 [wells],” said Chris Montgomery, manager of government and community relations for the Canadian Association of Petroleum Producers. “We need about a third more of that.”

While the LNG Canada project may not spark a drilling bonanza, even a small uptick in drilling provides a substantial amount of investment and jobs, since it is labour-intensive.

Montgomery said two billion cubic feet per day of demand (roughly the demand from LNG Canada’s first phase) would translate into 20,000 direct, indirect and induced jobs in B.C., $500 million in additional revenue to the B.C. government and $3.7 billion in added GDP growth.

That’s just from the upstream activity, and doesn’t include the jobs and revenue from the pipeline and LNG plant in Kitimat.

“Alberta gets a little bit of an uplift, but most of the uplift from LNG production comes from here in British Columbia,” Montgomery said.



Nelson Bennett

Business in Vancouver resources reporter.

$40B LNG project in northern B.C. gets go-ahead


Rhianna Schmunk

October 2, 2018

Construction is going ahead on a massive, $40-billion liquefied natural gas project in northern B.C., hours after five primary investors from five different countries granted their approval for the joint venture.

The LNG Canada project will see a pipeline carrying natural gas from Dawson Creek in northeastern B.C. to a new processing plant on the coast in Kitimat. There, the gas would be liquefied for overseas export.

The partners came to their decision at 9:18 p.m. PT on Monday. They are:

  • Royal Dutch Shell.
  • Mitsubishi Corp.
  • The Malaysian-owned Petronas.
  • PetroChina Co.
  • Korean Gas Corp.

A rendering of the proposed liquefied natural gas project in northern B.C. shows the processing terminal in Kitimat. All five primary investors have signed off on the project. (LNG Canada/Flickr)

On Tuesday, LNG Canada CEO Andy Calitz said the company is “immediately, today, moving into construction” on the pipeline and plant.

He said project has already obtained all the necessary approvals to break ground, including from the National Energy Board, Department of Fisheries and Oceans, BC Hydro as well as 25 First Nations.

Prime Minister Justin Trudeau announced a new 40 billion dollar liquefied natural gas project that will transport natural gas from Dawson Creek in northeastern B.C. to a Kitimat processing plant. 1:11

Prime Minister Justin Trudeau said the announcement represents the single largest private sector investment in Canadian history.

“Today is a good day,” he said Tuesday.

Political, First Nations leaders react

Trudeau, B.C. Premier John Horgan and other leaders held a news conference to make the official project announcement in Vancouver on Tuesday morning.

“It’s certainly a great day for northern British Columbia,” Horgan said.

“I can’t tell you how proud I am. I can’t stop smiling.”

B.C. Premier John Horgan speaks at the official announcement around the approval of LNG Canada’s joint venture project in B.C. (CBC)

The B.C. ministries of Finance and Energy have estimated the project would generate $22 billion in direct government revenue over the next 40 years.

The project is also expected to employ as many as 10,000 people in its construction and up to 950 in full-time jobs.

The Kitimat plant will be within the traditional territory of the Haisla Nation. Trudeau thanked that nation, as well as others in B.C., for their “leadership” in getting the project approved.

Final approval has been given for a $40-billion liquefied natural gas plant and pipeline for Northern B.C. The 670-kilometre pipeline will run natural gas from Dawson Creek to the plant in Kitimat, which will liquefy and export the gas to Asia. (CBC News)

Crystal Smith, chief councillor of the Haisla Nation, was emotional at Tuesday morning’s announcement.

“On behalf of our entire nation, we extend our gratitude … for the investment being made in Haisla territory,” she said.

“Haisla … history is unfolding before our eyes. We are having a share and we are having our say.”

Then-premier Christy Clark listens as Calitz responds to a media question in Ottawa Feb. 4, 2016. Investors have given final approval for the LNG project. (Adrian Wyld/Canadian Press)

Environmental factors

To help make the project happen, Horgan’s government offered a break on the carbon tax as well as an exemption on provincial sales tax related to construction costs.

According to information provided by the province, LNG Canada would be the least greenhouse gas-intensive large LNG facility in the world.

B.C. Green Party Leader Andrew Weaver was skeptical the project would mesh with the province’s climate plan.

Under the NDP and Greens’ Confidence and Supply Agreement (CASA), the parties committed to reducing greenhouse gases by 40 per cent by 2030 and 80 per cent by 2050.

In a statement, Weaver called the LNG announcement a “profound disappointment,” saying his party would not support the LNG legislation that would be required.

Horgan’s minority NDP government is supported in the legislature by the B.C. Green Party​.

History of LNG in B.C.

On Tuesday, Horgan acknowledged that the first discussions on LNG in B.C. began with a pitch for a plant in Prince Rupert in 1982.

He also acknowledged the previous B.C. Liberal government, specifically former minister Rich Coleman, for “tirelessly” lobbying for the project from 2011 onward.

In a Facebook post, Christy Clark, premier from 2011 to 2017 who helped lead the charge for the project, said Tuesday was “the single best day of my professional life.”

“This is an achievement for our whole country,” she wrote.

Since her election defeat in 2017, Clark has retired from politics and joined the law firm Bennett Jones as a senior adviser in Vancouver. She has also since been appointed to the board of directors for Shaw Communications.

With files from The Canadian Press