Trans Mountain Expansion versus LNG Canada: A tale of two energy projects

Trans Mountain Expansion versus LNG Canada: A tale of two energy projects

BC Premier John Horgan and Prime Minister Trudeau were positively beaming this week, as the duo announced the sanctioning of the massive LNG Canada project, located in Kitimat, BC. The $40 billion export terminal, led by Royal Dutch Shell, is the country's largest private sector investment in its history.

The initial phase of development will consist of two LNG liquefaction trains, for a total capacity of 14 million t/y, with the potential to expand to four operating trains. Shell CEO Ben van Beurden says he believes "LNG Canada is the right project, in the right place, at the right time.

The project is waiting on a decision from the Federal Court of Appeal on whether or not it should be exempted from duties on imported steel, required for some 140 modules to be built in Asia and shipped to Kitimat. Canada has pledged $275 million in federal funding for the project, promising that "trade barriers won’t be an impediment to moving forward."

A tale of two energy mega-projects: Similar but different

When asked about his ongoing opposition to the Trans Mountain Expansion Project (TMEP), Horgan says the two projects are not comparable since "Shell and LNG Canada were able to realize benefit agreements from wellhead to water line and Trans Mountain was not." LNG Canada has agreements in place with 25 First Nations communities, while TMEP signed benefits sharing agreements with 43 Indigenous groups along the pipeline's right of way. 

TMEP faces opposition from First Nations communities located on the coast, not along the pipeline route. It's also worthwhile to note that the Federal Court of Appeal concluded in its ruling that the federal government failed in its duty to consult with First Nations peoples, not Kinder Morgan.

The federal government says it will not appeal a court ruling that overturned the pipeline's approval, instead opting for more consultations with aboriginal groups.

In the meantime, the province of BC has filed for intervenor status in the National Energy Board's latest round of regulatory reviews on TMEP, claiming its mandated 22-week timeframe is "insufficient to accommodate a thorough review" on the impacts of additional marine traffic and consultations with Indigenous groups.

A change of heart from BC's NDP

Horgan was opposed to all LNG development during his stint as leader of BC's official opposition party, on grounds that the liquefaction process would raise the province's total carbon emissions, making it impossible for BC to achieve its GHG reduction goals. Last spring, Horgan offered the LNG sector a generous tax break, to the tune of about $6 billion, much to the dismay of Green Party leader Andrew Weaver and other environmental organizations.

Weaver and several other special-interest groups in the province have already expressed dismay over the new LNG terminal. Although there is plenty of opposition to LNG development in BC, LNG Canada has largely been spared of the many legal challenges launched against Petronas' Pacific Northwest LNG Project, which was cancelled in the summer of 2017.

LNG Canada already has a 40-year export license in place, as well as all major environmental permits. Former BC Premier Christy Clark began negotiations with the company in 2011, calling this week's news "the best day" of her professional life.

A lawsuit is still pending on TransCanada's Coastal GasLink Pipeline, which would supply natural gas from the Dawson Creek area to Kitimat. A BC-based litigation is seeking to send the $6.2 billion pipeline through a full federal review process, which could delay construction by several years.

Much like TMEP, LNG Canada is intended to ship Canadian resources overseas to Asian buyers, increasing marine traffic on the west coast. It remains to be seen if any more lawsuits are launched, using TMEP as a precedent for failing to consider impacts on marine life.

LNG Canada is owned by Royal Dutch Shell (40%), PetroChina (15%); Japan's Mitsubishi Corporation (15%) and the Korea Gas Corporation (5%). The export terminal has an estimated in-service date of about 2025. 

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