Kitsault Energy seeks LNG export permit

The company has applied for a 25-year natural gas export licence from federal regulators

Kitsault Energy, the company wanting to build and operate a liquefied natural gas (LNG) export plant near an abandoned mining town north of Terrace, has applied for a 25-year natural gas export licence from federal regulators in order to export Canadian shale gas to Asian markets.

The application, submitted to the natural Energy Board on Dec. 18, 2013, requests a licence authorizing the export of up to 20 million tonnes of LNG per year for a term of 25 years. The company intends to initially use smaller floating liquefaction plants beginning in 2018 and adding on to those plants in future years in order to export up to 2.6 billion cubic feet of gas per day.

“The proposed LNG terminal will be comprised of a floating, and/or land-based natural gas liquefaction plant, LNG storage and marine loading facilities,” reads the filing.

Kitsault Energy was formed by Kitsault townsite owner Krishnan Suthanthiran to market the location as an energy hub because its location on Alice Arm provides access to the Pacific Ocean for LNG tankers and its convenience as an end point for natural gas pipelines originating in northeastern B.C.

The townsite was initially built to house molybdenum mine workers and their families, but was abandoned over 30 years ago when the mine closed. Since Suthanthiran bought the property in 2005, a handful of caretakers have been maintaining the townsite.

The outfit still needs to find partners or investors for an approximately 600-kilometre long pipeline to bring the product to Kitsault, the LNG facilities it wants built, and a supply of natural gas itself, the filing confirms.

“Kitsault Energy will employ several models for export including a tolling model and one where project partners may own their gas supply or contracts and be responsible for sales and delivery,” reads the filing. “Accordingly, Kitsault energy may or may not be involved directly in the purchase and sale of natural gas with respect to export of gas from Canada.”

The company intends to power the project using electric drives utilizing a BC Hydro transmission line already in use at Kitsault, gas turbine power generation, or a combination of the two, reads the filing.

Three northwest LNG terminals received approval for export licences from the NEB last month – BG Group’s Prince Rupert LNG Exports Ltd., the Petronas-led Pacific NorthWest LNG Ltd. and Exxon Mobil Corp.’s West Coast Canada LNG Ltd. – as well as a smaller outfit near Squamish.

That brings the provincial total of approved NEB LNG export applications to seven – with four more currently being assessed.

The federal government still needs to give its approval for the proposed projects, and companies and investors are still waiting for news from the province on how the projects will be taxed before moving forward. Taxation information was expected to be released by the provincial government last November, but was delayed until 2014.