Power plant hinges on LNG potential

CONSTRUCTION of a natural gas-fired power plant south of the airport hinges on how much electricity BC Hydro estimates it will need

  • Sep. 4, 2013 2:00 p.m.

CONSTRUCTION of a natural gas-fired power plant at the city-owned Skeena Industrial Development Park south of the airport hinges on how much electricity BC Hydro estimates it will need for the region’s potential liquefied natural gas (LNG) industry, says the vice president of the company that wants to build it.

“We’re not going to file the project description until BC Hydro tells us this is what they want because we will look kind of silly if we file something that’s in the pubic realm and then BC Hydro comes in and says no we want something else. We don’t want to look silly,” says Alexi Zawadzki from the Calgary-based Veresen energy company.

So far, Veresen has signed a memorandum of understanding with the city and says that an option agreement is underway for a gas supply with Pacific Northern Gas which has a supply line running through the industrial park.

The company is also speaking with the Kitselas First Nation. Its traditional territory takes in the industrial park area.

Although the LNG plants now under consideration for construction in Kitimat and in Prince Rupert are expected to use their own natural gas to power facilities to super-cool massive amounts of gas for exports overseas, BC Hydro would be called upon to provide power for other plant needs.

Veresen calls its planned facility a “gas peaker” because it would start up when other power sources are at maximum capacity, Zawadzki said. That’s typically five per cent of the time.

Zawadzki said his company hopes to build a facility with about 500 megawatts of capacity and with each megawatt representing approximately $800,000 in construction costs, a price tag for a plant of that size would be in the order of $400 million.

Depending upon circumstances, the plant would go through a three to five-year permitting and construction phase.

BC Hydro’s resource planning director Randy Reimann confirmed that BC Hydro has been looking into options for a back-up facility in the area.

“We recognize the benefits of gas peaking plants on the North Coast,” Reimann said in an email. “They will support the growing loads, and the maintenance and reliability of the transmission line to northwest B.C.”

“The 500 kilovolt line from Prince George to Terrace is about 450 kilometres long. While it is typically very reliable with very few outages, it makes sense to support the single line supply,” he said of the line which brings power from the BC Hydro grid to the region.

BC Hydro’s recently released Integrated Resource Plan expressed the need for a peaking facility in the area and that it would entertain bids from companies once a final decision is made to proceed.

“Assuming the technical studies confirm the need for natural gas-fired generation to support North Coast reliability levels, BC Hydro will conduct a competitive procurement process to enter into an agreement with a private developer to provide capacity and associated ancillary services,” reads a section from the resource plan.

Zawadzki is confident Veresen would be the successful bidder on any project to generate power to sell to BC Hydro.

The company does have a memorandum of understanding with the city which would lead to the purchase of three to five acres at the park.

“A lot of this comes down to decisions made by the government. But the government is saying their decisions are based on industry’s decision. So you are kind of playing this zero-zero defensive game back and forth,” said Zawadzki of the intricate interaction currently underway to establish a LNG industry in BC.

“A gas-fired peaker facility combines compressed air and natural gas in a combustion chamber. When burned, this fuel/air mixture expands rapidly, and this high-speed rush of hot gases is forced through a turbine, making it spin. The turbine is connected to an electrical generator, which creates a flow of electrons when it spins,” Zawadzki explained.

Zawadzki, who briefed Terrace council Aug. 26, said a power plant would be an important tax source for the city and for the Kitselas. It would also act as a power fail safe for the area.

He did acknowledge that peaker plants to have greenhouse gas emissions.

“These things burn gas,” he said bluntly. “There’s basically no way around it.”

Zawadzki did state Terrace made a better location than Kitimat for a plant because of that town’s growing industrial base and the predicted effects on the airshed resulting from that.

City councillor Brian Downie asked if the facility could also use wood waste, making it a co-generating peaking plant.

Zawadzki said Veresen isn’t interested in using wood, partly because it is hard to secure financing when there is no guarantee that there will be a supply of wood waste in the long-term, and that those facilities are best operated by mills who have control over that fuel source.