What is LNG?
LNG stands for Liquefied Natural Gas. It’s processed natural gas that has been turned into a liquid by chilling it to -162 degrees Centigrade. As a liquid, it takes up only 1/600th of the original gas volume, and that makes it easier to ship to overseas markets. Or to use as fuel for vehicles and ships in our region. Or to be turned back into natural gas again (the process is called regasification) and then used to generate electricity in some other regions and countries.
LNG is odourless, colourless, non-toxic and non-corrosive. If spilled, it simply evaporates. It poses no risk to marine life, or wildlife. LNG processing plants are designed to be safe, and to deal with the risks of fire. The same is true for the LNG carrier vessels at sea. Around 100,000 cargoes of LNG have been delivered to world terminals by LNG carriers, and there have been no problems with loss of cargo, and no explosions.
Compressed Natural Gas, or CNG, is another fuel used by some vehicles, primarily buses and trucks. It’s natural gas compressed to about 1/100th of its original volume. It’s much cleaner than gasoline or diesel fuel, but a litre of CNG has only a quarter as much energy as a litre of gasoline.
How do LNG projects get approved?
You can’t just up and build an LNG export project in BC. You have to go through stiff governmental approval procedures first.
You’ll first need to have an export licence from the National Energy Board. And then you’ll have to pass a tough Environmental Assessment from BC (and possibly one from the federal government as well).
Many government agencies may be involved in the approval process before any work can begin. Additional permits and reviews can cover a range of topics such as impact on fish, wildlife, marine and land habitats, pollution levels, and impacts on First Nations.
Consultation and accommodation with First Nations on their issues and needs has become (and continues to be) of increasing importance. Both BC and federal governments plan to build into law the principles of the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). A key principle of UNDRIP is “Free, Prior and Informed Consent’ by a First Nation before development can proceed on its recognized territory. It’s not yet clear what all this will mean in the future in BC and Canada.
As well, both provincial and federal approval processes are being reviewed and revised, which may be a challenge for your LNG project.
In the end, you’ll need a whole series of permits, plus solid Indigenous consultation and general public input — all at your expense — before you can start building. It will then take you 4-5 years to build your plant and get it into operation. You’ll also have to secure overseas customers, and the pipeline that brings you your natural gas to process has to go through similar complicated and costly approval processes.
Who else is in the LNG market?
Japan, China, and South Korea are the largest LNG importers in Asia. Demand is expected to increase from them, and India’s demand is rising, too. Experts forecast that world demand will be rising strongly at the time the LNG Canada plant at Kitimat comes online, before or around the mid-2020s.
BC faces substantial competition for these markets. Australia already has a well-established LNG export industry, with seven operating LNG developments and three more under construction. Other projects are also being considered. The US has two operating export plants, four under construction, and 11 more undergoing permitting processes. The Trump administration has been pushing LNG, and making approval processes shorter for projects. Russia is working hard to build its exports to Europe and Asia. The U.S. is also eyeing Europe. Qatar, the world’s biggest single source of natural gas, is taking steps aimed at making it the No. 1 exporter of LNG.
When it comes to competition from the US, we have mentioned the built-in advantage of our West Coast ports, with much shorter shipping times to Asian terminals than LNG plants on the US Gulf Coast. But two projects currently proposed in the US could compete: an LNG plant at in Oregon (Jordan Cove) and one in Alaska (Nikiski). As of winter 2019, LNG Canada and Woodfibre LNG were ahead of them in the race.