Steelhead still bullish on LNG plans for Vancouver Island

Company confident market issues will have passed by the time proposed export facilities near Alberni and Mill Bay ready to go

An aerial photograph of the site of the proposed Sarita Bay LNG plant

Never mind the choppy waters, it’s still damn the torpedoes, full speed ahead for the firm behind Vancouver Island’s biggest industrial proposal in at least a generation.

Despite glum economic forecasts, political opposition and upheaval for one of its key partners, the CEO of Steelhead LNG says the company is still on track to meet its planned schedule on whether to proceed with a multi-billion-dollar plan to build two liquified natural gas plants on Vancouver Island.

“We are on target, given the schedule we had before,” Steelhead CEO Nigel Kuzemko said.

Kuzemko’s comments come in the wake of Tuesday’s throne speech where Premier Christy Clark pledged the B.C. government’s continued commitment to LNG exports, despite project delays and a global glut of oil and gas.

The Shell-led LNG Canada project proposed for Kitimat has postponed its final investment decision until the end of the year, while the Petronas-led Pacific Northwest LNG proposed for Prince Rupert is also behind schedule.

In June, the International Energy Agency warned a flood of new LNG supply was coming onto the market. It suggested new plants would struggle to get off the ground as current LNG prices would not justify the capital cost.

But Kuzemko said Steelhead representatives are confident that by the time its project is operational, the markets in China and Japan will be much improved.

“2020-plus is a very different market,”he said. “The excess product will be used up by then.”

On Oct. 2, Steelhead LNG announced National Energy Board approval for a license to export up to 30 million tonnes of liquified natural gas per year over a 25-year period from two proposed sites.

Steelhead had previously announced proposals to build export facilities on each Vancouver Island coast: a $30 billion facility at Sarita Bay, about 75 kilometres southwest of Port Alberni, and a smaller floating terminal at the Bamberton site just south of the Mill Bay ferry terminal.

The Sarita Bay proposal is being explored with the Huu-ay-aht First Nation, while the Mill Bay project is proceeding in conjunction with the Malahat First Nation.

The latter band received a jolt Wednesday with the announcement three top economic development officials had been dismissed as part of an ongoing review of governance and finances initiated by new Chief Caroline Harry and her council shortly after they were elected in November.

Previous chief Michael Harry resigned last summer amidst allegations he was receiving a consulting fee from the owners of a controversial contaminated soil treatment facility near Shawnigan Lake.

That occurred just prior to the band’s Aug. 20 announcement that a long-term lease deal had been reached with Steelhead for the Mill Bay plant.

Kuzemko said Steelhead is continuing to work with the new chief and council to iron out any concerns they may have.

“Every organization goes through this, particularly after a political change,” he said. “The deal that we signed is still in place.”

The Mill Bay plant has come under fire from some neighbours around Saanich Inlet, who say it comes with too much environmental risk. The Cowichan Valley Regional District last week formalized its opposition due to those environmental concerns.

“We should make it clear that the Cowichan Valley, or anywhere else in B.C. For that matter, is not the place for this kind of project,” Shawinigan Lake Director Sonia Furstenau said.

Kuzemko said on a global perspective LNG is environmentally superior to the Asian coal plants it will replace. On a closer-to-home level, he said the technology is proven to be safe and the proposal can be adjusted.

“We need to understand what the major concerns are, and, indeed, the minor ones,” he said. “We are well before the design stage. We can design it to mitigate all concerns that people have.

Proponents point to the up to 200 direct, high-paying long-term jobs the plant is expected to provide once operational.

The larger Sarita Bay project, meanwhile, remains in the feasibility study stage. It promises between 300 and 400 jobs.

Job estimates on the planning and construction of each project, as well as the spin-off jobs number in the thousands.

Feeding each plant proposal are a pair of proposed pipelines, the first running for 75 kilometres undersea from Cherry Point Washington directly to Mill Bay, the second connecting the Island’s east coast to Sarita Bay.

Before proceeding with either project, Steelhead LNG needs to overcome a number of regulatory approvals.

Should a positive final investment decision be made in 2018  as planned, the Mill Bay plant is expected to be operating by 2022. The Sarita Bay project is operating on a timeline of a 2020 decision and a 2024 completion date.

— with files from Black Press

 

 

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