TransCanada forges ahead on B.C. gas pipeline, hits resistance

The Vancouver Sun | Gordon Hoekstra | January 18 2018

TransCanada is forging ahead with a revamped plan to build a $1.4-billion North Montney Mainline gas pipeline despite the death of the LNG project in northwest B.C. that had underpinned its construction.

The pipeline project — now aimed at the North American market — enters National Energy Board hearings next week.

Following the hearings in Calgary and Dawson Creek, scheduled to end on Feb. 1, the NEB can take about three months to make a decision.

Calgary-based TransCanada says the project is still justified by demand for natural gas in North America, noting it has signed up 11 North Montney producers in northeast B.C. who want better access to markets to the south.

However, the new approval of the North Montney Mainline faces resistance from pipeline competitors and some First Nations.

“While it is not surprising that competitors continue to oppose the project, North Montney area producers have a much different view, as demonstrated by the long term commercial underpinning,” TransCanada spokesman Shawn Howard said in a written statement.

“As a result of the reduced scope of the project, there will be an even smaller environmental impacts,” he added.

The 300-kilometre pipeline project was initially meant to connect gas producers in the North Montney to the planned 900-kilometre Prince Rupert Gas Transmission pipeline that was to feed the $11.4-billion Petronas-led Pacific NorthWest LNG project. The LNG project was cancelled last year over low global natural gas prices and market uncertainty concerns.

The NEB had given approval to the project based on the export of liquefied natural gas to overseas markets in Asia.

The variation seeks approval for 206 kilometres of pipeline to proceed independently of the LNG project being built.

In filings with the NEB, Westcoast Energy, a pipeline company owned by Enbridge, said the application to vary the approval should be denied because the initial approval was based on the export of LNG.

Some First Nations in northeast B.C. have also questioned the need for the project and have concerns over its effect on the environment.

A report commissioned by the Saulteau First Nation — and filed with the NEB — concludes the pipeline project “is surplus to Canadian requirements and therefore this variance application should be denied.”

The report, written by Canadian energy analyst David Hughes, said TransCanada has overestimated U.S. natural gas demand and overestimated North Montney production. “There is also unlikely to be a price bonanza in the U.S. for Canadian exports, given that U.S. domestic production is projected to be sufficient to cover all domestic supply plus expanding exports,” said Hughes.

First Nations have another concern.

Almost all natural gas in northeast B.C. is produced by fracking, which requires vast quantities of water. The process involves pumping a mixture of water, sand and chemicals deep underground at high pressure to fracture rocks, releasing trapped natural gas so it can be pumped to the surface.

In a filing with the NEB, the Blueberry River First Nation said 74 per cent of its traditional territory is now within 250 metres of some form of industrial development.

The variance for this pipeline project will further destroy or degrade islands of critical area within its territory that supports its treaty rights, which includes a traditional way of life including hunting, fishing and trapping, said the First Nation.

The North Montney is part of the Montney gas formation in northern B.C. and northern Alberta that has been labelled Canada’s next big energy bet.

The formation also produces liquid hydrocarbons that are a much-needed economic bonus as a glut of natural gas production in North America has driven down gas prices for nearly a decade.

Energy analyst Edward Kallio said there is bottleneck preventing North Montney producers from getting their product to the North America market.

This “world-class” gas play can compete with U.S. shale gas plays such as the Marcellus or Utica on cost, said Kallio, principle of Calgary-based Eau Claire Energy Advisory, Inc.

“What it requires is economic pipeline infrastructure to connect to downstream markets,” he said. “Otherwise, the gas is stranded. Producers won’t drill, rigs won’t be active, jobs and economic activity will dry up.”

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