An Oil & Gas 360® Exclusive

In the first half of 2018, Canada’s Steelhead LNG has been busy.

The Vancouver-based LNG project added two key North American natural gas and pipeline industry leaders to its executive team as the company prepares to steer its proposed Kwispaa LNG export project into the fast lane.

Steelhead’s floating liquefaction model

Steelhead’s concept would require a much smaller environmental footprint than most conventional land-based LNG export facility projects. It calls for a floating LNG production and storage unit that is moored to marine jetties just off the coast.  In January Steelhead contracted Hyundai Heavy Industries to develop the company’s At-Shore LNG™ (ASLNG) concept.

To get the gas to the floating liquefaction facility, the company is proposing a major pipeline to transport natural gas production from the Northeast B.C. area of Chetwynd to the Kwispaa LNG liquefaction, storage and loading facility proposed for Sarita Bay.

B.C.’s Steelhead LNG Closes In

Proposed start and finish areas of the Steelhead LNG pipeline

B.C.’s Steelhead LNG Closes In

Location of Sarita Bay, relative to Vancouver

~$18 billion investment

The proposed ASLNG unit itself will be 340 meters long, 60 meters wide, weigh 74,000 tons, and will be able to store up to 280,000m3 of LNG. Approximate capital cost for the facility is $10 billion with another $8 billion estimated for the pipeline.

Steelhead has secured 25-year licenses from Canada’s National Energy Board to export up to 24 million tonnes per annum.

B.C.’s Steelhead LNG Closes In

Sarita Bay Vancouver, B.C. Canada; Source: Steelhead LNG

The company projects that 1,500-2,000 jobs will be created during construction and 350-400 jobs created when the project and pipeline are operational, which the company is targeting for 2024.

The preliminary approximate pipeline capacity is 2 Bcf/day, expandable to approximately 4 Bcf/day, the company said. The proposed pipeline will cross 35 First Nations lands, the company told Oil & Gas 360®.

The company’s leadership has long-standing relationships with many of the First Nations. In fact Steelhead LNG is the only Canadian LNG project being developed through a co-management relationship between industry (Steelhead LNG) and First Nations (Huu-ay-aht First Nations). Steelhead LNG and Huu-ay-aht entered into the co-management relationship following a 70% ‘yes’ vote by Huu-ay-aht citizens in a community-wide referendum, held in March 2017.

Top energy, pipeline leadership

Steelhead has brought two well-known energy pros onboard recently—Western Canadian Energy’s Randy Jespersen and former president of the Keystone pipeline projects for TransCanada, Corey Goulet.

Goulet was most recently the VP of integrity and projects at Tundra Energy and Marketing. But he is better known for his senior leadership positions for almost 20 years at TransCanada and eight years at Enbridge Inc. At TransCanada, Goulet was president of the Keystone pipeline projects, including the Keystone XL. Goulet will be vice president of pipeline at Steelhead LNG effective July 3.

Jespersen, who joined Steelhead in March, has held senior roles throughout the Canadian oil and gas sector including vice president of gas supply and president and CEO of Terasen (Now FortisBC) from 2002- 2010 when he retired. Jespersen has also served as chair of both the Canadian Gas Association and the Western Energy Institute.

Oil & Gas 360® interviewed Randy Jespersen this week about the status of the company’s Kwispaa Project.

OAG 360: How would you describe the political climate right now in B.C toward LNG export projects?

Steelhead LNG Executive Chairman Pipeline R.L. (Randy) Jespersen: “I think the climate is very good politically and regulatory-wise in B.C. for liquefied natural gas developments. The current government has been very clear on the conditions that must be met in order to proceed with an LNG export project. They recently came out with a four-pillar approach to stimulate and encourage development of projects.

They have eliminated the royalty tax, which would have been a huge economic barrier. The royalty tax has been lifted for those projects that meet top quartile emissions, and they will have the carbon tax waived as it applies to their projects, which is huge. We meet and exceed that hurdle.

The provincial sales tax has been deferred until the commercial operation date, which helps, given the long ramp-up time for construction of projects of this size.

The last element that they have addressed is the provision of electricity to projects like this at the same rate as other industrial customers in B.C. Those are all positive indicators to project developers and producers.

OAG 360: Which natural gas producers are under contract as of today? Who has expressed interest?

Steelhead LNG Executive Chairman Pipeline R.L. (Randy) Jespersen: We have not gone to the street with our offering, we anticipate doing that through the summer period here, but we have been in private discussions with a number of producers. They are helping shape what our offering will be to them.

In a nutshell, we will be offering world prices at the inlet of our pipe in Northwest B.C. Northwest B.C. typically trades at a discount to the Alberta pricing, so it’s an opportunity for them to capture world pricing for their production in Northwest B.C.

OAG 360: What is the likelihood of expanding the pipeline into Alberta to provide an outlet for the Alberta Montney producers’ dry gas, for example?

Steelhead LNG Executive Chairman Pipeline R.L. (Randy) Jespersen: “We fully intend for Alberta origin product to find its way directly and indirectly into our pipe.

At this juncture, our plan is to keep the regulatory model very, very simple. Our pipe will start in Northwest B.C. and therefore be regulated under the B.C. Oil and Gas Commission and have a single-point review through B.C.’s environmental assessment office.

With the top end of our pipe being stationed in the Chetwynd area, there are existing pipes there that flow and we anticipate once we identify who the gas supply community would be, we would want to take a long hard look at developing a header system that would feed new production into our pipe. We will not have the pipe crossing the interprovincial boundary.

OAG 360: What are some key differences between locating the project in Sarita Bay as opposed to the Malahat location that you had under consideration previously?

Steelhead LNG Executive Chairman Pipeline R.L. (Randy) Jespersen: The Malahat location was attractive to us because we have First Nation partners there. But the scale of the plant in that location wound up being of lesser size than we wanted, and that location had the potential for more local opposition in terms of where we would be bringing LNG tankers in and out.

The primary reason for the site that we have selected at Sarita Bay is the proximity to deep water ocean. It requires no dredging – it’s a deep-water facility.

OAG 360: What sets the Steelhead project apart from the other proposed Canadian LNG projects?

Steelhead LNG Executive Chairman Pipeline R.L. (Randy) Jespersen: Our company and our project are entirely BC (British Columbia)-based. Our focus is entirely on developing our flagship project, Kwispaa LNG. We do not have a competing portfolio of projects.

Kwispaa LNG is the only Canadian LNG project being developed through a co-management relationship between industry (Steelhead LNG) and First Nations (Huu-ay-aht First Nations)— that provides increased certainty for the project.

Kwispaa LNG is the only project in the world that features Steelhead LNG’s trademarked At-Shore LNG™ design, which places the proven technology of onshore LNG plants into electric drive At-Shore LNG™ units moored to permanent jetties.

We are integrating up to 6 mtpa of LNG production with approximately 280,000 m3 of LNG storage in each unit. It’s how our concept offers lower site preparation costs than conventional onshore projects.

The Kwispaa LNG site benefits from a deep-water port, a sheltered bay and short shipping distances to Asia.




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