The Western LNG Project

Abstract

Introduction The Western LNG Project is one of the last "megaprojects" which is still being actively pursued in Canada because the oil sands plants, the Arctic Pilot Plant and the Foothills Pipeline are all in various stages of shelving or mothballing. Canada needs the Western LNG Project, and Dame Petroleum Limited is working very hard to bring it into being. This paper will provide a little history, will briefly outline the project, and will indicate our progress to date. In 1978 Dome, a key player in Alberta ethane supply identified a surplus of ethane developing in Alberta and saw potential in British Columbia. At the time the surplus was in excess of requirements for Alberta and other traditional markets, consequently an approach was made for sales to Japan. To make a long story short, the ethane surplus disappeared due to expansion plans for petrochemical developments in Alberta and, as a substitute energy export into Japan, the Western LNG Project came into being. The years 1980 and 1981 were the "years of the market "where the principal project activity was centered around obtaining the sales agreement which was signed in its final form March 20, 1982. The year 1982 was, and is, the "year of the regulatory approvals ", governments permitting, 1983 will be the "year of the engineer" when we can complete our design and proceed with the construction. Project Description Dome Petroleum Limited and NIC Resources Inc. (a Canadian subsidiary of Nissho Iwai Corporation of Japan), signed the agreement for the sale of liquefied natural gas to five major Japanese utility companies. Nissho Iwai is a major Japanese trading company, the largest in Japan in the area of LNG. Contingent upon obtaining the necessary Canadian government approvals and assuming our plans are in place, deliveries will begin in 1986. Under a 20-year 100 per cent take-or-pay purchase agreement, annual deliveries will total 2.9 million tonnes (154 billion cubic feet) by 1989. Other Canadian participants could include NOVA, An Alberta Corporation, TransCanada Pipeline Limited and British Columbia Resources Investment Corporation. The natural gas will be converted to liquid at the Grassy Point site, 30 kilometres north of Prince Rupert, British Columbia. The LNG will then be transported to Japan in five conventional marine carriers each having a capacity of 125 thousand cubic metres (2.7 billion cubic feet) of liquefied natural gas. Upon reaching Japan, the LNG will be sold to the five major Japanese utility companies. Figure 1 presents a schematic representation of the project. A joint Alberta, British Columbia natural gas supply is proposed. Of the total peak requirements of 451 MMcf/d, Alberta will provide 338 MMcfl/d (peak day) in the first phase of the project. The remainder of the natural gas, approximately 113 MMcf /d (peak day), will be supplied by British Columbia. The province recently conducted hearings to determine the amount of surplus gas available in B.C. and analyze the projects. The Western LNG Project was selected.