The Enbridge Inc. logo. on display at the company’s annual meeting in Calgary, Thursday, May 12, 2016. THE CANADIAN PRESS/Jeff McIntosh Jeff McIntosh/The Canadian Press
Enbridge Inc. ENB-T has invested US$1.5 billion for a 30 percent stake in the Woodfibre LNG terminal in British Columbia, hoping to shore up the long-delayed project that needed a deep-pocketed investor to help export liquefied natural gas natural gas to Asia.
Woodfibre aims to become Canada’s second-largest exporter of the fuel after Shell PLC-led LNG Canada, which has a terminal under construction in Kitimat, British Columbia, with plans to begin shipping to Asia in 2025.
Woodfibre will begin construction in September 2023 and begin exporting liquefied natural gas to Asia in 2027 from its industrial site near Squamish, British Columbia, 65 kilometers north of Vancouver.
The LNG facility in the Squamish area, which will be built on the site of a pulp mill that closed in 2006, will have an export capacity of 2.1 million tonnes per year. In contrast, LNG Canada is much larger, with an initial export capacity of 14 million tonnes per year.
Enbridge said on Friday that Woodfibre has lined up buyers for the fuel in Asia, including through a 15-year deal with London-based BP Gas Marketing Ltd., which will account for 70 percent of the export terminal’s capacity.
The Calgary-based energy infrastructure company will buy 30 percent of Woodfibre, while Pacific Energy Corp. Ltd. will own the remaining 70 percent stake. Pacific Energy is part of privately held RGE Pte. Ltd. from Singapore and controlled by Indonesian businessman Sukanto Tanoto.
Pacific Energy owns Pacific Canbriam Energy Ltd., which is willing to ship its natural gas from northeastern British Columbia to be transported via pipeline systems to Woodfibre.
Construction costs are projected to total $5.1 billion, including the Squamish area export terminal and other costs, particularly those related to FortisBC’s proposed Eagle Mountain-Woodfibre pipeline.
Woodfibre president Christine Kennedy said LNG will play a crucial role globally as a transition fuel to help displace the use of thermal coal in electricity generation. “It’s always important to understand and recognize that in the absence of LNG, coal plants continue to be built around the world,” Ms. Kennedy said in an interview.
But Tracy Saxby, executive director of climate activist group My Sea to Sky, said LNG should not be seen as a good transition fuel for the world. “Building LNG facilities is a multi-decade investment that will increase fracking in northern British Columbia and lock the province into fossil fuels for decades,” Ms. Saxby said.
Brian Johnson, Enbridge’s vice-president of Canadian gas transmission and midstream, said Woodfibre emerged as an ideal solution after Enbridge explored potential investments across Canada, with challenges in transporting natural gas from Western Canada to the East Coast. “The struggle is how do you get all the western Canadian gas all the way there? I mean the cost structure is different,” Mr Johnson said.
Backers of two East Coast export proposals, Pieridae Energy Ltd.’s Goldboro LNG. in Nova Scotia and Repsol SA’s Saint John LNG in New Brunswick are exploring the economics of shipping LNG to Europe but face pipeline constraints in central Canada and New England.
Mr. Johnson said liquefied natural gas exported from British Columbia to Asia would still indirectly help Europe as the continent seeks to wean itself off natural gas from Russia. “Basically, it’s a global market. So the more you can get to Asia, the more other things can go to Europe,” he said, adding that exporting LNG to Asia would free up fuel supplies in Qatar and elsewhere to be diverted to Europe .
Omar Mauji, an analyst with the BC Center for Innovation and Clean Energy, said Enbridge has a system of pipelines for BC that will feed FortisBC’s planned Eagle Mountain-Woodfibre pipeline.
“This is a very easy way for Enbridge to be involved in LNG on the West Coast without exposing too much risk,” he said.
Mr Mawji warned that construction costs were rising sharply at a number of energy projects, including Woodfibre, which had forecast a $1.6bn price tag for the export terminal at ground-breaking in 2016.
FortisBC’s plans include running two pipelines through a nine-kilometre tunnel that will pass through Monmouth Ridge and under the Skwelwil’em Squamish Estuary Wildlife Management Area. The cost of this tunnel and two pipelines alone is estimated at $341 million. This figure does not include the costs associated with the construction of the remainder of the pipeline’s 50 km route.
Earlier this year, FortisBC notified the British Columbia Environmental Assessment Office of its latest plans, which the regulator will review in a collaborative process with the Squamish Nation.
“As a project regulator, our role does not change despite the investment from Enbridge,” Squamish Nation spokesman Wilson Williams said in a statement. “The Squamish Nation will still hold the project to the strict standards set out in the impact benefits agreement to ensure that our lands and waters, as well as our historic connections and the cultural significance of the site, are respected.”
On Friday, Enbridge said it reported a second-quarter profit of $450 million, compared with nearly $1.4 billion in the same period in 2021.
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