Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Gambling on Gas
The Gazette ^ | October 07, 2006 | MARK CARDWELL

Posted on 10/07/2006 4:14:18 PM PDT by thackney

When he was a kid growing up in Val d'Or in the early 1970s, fossil-fuel expert Glenn Kelly remembers his parents getting rid of the family's oil furnace and switching to electrical heating.

"Electricity was the new big thing in home heating back then," he said, noting that today more than 80 per cent of homes in Quebec are heated electrically. "It was billed as clean, clean, clean energy (and) it was cheaper than oil."

Now president and chief operating officer of the Rabaska project, Kelly is the front man in an $840-million international business venture that is aiming to develop another popular source of environmentally friendly fuel for Quebec residents and businesses.

Rabaska - the name comes from the boats that the coureurs de bois used to transport their goods through the Canadian wilderness - is a partnership involving three natural-gas giants: Gaz Metro, Enbridge and Gaz de France.

The project involves construction of a terminal on the St. Lawrence River at the eastern end of Levis. Liquefied natural gas - or LNG - would be imported from its extraction sites in the Middle East and Asia.

The largest of two private LNG terminal projects now being promoted in eastern Quebec (the other, a joint venture involving TransCanada Corp. and Petro-Canada, is based in Gros Cacouna, just east of Riviere du Loup), the Rabaska facility would consist of a long pier for receiving LNG ships, two massive storage reservoirs and about 40 kilometres of underground pipelines to carry reheated gas to the Trans Quebec & Maritimes Inc. natural gas pipeline in nearby St. Nicolas.

The Rabaska project envisions up to 60 double-hulled tankers, each carrying 160,000 cubic metric tonnes of LNG, arriving annually at the Levis terminal.

Unsurprisingly, a project of this dimension raises many questions and concerns about its environmental impact.

An important phase in its development begins Tuesday, when a 4,500-page impact assessment study will be made public, a process that will lead to full-blown environmental hearings, likely begin in December. If approved, construction on the project would begin next summer and Rabaska would be operational by late 2010 or early 2011.

The facility would provide for roughly 12 per cent of the province's total energy needs. By comparison, natural gas provides 34 per cent of Ontario's requirements.

While big industry accounts for only a fraction of Quebec's 50,000 natural-gas customers in Quebec, it accounts for two-thirds of total consumption. Natural gas also heats about six per cent of homes in Quebec. The vast majority are on the island of Montreal, which is the eastern end of the 41,000-kilometre-long Trans-Canada pipeline network that transports western Canada's natural gas to Canadian and U.S. markets.

An LNG import terminal in Levis would have multiple benefits for gas users in Quebec and eastern Ontario, said Kelly, a fluently bilingual civil engineer, MBA graduate and recognized natural gas expert. (He ran Intragaz, the Quebec subsidiary of SOQUIP energy agency and Gaz de France for 15 years until taking over the Rabaska office in 2004.

One advantage would be a guarantee of future access to the least costly and cleanest-burning fossil fuels.

"When I started working in the industry in the early 1980s, we thought we had unlimited natural gas reserves in Canada," Kelly said. "Our reserves-to-production ratio was 30 years or more."

In recent years, however, demand for natural gas has continued to rise in step with concerns over global warming. The conundrum is that North America now consumes one-third of current world supply, but holds only four per cent of the known natural gas reserves.

"Production is levelling off fast in North America," Kelly said.

"We're down to nine years of known inventory here now, but there are 70 years of proven resources around the world. That's twice as much as for oil."

As demand for Alberta natural gas increases, Kelly noted that prices, too, are heading north.

The price of 1,000 cubic feet of natural gas tripled from $2 to $6 since 2000, he said, and is expected to go as high as $14.

Importing gas, Kelly reasons, will create "gas-on-gas competition." In other words, force down the price of pipeline-supplied gas to Quebec and Ontario customers.

Kelly said that with and without Rabaska, studies project a five-per-cent reduction in the price of natural gas the minute the facility's LNG gas hits the market. That decrease, he added, will eventually climb to 10 per cent.

"We calculate that the energy cost savings for all natural gas consumers in Quebec will be

$80 million to $100 million a year," Kelly said last week during a meeting at the project office in downtown Levis.

He added that, when added to the potential energy savings for natural gas users in eastern Ontario, who will be able to access Rabaska gas through Enbridge, which owns Consumers Gas and will buy, together with Gaz Metro, 60 per cent of the LNG terminal's production, the figure rises to $8 billion over 15 years.

"This is a great project," Kelly said. Not everyone agrees.

In particular, a coalition of a half-dozen environmental groups has remained fervently opposed to the project since it was first announced in 2004.

Most of those critics deal with safety issues.

In September, a study by a master's student at l'Ecole nationale d'administration publique in Quebec claimed that a hijacked LNG tanker would be the ideal weapon for terrorists to shut down the shipping lanes in the St. Lawrence, bringing the St. Lawrence Seaway - North America's economic jugular vein - to a standstill.

Other safety concerns are more prosaic.

According to Yves St-Laurent, a spokesperson for Rabat-Joie, a citizens group that has fought against numerous development projects in this area, the project is a local environmental hazard.

"Levis is no place for an LNG terminal," St-Laurent said. "They want to build it here because it costs them $1 million a kilometre for pipeline, so they want to be close to the (Trans Quebec & Maritimes connection).

"Studies of other facilities show that, if liquified natural gas leaks out, it expands 600 times and will quickly form a cloud of natural gas. All it needs is a spark and you've got a catastrophe."

St-Laurent also questioned the rationale behind a market-driven proposal to build a fossil-fuel plant in a post-Kyoto world - an argument raised last spring by former Quebec environment minister Thomas Mulcair, who questioned the need and speed for the development of Rabaska.

"This a cheap project," said

St-Laurent, adding that many of the two dozen farmers who last month agreed to sell their land for the project at twice the municipal evaluation were intimidated by project and government officials who insinuated they might get less if expropriated.

Kelly hotly denied any use of the "E" word.

"These people will say anything - and most of it is completely false," said Kelly, who has been physically threatened by opponents of the project.

"The truth is that most people we talk to here are in favour of the project and the jobs it will bring."

Economically, the project has many supporters.

In July, for example, the city of Levis signed a formal deal with the promoters that could see the city pick up a cool

$330 million in fiscal revenues and taxation over 35 years, plus another $150 million if Rabaska renews the deal over 50 years.

Levis Mayor Danielle Roy-Marinelli called the deal, which will only take effect if the project goes ahead, "the most generous energy agreement in Canada."

Last week, a pro-terminal support group called A Bon Port was formed. Led by a coalition of local business, municipal and union leaders, the group claims to have 400 members.

Studies of the winds and tides of the St. Lawrence suggest that Levis is the safest place to dock LNG ships, Kelly said. As for the safety of LNG and the project's planned 600-metre safety zone, he said they conform to Canadian and international industry standards.

"We have a lot of experience in this," said Kelly, noting that Gaz de France, in particular, has

20 million natural gas customers and is one of the world's largest transporters and distributors of LNG.

"We hope people will put their trust in the abilities of (the environmental assessment process) and judge the project on its merits."

Uneasy neighbours: Rabaska will be next door to Quebec City

Why LNG?

North America consumes one-third of the world's supply of natural gas but holds only four per cent of the known reserves.

Why this location?

Rabaska has the advantage of being near an existing pipeline, Trans Quebec & Maritimes Inc.'s natural gas pipeline in nearby St. Nicolas.

How much capacity?

The facility would have a daily send-out capacity of 500 million cubic feet of reheated natural gas - an amount equal to the current daily level of natural gas consumption in Quebec.

Think big

LNG tankers are smaller than the Queen Mary but bigger than the average oil tanker.

LNG's voyage, from well to consumer

Most of the world's LNG comes from countries with large natural gas reserves in the Middle East, North Africa and Asia. Condensed into a liquid at minus-163 degrees Celsius near its extraction site, LNG is roughly one-600th the volume of natural gas at normal temperature.

LNG is loaded into tankers and transported to terminals in consumer countries. In Canada, LNG is not widely used, although there are seven proposed terminal projects, including two in Quebec.

At the reception site, the gas is kept in temporary storage tanks until it undergoes regasification. Once returned to its gaseous state, it is distributed to customers through pipelines.


TOPICS: Canada; News/Current Events
KEYWORDS: energy; lng; naturalgas

1 posted on 10/07/2006 4:14:19 PM PDT by thackney
[ Post Reply | Private Reply | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson