B.C. shifts energy policy for LNG

The B.C. government is relaxing the electricity self-sufficiency policy that has driven expansion of independent power projects

  • Feb. 8, 2012 7:00 a.m.

The B.C. government is relaxing the electricity self-sufficiency policy that has driven expansion of independent power projects, and put the focus on new electricity supply for a major expansion of liquefied natural gas exports.

Premier Christy Clark made the announcement Friday in Burnaby. The self-sufficiency policy set in 2008 required BC Hydro to supply the province’s needs even in the lowest-water years when large hydroelectric reservoirs run low and B.C. has to import power.

The new policy requires BC Hydro to be self-sufficient only in average-water years, and will lead to the purchase of more imported power in years of low snow and rainfall.

B.C.’s announcement comes the day after the National Energy Board approved an export permit for B.C.’s second LNG facility near Kitimat. Chinese, Korean and Canadian energy companies have invested in the first two projects, and Shell has proposed a third.

LNG production requires huge refrigeration and compression plants. The B.C. government estimates that with new electricity development it can power two plants, but a gas-fired power plant will be needed to back up run-of-river or wind generation that runs intermittently.

“B.C.’s natural gas will help with the transition to a low-carbon global economy by displacing Asia’s current reliance on other carbon-intensive fuels like coal and diesel,” Clark said. “To protect our environment here, we also plan to introduce a more ambitious means of offsetting greenhouse gas emissions, such as carbon capture and storage, while balancing growth.”

B.C. is joining a rush of LNG production aimed at taking advantage of high prices paid by Asian importers. A surge of shale gas development in Canada and the U.S. has pushed the price down to about $4 per gigajoule in North America, while the price in Asia has climbed above $12.

The Persian Gulf nation Qatar has been producing LNG since 1984. It is the world’s largest producer with capacity of 42 million tonnes per year, with further expansion plans.

Australia has been expanding its LNG export industry rapidly, with six projects in development. Its latest project, with investment from Japanese and French petroleum companies, would put Australia ahead of Qatar as the world’s top producer by 2017.

Other top LNG producers include Indonesia, Malaysia, Nigeria, Trinidad, Egypt, Oman and Russia.