Kitsault Energy Ltd. has applied to the National Energy Board for a licence authorizing the export of up to 20 million tonnes per annum (mtpa) of LNG, which corresponds approximately to 960 billion cubic feet (bcf) per year for a term of 25 years.
This application comes on the heels of the NEB approving four export licences earlier this month, bringing the total to seven that have received a green light from the board to send out gas.
Gas for the Kitsault project will be exported from Canada at the outlet of the loading arm of the natural gas liquefaction terminal to be located near Kitsault, British Columbia. The proposed LNG terminal will be comprised of a floating and/or land-based natural gas liquefaction plant, LNG storage and marine loading facilities.
The liquefaction component will initially include floating LNG (FLNG) liquefaction facilities constructed in modules of four to five mtpa capacity each. At full build out, the total capacity of the LNG terminal would be 20 mtpa. FLNG Unit #1 is anticipated to begin operations in 2018, with FLNG Unit #2 following 12 months later. Follow-on units or liquefaction trains will be in service at a later date.
Gas supply will be transported to the LNG terminal by an approximately 600-kilometre long pipeline that will be permitted, built and operated by a third-party pipeline company.
Each FLNG unit, and subsequent liquefaction trains, will require approximately 200 megawatts of power. Kitsault Energy is considering various power supply alternatives including electric drives (taking advantage of a BC Hydro dedicated transmission line to Kitsault), gas turbine power generation or a combination thereof.
Kitsault Energy is a Canadian corporation, registered in Ontario, and wholly owned by Krishnan Suthanthiran. The project may be further developed with other partners taking minority positions related to pipeline, FLNG units, gas supply and off-take agreements, the application noted.
The company will employ several models for export including a tolling model and one where project partners may own their own gas supply or contracts and be responsible for sales and delivery. Kitsault Energy may or may not be involved directly in the purchase and sale of natural gas with respect to export of gas from Canada.
In addition, Kitsault Energy said it is forming partnerships and commercial arrangements for access to LNG markets that makes it ideally suited to deliver gas sourced from the Western Canadian Sedimentary Basin.
Kitsault Energy said that it can fulfill its gas supply requirements to the LNG terminal through a range of options including gas owned by project partners (from existing reserves, contingent resources, prospective resources and future acquisitions) and gas owned by customers accessing the LNG terminal on a tolling model.
There is a large and growing demand for LNG in global markets, the proponent pointed out, particularly the Asia-Pacific region, which will continue into the future. The company said North American natural gas markets will continue to function efficiently over the proposed licence term and natural gas buyers and sellers will continue to establish fair market prices based upon supply and demand fundamentals.
The proposed export of LNG in this application is unlikely to cause Canadians difficulty in meeting their energy requirements at fair market prices, the proponent stated.
At full build-out of 20 mtpa of LNG for export, the project will need access to, through its partners or own resources, up to 2.6 bcf per day, for export through the export point, the application stated.
"The applicant will be exporting gas that is produced in the WCSB," Kitsault Energy stated. "This gas will be owned by the project, project partners, or others accessing the LNG terminal on a tolling basis. The sources of gas supply for the LNG terminal will be connected by pipeline systems to the principal Western Canadian market hubs. The project owner anticipates that it will be able to either negotiate and secure pipeline access on other planned lines or on a dedicated owned line."
