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An aerial view of Kitimat, British Columbia. (DARRYL DYCK/THE CANADIAN PRESS)
An aerial view of Kitimat, British Columbia. (DARRYL DYCK/THE CANADIAN PRESS)

TransCanada wins $4-billion pipeline contract Add to ...

It may take the better part of a decade to build, but TransCanada Corp. has won a contest to install a $4-billion pipeline that will carry natural gas to British Columbia’s coast, feeding a proposed massive export terminal.

The West Coast GasLink, as TransCanada has called it, will extend 700 kilometres from Dawson Creek, the nexus of a number of rich B.C. shale gas fields, to Kitimat, B.C. Not far from that town, perched at the mouth of Douglas Channel, Royal Dutch Shell PLC has secured land and is developing a project to export 1.2 billion cubic feet a day of liquefied natural gas – and perhaps twice that – to Asian markets. TransCanada beat out Enbridge Inc. and Spectra Energy Corp. for the Shell contract.

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The massive pipe, which will likely measure well over a metre in diameter, is a “key piece” in moving forward the Shell project, a spokesman at that company said, and a shot in the arm for TransCanada, which has seen the prospects for another major Canadian gas pipeline, down the Mackenzie Valley, largely vanish in recent years.

It’s also the latest signal of the industry’s rapid moves to open up West Coast shipments of natural gas. Companies are pushing forward projects worth, in Shell’s case, well over $10-billion, in a scramble to seize a window for Asian export contracts that is expected to remain open for less than a decade. As they do so, they are plunging into the same thicket of first nations and environmental obstacles that’s slowed other projects – although, for now, natural gas has been largely embraced by local groups eager to profit from LNG.

Coastal GasLink is the fourth major new pipeline proposed for the West Coast, as Canada’s energy industry looks for different avenues to export oil and gas. As such it enters uncertain territory – northern B.C. is, after all, the heart of the opposition to Enbridge Inc.’s Northern Gateway project. TransCanada faces a similar group of 30 first nations, whose land it proposes to cross.

The company is also preceded by its legacy in the U.S., where a lengthy battle over construction of the Keystone XL pipeline, and TransCanada’s unwillingness to shift a route around a sensitive Sandhills ecosystem until forced to do so, suggested to some that the company was deaf to local interests. And the Shell project may spawn opposition, given that Shell once provoked blockades with its plans to drill in a place known as the “Sacred Headwaters.” To this day, some in northern B.C. wear “Get the Shell Out” T-shirts.

“The negative reputations of TransCanada and Shell will definitely make it harder for these companies to get social licence,” said Nikki Skuce, a Smithers, B.C.-based campaigner for ForestEthicsAdvocacy. She pointed to the 200 tankers a year that Shell’s project alone could bring to the area.

The prospect of huge increases in vessel traffic has already raised some concern given its potential impact on traditional harvesters of salmon, clams and cockles.

Yet it’s clear those concerns are secondary for indigenous groups eager to profit from LNG. The Haisla First Nation, who claim land around Kitimat, have established formal business relationships with two other LNG proposals, the Douglas Channel Energy Partnership and Kitimat LNG, and are talking with Shell. Among the options on the table are direct equity, revenue sharing and royalty sharing, said Ellis Ross, chief councillor for the Haisla. And while nothing has been resolved, the relationship is clearly warm.

Shell has “made tremendous progress in outreaching to our community and our council,” he said.

Art Sterritt, executive director of an alliance of coastal first nations, said groups are contemplating ways to drive far-reaching benefits from LNG. For example, revenues from those terminals could be used to purchase new fishing vessels and help revitalize more traditional economies. First nations are also attempting to find ways to sell renewable power – hydro, run-of-river and wind – to projects that will need massive amounts of electricity.

“It may very well be there could be a marriage between non-renewables helping finance our renewable economy,” Mr. Sterritt said.

As for TransCanada, it’s clear the company is attempting to learn from its lessons in Nebraska’s Sandhills. The company has devoted significant effort to planning and engineering a route for GasLink. But it declined to make it public, saying it wanted to first consult local groups.

“It makes good sense that we talk to folks on the ground before we start refining and putting lines on maps,” said Rick Gateman, TransCanada vice-president for major projects business development.

The financial community, too, believes TransCanada faces a relatively simple route forward for the line, which could enter the B.C. environmental approval process by early 2014 and complete construction by the end of the decade. The pipe would also link in the Alberta natural gas system, allowing Shell an outlet for rising production as it builds its LNG terminal, and Alberta producers potential access to Asian markets.

Relative to other West Coast pipeline proposals, “this one actually probably has the best potential of all of them,” said Carl Kirst, an analyst with BMO Nesbitt Burns. “Make no mistake, we are just at the very, very beginning of a long-term process. But in my opinion, the fundamental constraint is simply going to be whether Shell and its partners decide to make a final investment decision.”

 
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