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Energy and Resources Kitimat LNG touts natural gas reserves as it seeks 40-year export licence

The Chevron-Woodside site at Bish Cove is located on Haisla Nation reserve land near Kitimat, B.C.

Amber Bracken/The Globe and Mail

A joint venture led by Chevron Corp. is proposing to rely on two energy plays in British Columbia and Alberta to help supply an export terminal for liquefied natural gas on the West Coast.

Chevron is the operator of the Kitimat LNG venture located at Bish Cove near the community of Kitimat, B.C., co-owning the project with Australia’s Woodside Petroleum Ltd.

The Liard Basin in northeastern B.C. and the Kaybob Duvernay play in central Alberta are rich in natural gas reserves, Chevron said in a filing this week to the National Energy Board (NEB).

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The California-based company, through Chevron Canada Ltd., submitted a nine-page document to support its recent NEB application to increase Kitimat LNG’s export licence to 40 years from the previously approved 20 years.

“Chevron and Woodside currently together own an approximately 146,000 net-hectare position in the core of the B.C. portion of the Liard basin,” Chevron said in its filing dated July 15. “In addition to the Liard basin holdings, Chevron has an approximately 84,000 net-hectare position in the Kaybob Duvernay resource in Alberta.”

In 2011, Kitimat LNG became the first B.C. LNG project to receive an export licence from the NEB.

Chevron became a co-owner of the project in 2013 and Woodside joined in April, 2015, but the two companies suspended most construction work by late 2015 at the terminal site at Bish Cove after prices in Asia for LNG plunged.

In April of this year, Kitimat LNG requested that the 20-year export licence be extended to 40 years. To bolster the application, Chevron said this week that its lease holdings with Woodside amount to marketable natural gas of 1.07 trillion cubic metres (38 trillion cubic feet) in the Liard Basin alone.

Chevron estimates its current share of shale gas production in the Kaybob Duvernay is more than two million cubic metres (75 million cubic feet) a day: “In the future, this production may also partially supply the Kitimat LNG terminal.”

If needed, Kitimat LNG will also secure supplies from other producers in the Western Canada Sedimentary Basin.

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Last week, Chevron submitted a revised plan to B.C. and federal regulators, aiming to start terminal construction by 2023. The new plan calls for electric-motor-driven technology to supercool natural gas into liquid form, relying on hydroelectricity from BC Hydro instead of using natural gas-powered turbines.

Kitimat LNG and other backers of B.C.'s fledgling LNG sector have been trying to alleviate concerns about greenhouse gas emissions, address worries over hydraulic fracturing at natural gas well sites and deal with opposition among some Indigenous groups to pipeline routes.

The Chevron-Woodside site at Bish Cove is located on Haisla Nation reserve land near Kitimat. The elected Haisla band council supports Kitimat LNG and also backs the Royal Dutch Shell PLC-led LNG Canada project, which is being built on industrial land in Kitimat on the Haisla’s traditional territory.

Chevron and Woodside are also proposing construction of the Pacific Trail Pipeline (PTP) to transport natural gas from the Summit Lake area in the B.C. Interior to Bish Cove.

In this week’s filing to the NEB, Chevron said the 471-kilometre PTP would be configured to connect with TC Energy Corp.'s planned 260-kilometre Merrick pipeline route in northeastern B.C. The Merrick project hinges on Kitimat LNG and PTP forging ahead.

Kitimat LNG expects to undergo front-end engineering and design in 2020-21, and then start negotiating for export contracts for the fuel as it strives to make a final investment decision in 2022-23 on whether to begin construction of the terminal.

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