BC Hydro and LNG Canada have reached an agreement for the provincial utility to supply power for a proposed liquefied natural gas export facility in Kitimat.
The deal is the first to be signed under a new price regime announced on Tuesday. It highlights the question of where the electricity for the LNG industry will come from if even some of the facilities proposed in the province go ahead.
The arrangement means BC Hydro would supply 20 per cent of the power that LNG Canada, a Shell Canada-led joint venture, would need to run an export facility in Kitimat.
That power, along with electricity required for the $400-million expansion of the existing FortisBC LNG facility in Delta, would come close to the total set aside for LNG facilities in BC Hydro's most recent plan.
When the electricity required for those two projects is taken into account, "we are up very, very close to what BC Hydro forecast for LNG demand in the Integrated Resource Plan that we announced last fall," provincial Energy Minister Bill Bennett said on Tuesday in a conference call.
That plan included 3,000 gigawatt hours for initial LNG-related capacity.
But with an estimated 2,000 gigawatt hours going to LNG Canada, and with the FortisBC project using e-drive – a technology that employs electricity rather than natural gas in the production process – "you'll essentially be at least coming close to using up that 3,000 gigawatt hours," Mr. Bennett said.
If two large LNG proposals move ahead, BC Hydro would likely need to produce or find some more electricity, Mr. Bennett said.
Currently, more than a dozen LNG projects are seeking approval. The Integrated Resource Plan says B.C. will need new energy by 2024, assuming an initial LNG load of 3,000 gigawatt hours.
Under the new power rates announced on Tuesday, LNG customers will have to pay more for electricity than existing industrial customers. No LNG proponents balked at that, Natural Gas Minister Rich Coleman said on the call.
"We've had no indication that this is a difficult number for anybody," he said.
Potential electricity demand would depend on the location of new facilities, Mr. Coleman added. LNG plants in Kitimat, for example, could connect to the provincial electricity grid, while plants in other places – such as Prince Rupert – are expected to depend more on natural gas.
B.C. announced its electricity rules for the LNG sector as it is mulling whether to build Site C, a Peace River dam that would produce about 5,100 gigawatt hours of electricity a year.
Opponents of that project, which is expected to cost about $7.9-billion, have questioned whether it is needed.