FortisBC's Tilbury LNG facility is seen in Delta, B.C., on Monday, Dec. 19. 2022.DARRYL DYCK/The Globe and Mail
FortisBC has applied for regulatory approval to increase production of liquefied natural gas, saying that it has credible plans for the project to attain net-zero emissions.
The utility company is seeking permission from the BC Environmental Assessment Office to expand its domestic Tilbury LNG site in the Vancouver suburb of Delta.
The existing site, which opened in 1971, uses compressors powered by electric motors to help supercool natural gas into liquid form, and the expansion would also rely on electrification.
The B.C. government requires new LNG proposals to have credible plans for attaining net-zero greenhouse gas (GHG) emissions by 2030.
“To meet net zero by 2030 requirements, the proposed project will consider the use of renewable fuels for combustion and use of offset measures,” FortisBC said in its 74-page summary.
“FortisBC has also committed to design measures to reduce potential air and GHG emissions, including electrifying proposed project refrigeration.”
The Tilbury Island plant in Delta is a small-scale operation that briefly exported a small amount of LNG in containers. The facility wants to be a key supplier of marine fuel for ships powered by LNG in the Port of Vancouver and then eventually export LNG in tankers to Asia.
“This project will help improve the resiliency of the existing gas system during peak demand seasons with a new storage tank,” Doug Slater, FortisBC’s vice-president of Indigenous relations and regulatory affairs, said in a statement.
Earlier this year, FortisBC and marine company Seaspan obtained environmental assessment approvals from the B.C. and federal governments to build a new jetty, or dock, at the Tilbury site, which is located on the traditional territory of the Coast Salish nations.
Tilbury LNG’s production capacity could eventually reach 3.4 million tonnes a year, after the new project is slated to start operating in 2031. That would include current production capacity of more than 250,000 tonnes a year and another 650,000 tonnes a year of capacity to be added in 2027 under a previously approved expansion.
LNG Canada, which will become the country’s first LNG export terminal when it opens by mid-2025 in Kitimat in northwestern B.C., is considering an expansion. LNG Canada’s initial export capacity will be 14 million tonnes a year.
Aside from the potential expansions in Kitimat and at Tilbury Island, other LNG projects that remain active in British Columbia include Woodfibre LNG, Cedar LNG and Ksi Lisims LNG.
The BC Environmental Assessment Office said in a letter, dated Dec. 2, that the review process for the Tilbury Phase 2 application will include seeking comment from Indigenous groups.
FortisBC forecast that the project would generate $300-million in tax revenue for the B.C. government during construction alone.
But a new report from Investors for Paris Compliance, a climate advocacy group based in Canada, warns that there is a looming oversupply of LNG globally.
“As a glut of supply comes online and as demand faces uncertainty, longer-term equity and debt exposures to Canadian LNG projects will be increasingly risky,” the climate group said in its study titled Late to the Party: The business and climate risks of Canadian LNG.
LNG projects in other parts of the world, including in the United States and Qatar, have lower costs than those in B.C.
“The economics have shifted substantially, and Canada is a high-cost producer. Investors are right to question the viability of new Canadian LNG projects,” Michael Sambasivam, senior analyst at the climate group, said in a statement.
LNG Canada’s Phase 1 is nearing completion while Woodfibre near Squamish and Cedar in Kitimat are in the early stages of construction. Ksi Lisims is undergoing a regulatory review.
The report by Investors for Paris Compliance sharply disagreed with the industry’s characterization of LNG as a transition fuel globally.
“The expansion of LNG production, marketed as a move to displace the dirtiest of fossil fuels, is not based on sound evidence,” according to the report. “The more we know about the lifecycle emissions of LNG and about our carbon budget in a net-zero world, the less sense that LNG makes as a transition fuel.”