How will British Columbia power its liquified natural gas industry?


Vladimir Putin’s Crimean escapades have politicians demanding the U.S. ramp up its natural gas export capacity, thereby breaking – or so the theory goes – Russia’s energy stranglehold on Europe. As HCN’s Jonathan Thompson and others have pointed out, though, President Obama can’t turn gas into a geopolitical weapon by snapping his fingers: Export facilities are costly, time-consuming projects, and the Department of Energy has so far approved just 6 of 21 terminal applications. While one terminal will open in Louisiana in late 2015, the rest won’t get cranking until 2017 at the earliest, and plants faced opposition even before a liquefied natural gas (LNG) storage tank blew up along the Columbia River on Monday.

As the U.S. has tiptoed toward gas exports, however, its northwestern neighbor, British Columbia, has lurched forward – not for Russophobic reasons, but for boring old economic ones. The Canadian province is in the midst of a fracking boom that’s producing 3.5 billion cubic feet of gas per day, and its shale reserves hold over 1,000 trillion cubic feet (about seven times more than the famous Marcellus Shale in the northeastern U.S.). Shipping that vast production to Asian markets is too tasty an opportunity to pass up. Provincial Premier Christy Clark predicts B.C.’s nascent LNG industry will someday contribute $100 billion to the province’s economy and transform B.C. into an energy powerhouse to rival Alberta, home of the tar sands.

How British Columbia powers its LNG boom could determine whether the province manages to meet its emissions reduction targets. Photo courtesy of the B.C. Ministry of Natural Gas Development.

Last week, British Columbia took a big step toward making its LNG dreams a reality. The province approved four export terminals, to be operated by energy giants like ExxonMobil, Pacific Oil & Gas, and Petronas, with the combined capacity to ship nearly 75 trillion cubic feet annually. Canada’s plants, like those in the U.S., will take years to come online. Still, it’s hard to downplay the magnitude of this act: With a few strokes of the pen, Canada’s minister of natural resources authorized more LNG capacity in British Columbia than all U.S. approvals combined.

Even as Canada’s LNG industry plows ahead, however, a critical question remains unanswered: How will all these new plants be powered?

This might sound like a minor detail, but its answer will have huge implications for B.C.’s energy landscape – and our climate. LNG facilities are essentially giant refrigerators that cool gas to 260° below zero so that it can be shipped in liquid form. As you might expect, those refrigerators require a huge amount of power: According to one energy lawyer, proposed LNG plants could someday require up to 50 percent of B.C.’s existing energy capacity. (LNG facilities also gobble power to run pumps, lighting, offices, and other operations.) Where will the plants get all that energy?

There are two options. The first, and by far most commonly used, is called “direct drive,” whereby LNG plants power their compressors with the resource they have in abundance: natural gas. "By having your own power plant you have control of your own fate,” energy consultant Zoher Meratla told the Canadian Press last year. “You're not worried about a tree falling on the powerlines, you're not worried about the ice affecting the lines."

But direct drive has a major drawback: carbon emissions. Natural gas might be cleaner than coal, but it’s still a fossil fuel. According to a recent report by Clean Energy Canada, building just three direct drive LNG plants could have the same climate impact as adding 3 million cars to B.C.’s roads. Powering the industry through direct drive would likely blow through B.C.’s self-determined emissions reduction targets – though if that happened, the province could meet its goals through purchasing carbon offsets or simply setting new targets. (Neat trick, eh?)

To shrink its massive carbon footprint, the LNG industry could pursue an alternative technology: electric drive, or e-drive, which would allow plants to run their compressors through harnessed renewables like wind and run-of-river hydro. Clean Energy Canada’s reports suggest that operating B.C.’s LNG industry on renewable-powered e-drive would cut carbon pollution by a third (and create 400 jobs to boot). “B.C. has an abundance of renewable energy and a population that wants us to be climate leaders,” says Merran Smith, the group’s director.

E-drive sounds great in theory, but it’s virtually without precedent. The only electric drive plant in the world is Statoil’s Snøvit plant in Norway. Although Clean Energy Canada claims that e-drive would raise the selling price of LNG by just 2 percent, companies still say that powering their operations with renewables would be too expensive and unreliable. British Columbia’s balancing act – trying to attract LNG companies while claiming that its liquefied gas industry will be the world’s cleanest – has forced the government to resort to legal sleight-of-hand. In 2012, it amended its own Clean Energy Act to reclassify natural gas as a clean fuel source when it’s used to operate LNG plants – a move that one environmental lawyer called “putting lipstick on a pig.”

Still, mandating e-drive comes with perils of its own. While electric LNG plants would ideally harness energy directly from wind and run-of-river projects, they could also hook up to B.C.’s grid already strained by projected population growth and a province-wide mining rush. To help meet LNG’s power demands, Clark has repeatedly called on B.C. Hydro, the province’s largest utility, to construct a massive hydroelectric installation that would flood wildlife habitat and prime farmland in the Peace Valley. If the choice is between carbon-polluting direct drive on one hand and a giant dam on the other, B.C. could find itself wedged between a climate rock and an ecological hard place.

Proposed LNG plants in the U.S. are resolving their own energy dilemmas in different ways. Oregon LNG, a proposed terminal at the mouth of the Columbia, would hook up to the grid to take advantage of abundant hydro and wind power. Meanwhile, the Jordan Cove Energy Project in Oregon’s Coos Bay plans to build its own natural gas-fired power plant. And construction on an electric-drive plant in Texas is scheduled to begin this year.

In B.C., the falling price of wind and other renewables, combined with B.C.’s rigorous carbon tax, could be enough to push the industry in the right direction. “Since the fall, we’ve seen movement from companies saying they’re only going to use gas-fired direct drive to saying they’re going to power about 20 percent of their load with renewables,” says Smith. “That said, we really need government to take leadership here and create the right conditions for renewable energy.”

Ben Goldfarb is an editorial intern at High Country News. He tweets @bengoldfarb13.

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