B.C.'s LNG dream comes alive with first-ever natural gas shipment to China

Fortis BC senses an opportunity to supply LNG in small batches to Asian countries given some of the major projects cancelled in B.C. in recent months

November 22, 2017

CALGARY – A small container of liquefied natural gas is headed from Vancouver to China, marking the first Canadian export of the super-chilled gas to China.

FortisBC liquefied the natural gas at its Tilbury facility in Delta, B.C. and the cargo – shipped in an “ISO container” about the size of a sea can – is expected to arrive in China in early December, in a symbolic first.

While the volume is small – about 950 gigajoules of natural gas – the company’s vice-president, market development Douglas Stout described it as a “significant first step for B.C.’s LNG export industry,” which has struggled following multiple multi-billion-dollar project cancellations in recent months.

Stout said his company is sensing an opportunity to supply LNG in small batches to Asian countries given some of the major projects cancelled in B.C. in recent months. Malaysia’s state-owned energy company Petronas scrapped advanced plans for a $36-billion LNG export facility near Prince Rupert this year, while CNOOC Ltd.’s Canadian unit Nexen shelved an early-stage plan for an LNG project.

“We’re expecting to do more shipments in December and January,” Stout said, adding that FortisBC’s Tilbury facility, built in 1971, has enough capacity to supply both its existing customers, such as BC Ferries Corp., and customers looking to move LNG to Asia.

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“What it does show is the desire for natural gas in China,” Stout said of the company’s first shipment, adding that FortisBC had been approached by other customers interested in small-scale shipments of LNG from Canada.

FortisBC announced a $400 million expansion of its Tilbury facility near Vancouver in 2014 that would increase its liquefaction capacity nearly seven-fold, from 5,000 GJ per day to 34,000 GJ. Stout said the expansion project is on pace to wrap up in the first quarter of next year, and the company is considering additional small-scale expansions.

The current expansion was sanctioned with the intention to supply LNG to domestic customers, including the long-haul trucking industry, and Stout said the company did not expect it would be shipping LNG cargoes to China at this stage.

However, Vancouver-based True North Energy Corp. approached FortisBC with a request for LNG and is handling the shipping to China, where demand for gas is growing.

True North CEO Calvin Xu said in a statement that the company is working to “continue to develop a strong LNG market in Canada and abroad.”

Even as B.C. export projects have dithered, LNG demand has continued to rise in China and is expected to become the world’s second-largest LNG importer next year after Japan, at the same time the country is claiming to cut its dependence on coal and reduce carbon emissions. So what are we expected to believe.