Could liquefied natural gas be one solution to climate change

Climate change and the goal of net-zero emissions by 2050 have cast Canada’s oil and gas producers in the role of bad guys in black hats.

Now, producers of natural gas hope to recast themselves as white-hatted good guys, with proposals for LNG (liquefied natural gas) ports on the Pacific and Atlantic coasts.

LNG would be a transition fuel, in this scenario. It would be shipped to Asia and Europe, where it would replace coal-powered electricity generators with natural-gas generators that emit fewer greenhouse-gas (GHG) emissions.

Royal Dutch Shell is going ahead with its $48-billion Canada LNG port at Kitimat, B.C., described by Prime Minister Justin Trudeau as the largest single investment ever made in Canada.

In the east, two LNG projects are in the works. In Quebec, Énergie Saguenay will decide whether to proceed with its $9.6-billion investment in the GNL Québec project in late 2022.

The Quebec cabinet could block the project, after the province’s agency that conducts public consultations on projects’ environmental impacts concluded the project would increase GHGs.

Ottawa and Quebec are jointly evaluating the project, as well.

In Nova Scotia, Pieridae Energy Inc. will decide by June 30 whether to proceed with its $12-billion Goldboro LNG project.

James Gunvaldsen Klaassen, a Halifax lawyer with Ecojustice, which defends environmental activists, called Goldboro LNG “a fossil-fuel project that is not appropriate,” and “a quick buck” for the promoters of LNG projects “that we will pay for many times.”

Western Canada has always produced more gas than oil. Chilling that gas to -160 C, then reducing its volume by about 600-fold, produces liquified natural gas, which can be transported in refrigerated tanker ships.

Several LNG projects have been announced in Canada, but only Kitimat LNG and Canada LNG, also in Kitimat, are going ahead.

The two projects in Kitimat are to be supplied with natural gas from the still-uncompleted TC Energy Coastal GasLink pipeline, which runs through Wet’suet’en First Nation territory and was the scene of protests in 2020.

The Goldboro project in Nova Scotia has overcome many of the hurdles that have stymied other LNG projects, said James Millar, director of external relations for Pieridae, in a phone interview on Thursday.

Goldboro uses existing pipelines running from Alberta to Nova Scotia, although modifications will be required on the TransQuebec Maritimes section from Montreal to the U.S. border, he said.

Environnement Vert Plus, a Quebec environmental group, notes that the modifications Millar refers to are major, and would likely require expropriations.

TransQuebec Maritimes can handle 350 million cubic feet a day of natural gas. Goldboro will require 800 million cubic feet daily for its first phase, and another 800 million cubic feet a day for its second phase.

From TransQuebec Maritimes, the gas would be carried by Portland Natural Gas Transmission System, then to the Maritimes & Northeast pipeline, which runs to Goldboro from near Boston.

The pipeline was originally built to carry offshore gas from the now largely depleted Sable Island gas play. That pipeline can be reversed.

Alfred Sorensen, now Pieridae’s CEO, was the founding CEO of Galveston LNG’s Kitimat LNG project when it was the first LNG plant authorized in North America in 2006.

Sorensen knows the Goldboro project must be done in collaboration with First Nations, Millar said. In 2019, Pieridae signed an agreement “with all 13 bands” affected, with the promise of jobs for the Mi’kmaq and construction of a lodge where they can live during construction.

Environmentalists say the Mi’kmaq oppose the project, but Millar said the company holds weekly meetings with the First Nation.

Pieridae has received environmental approvals from the federal and Nova Scotia governments.

Ecojustice’s Klaassen points out that the Impact Assessment Agency of Canada has not evaluated the Goldboro LNG project; it assessed an earlier project that was “fundamentally different.”

The earlier Keltic Petrochemicals plant, at the Goldboro site, was approved in 2008 by then-federal Environment minister John Baird.

Keltic planned a port to import natural gas at Goldboro to make petrochemical products, but abandoned the project as uneconomical in 2010.

In 2012, after Pieridae announced its Goldboro LNG project, the federal government ruled that the Pieridae project was cleared by the Keltic evaluation.

Ecojustice says there was no environmental assessment of the Goldboro LNG project.

The Impact Assessment Agency of Canada is “currently examining Ecojustice’s request,” the agency said in an email.

Goldboro had to submit to an evaluation by the Nova Scotia government, which required the company to have a plan to manage GHG emissions.

Klaassen said an LNG plant isn’t the same as the petrochemical-products plant Keltic proposed, estimating that Goldboro LNG would emit 3.7 million tonnes a year of GHGs.

Millar said Pieridae has developed a plan, with Navius Research Inc. of Vancouver, to make Goldboro LNG a net-zero emitter by 2050.

The plan would involve carbon capture and storage in a cavern in Alberta, where the gas would be sourced, and other carbon-capture technology at Goldboro — plus the use of carbon credits, if necessary.

“There aren’t enough carbon credits in Nova Scotia,” Klaassen said, adding that carbon capture and storage remains an unproven technology.

Another lesson Sorensen learned from developing Kitimat LNG was the need to line up a committed buyer.

“No customer, no project,” Sorensen would say.

Unlike Énergie Saguenay’s GNL Québec project, Pieridae has a customer for its LNG.

Uniper, a German company, has agreed to buy five million tonnes of LNG a year from Goldboro, or about half its total output, for a 20-year period.

In addition, a German government agency has offered Pieridae $5.3 billion in loan guarantees, meaning the company can borrow with Germany’s AAA credit rating, thus ensuring low-interest costs, Millar said.

Millar confirmed that Pieridae is also in talks with the Canadian government about a reported $925-million federal investment in the Goldboro LNG project.

Pieridae threatened to sue Environnement Vert Plus after it released information about those discussions, but Millar said the company wasn’t trying to hide anything. He said the leaked information was from a PowerPoint presentation that was protected by a non-disclosure agreement.

Klaassen said if public money were committed to a fossil-fuel project, the presentation should be public knowledge.

“The cost of carbon to pay for jobs is significant,” he said, adding that carbon would be released at every step, from extraction of the gas in Alberta to its shipment, with leakages and losses along the way.

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