Sarita Bay LNG facility progresses with Hyundai design deal

Eric Plummer, September 19, 2018

The development of the Kwispaa LNG facility is expected to bring 350-400 long-term jobs in Sarita Bay. (Huu-ay-aht First Nations photo)

The Huu-ay-aht have taken another step towards bringing a large-scale liquefied natural gas facility to southwest Vancouver Island through a design deal announced with Hyandai Heavy Industries.

Announced today, the Nuu-chah-nulth nation and Steelhead LNG, its Vancouver-based partner in the venture, finalized the arrangement with Hyundai for the engineering and design of two hulls that would be part of the floating portion of the liquefaction and export terminal to be built in Sarita Bay. The partners plan to develop the Kwispaa LNG project on 475 hectares of Huu-ay-aht land at the site in Barkley Sound, which is expected to be operational by 2024.

The deal with Hyundai follows Kwispaa LNG’s recent invitation to tender contractors for engineering, procurement and construction on the Sarita site, which has received export licences from the National Energy Board to ship up to 24 million tonnes of LNG annually over 25 years. At a total cost of $500 million for both, the LNG hulls would measure 340 metres long and 60 metres wide, containing five tanks. Each hull would be designed to store up to 280,000 cubic metres of liquefied product. Design work on the hulls is expected to begin in early 2019.

“What we’re really looking at are the actual units that liquefy the natural gas by cooling it down,” said Huu-ay-aht Elected Councillor John Jack. “They’re almost like giant barges that use ship hulls.”

Since 2014, Stealhead and the Huu-ay-aht have been exploring the viability of building an LNG facility in Sarita Bay, which is 80 kilometres southwest of Port Alberni. The international demand for the resource is expected to increase, according to Royal Dutch Shell, the world’s largest LNG trader. A report Shell released in late February predicts a worldwide supply shortage by the middle of the 2020s if more facilities aren’t built. 

“The number of countries importing LNG has quadrupled, with LNG trade increasing from 100 million tonnes in 2000 to nearly 300 million tonnes in 2017,” stated Shell’s LNG outlook for 2018. “That’s enough to power 575 million homes.”

In a press release announcing the deal with Hyundai, Steelhead LNG CEO Nigel Kuzemko noted the environmental value of LNG. The resource emits 45-55 per cent less greenhouse gas emission than coal, according to the Royal Dutch Shell report.

“Our goal is to help meet the world’s rising demand for LNG and reduce worldwide greenhouse gas emissions,” stated Steelhead LNG CEO Nigel Kuzemko. “At the same time, with our co-management partners Huu-ay-aht First Nations, we are committed to working with all levels of government to realize the tremendous potential benefits the Kwispaa LNG Project can provide to local communities, British Columbia, and Canada.”

The Kwispaa facility would require the construction of pipelines to Vancouver Island from where natural gas resources are tapped in the interior of B.C.

“We’ve actually met and spoken with 35 First Nations up and down the pipeline corridor,” said Jack. “These have been very positive discussions that are essential as we continue to seek their support and input into potentially putting the pipeline in their territory.”

In recent weeks plans for the expansion of the Trans Mountain pipeline from central Alberta to the Lower Mainland got derailed with a court ruling. The Federal Court of Appeal determined that the project could not go forward as proposed due to a lack of consultation with First Nations and undue consideration to the effects of tanker traffic on the endangered Southern Resident Killer Whale population.

As Kwispaa moves closer to realisation, Jack sees it as an altogether different project than Trans Mountain.

“From the perspective of building a relationship with these First Nations, it’s been going very well,” he said of the Indigenous communities along the pipeline route. “LNG carriers are markedly different from oil tankers…the safety record for LNG carriers is so much better.”