Canadian Energy Perspectives

Developments in Energy and Power Law

Canadian Energy Perspectives

Court Dismisses Appeal Related to the Darlington Nuclear Refurbishment

Posted in Energy – Conventional, Nuclear, Projects
Ontario
Joanna Rosengarten

On April 13, 2015, the Federal Court of Appeal dismissed the appeal related to the environmental assessment (“EA”) for the refurbishment and continued operation of the Darlington Nuclear Generating Facility (the “Project”). The appeal was from the Federal Court’s earlier decision dismissing a judicial review application related to the EA for the Project. Continue Reading

Phase I of Ontario’s Large Renewable Procurement Process Concluded

Posted in Electricity, Energy – Renewable, Alternative and Clean, Ontario Independent Electricity System Operator, Power, Procurement, Projects
Ontario
Christopher Zawadzki

The Independent Electricity Systems Provider (IESO) has announced that the 16 contracts offered on March 10, 2016 for Phase I of the Large Renewable Procurement process (LRP I) have now been signed and executed. The execution of the contracts concludes the LRP I process. Moving forward, contracted projects will be required to obtain all necessary licenses and approvals before they can be constructed and operated. These processes are separate from the IESO’s procurement activities and will involve additional community engagement. Continue Reading

Ontario Launches Phase II of the Large Renewable Procurement Process

Posted in Electricity, Energy – Renewable, Alternative and Clean, Ontario Independent Electricity System Operator, Ontario Ministry of Energy, Power, Procurement, Project Finance
Ontario
Christopher Zawadzki

The Ontario Ministry of Energy has announced the launch of the second phase of the Large Renewable Procurement (LRP) process (LRP II). The LRP is a competitive bid process for procuring large renewable energy projects in Ontario larger than 500 kilowatts. Continue Reading

Québec’s New Energy Policy

Posted in Québec Hydro-Québec, Régie de l’énergie
Québec
Daniel BénayThomas LavierJacob StoneGrégory Larroque

The Québec Government has unveiled its energy policy for 2016-2030, entitled “Politique énergétique 2030, L’énergie des Québécois – Source de croissance” (Energy Policy 2030, The Energy of Quebecers – a Source of Growth). The policy is the result of two major public consultations that took place in 2013 and 2015. It follows the previous policy in effect from 2006 until 2015 and aims to set out a clear vision of energy development in Québec as well as addressing the concerns of certain stakeholders. Continue Reading

Politique énergétique 2030 du Québec (in French)

Posted in Projects, Québec, Québec Hydro-Québec, Régie de l’énergie
Québec
Daniel BénayThomas LavierGrégory LarroqueJacob Stone

This article will be translated to English shortly.

Le gouvernement québécois a dévoilé aujourd’hui sa politique énergétique pour la période 2016-2030, intitulée « Politique énergétique 2030, L’énergie des Québécois – Source de croissance ». La Politique est le fruit de deux consultations populaires importantes qui ont eu lieu en 2013 et en 2015. Elle intervient à l’expiration de la politique précédente (2006-2015) et vise à énoncer une vision claire du gouvernement en matière de développement énergétique et à répondre à certaines préoccupations contemporaines. Continue Reading

Phasing Out Coal: Alberta Names the Coal Facilitator

Posted in Climate Change, Climate Policy, Coal, Emissions Regulation, Energy – Conventional, Power
Alberta
Kimberly HowardKimberly Macnab

On March 16, 2016, the Government of Alberta finally named the coal facilitator, and announced the next steps for its plan to phase-out coal by 2030.  The province appointed Terry Boston to act as the province’s independent coal phase-out facilitator, and released details of Boston’s mandate and next steps.

Boston’s Prior Experience

Boston is the recently retired CEO of PJM Interconnection (PJM), which is a regional transmission organization in the United States.  PJM controls approximately 105,502 km of transmission lines and manages 186,000 MW of generation serving 61 million people.

Boston has been involved with energy initiatives around the world, including consultation with White House staff and Congress, and has testified before the Federal Energy Regulatory Commission, and served on a number of corporate boards within the electricity industry.  Boston is a recognized expert in grid reliability and transmission.

Purpose of the Facilitator

Boston is tasked with presenting options to government that will strive to maintain the reliability of Alberta’s electricity grid, maintain stability of prices for consumers, and avoid unnecessarily stranding capital.

Desired Outcomes of the Facilitation Process

The desired outcomes are those which have been iterated in the Climate Leadership Plan, namely, that by 2030, two-thirds of Alberta’s coal generation capacity will be replaced by renewable energy, and one-third will be replaced by natural gas.  The provincial government has repeatedly promised that “throughout this process, government will ensure that workers, communities and affected companies are treated fairly.”

Facilitator’s Approach and Deliverables

One key aspect of Boston’s work is that he will engage with the three coal-fired generators who are currently operating units beyond 2030, with the support of Alberta Energy’s Coal Secretariat and the Alberta Electric System Operator.

Because twelve of Alberta’s eighteen coal-fired generating units are expected to shut down prior to 2030 under the current federal regulations, the facilitator’s mandate is focused on the six generating units remaining after 2030.  As set out in the previously released Fact Sheet on the coal phase-out, this will entail discussions with Capital Power, TransAlta, and ATCO Power about the Keephills 3, Genesee 1, 2 & 3, and Sheerness 1 & 2 thermal generating units.

What’s Next?

In addition to consultation with affected generators, the government is also engaging in a parallel process of consultation with the goal of ensuring ongoing support for coal communities and workers.  More announcements on the next stage of these consultations are expected in the next month.

In another recent announcement, the March 8, 2016 Speech from the Throne touched on the implementation of climate change initiatives, noting that one of the elements of “investing in a clean energy future” will be a Climate Leadership Implementation Act, designed to put the Climate Change Plan into action.  Further detail on this legislation, and what it may mean for Albertans, is still up in the air.

 

BC Hydro Releases Long-Anticipated Updates to Standing Offer Program and Introduces Micro-Standing Offer Program

Posted in BC Hydro, Electricity, Energy – Renewable, Alternative and Clean, Independent Producers, Procurement, Purchase Agreements
British Columbia
Ainslie HurdSebastian NishimotoSven Milelli

Updates to the Standing Offer Program (SOP)

On March 4, 2016, BC Hydro released a new version (Version 3.1) of its SOP Rules to address feedback it received during First Nation and stakeholder consultation meetings and focus group discussions conducted over the last few years. The SOP offers small-scale, clean energy projects in British Columbia with capacities between 100 kW and 15 MW the opportunity to enter into energy purchase agreements (EPAs) with BC Hydro. An EPA requires the project developer to sell all energy from the project to BC Hydro for a term of 20 to 40 years commencing on commercial operation date (COD).
Version 3.0 of the SOP Rules introduces several notable changes:

  • Key vs. Standard Eligibility Requirements – eligibility requirements have been reorganized into key eligibility requirements and standard eligibility requirements, with key eligibility requirements serving as an initial threshold within the SOP review process.
  • Annual Energy Volume Target – the developer’s target COD must be in a year where there is sufficient room available in BC Hydro’s annual SOP energy volume target (currently set at 150 GWh/year). This new target volume management system is designed on a first come, first served basis. If the energy volume target for a year has been met, a project will be deferred until the next year with available volume.
  • Public Utility Customers – customers of public utilities other than BC Hydro cannot apply under the SOP, except for customers that take only back-up or start-up electricity service from that public utility.
  • Additional Generators – new generators added to sites with existing generation are no longer eligible under the SOP.
  • Customer-Based Generation – a simplified rule for projects behind a BC Hydro customer load allow these projects to apply under the SOP but BC Hydro will only purchase energy on a net-of-load basis.
  • First Nations Consultation – BC Hydro now considers the issuance of land tenure, permits and licenses as sufficient evidence that a Crown agency has completed its First Nations consultation.
  • Conflicts of Interest Rule – pursuant to a new conflicts of interest rule, a developer must not be in or have the potential to be in an actual, apparent or deemed conflict of interest as a result of entering into an EPA with BC Hydro.
  • Cluster Rules – revised rules regarding project clusters and common generation facilities clarify that such arrangements are permitted but must not exceed 15 MW in the aggregate.
  • Pre-Application Meetings – pre-application meetings remain optional but are strongly recommended. There is a focus on providing eligibility and cost information as early as possible in the development process.
  • Staged Review Process – SOP application and review processes are now organized into stages – BC Hydro will undertake an eligibility assessment before it requests a system impact study (previously referred to as an interconnection study). Rigid timelines for EPA offer and acceptance have been replaced with the more general requirement that such steps occur “within a commercially reasonable period of time”.
  • Changes to EPA – the Standard Form EPA has been streamlined, and now contains only three appendices instead of 12. Other changes to the Standard Form EPA include:
    • clarification that BC Hydro is not obligated to accept delivery of power in excess of the specified hourly energy limits;
    • the requirement, as a condition to COD, that a Project must have generated energy for 54 hours during a period of 72 continuous hours; and
    • the reference to First Nations consultation depending on evidence of Aboriginal claims under section 35 of the Constitution Act, 1982.

The New Micro-Standing Offer Program (Micro-SOP)

On March 4, 2016, BC Hydro introduced the Micro-SOP, which is designed for very small-scale clean energy projects in British Columbia with capacities between 100 kW and 1 MW. The Micro-SOP is only available to First Nations and communities, including municipalities, not-for-profit groups, all organizations of the public and agricultural sectors.

To participate in the Micro-SOP, a First Nation must show that it has significant beneficial ownership of, and will actively participate in, the project. A community group must provide evidence that it has at least 50% control and beneficial ownership of the project. Provided that they satisfy these beneficial ownership requirements, First Nations and community groups are still eligible for Micro-SOP if they partner with private sector independent power producers to develop the project. As with the SOP, there must be sufficient room in BC Hydro’s energy volume target of 150 GWh/year at the time of the Micro-SOP application.

The Micro-SOP differs from the SOP in certain key respects:

  • Non-BC Hydro Utility Service Areas – projects located within another utility’s service territory or jurisdiction, such as the FortisBC service area, are not eligible.
  • Cluster Rules – project clusters and common generation facilities are not eligible.
  • Time of Delivery Price Adjustments – there are no time of delivery price adjustments.
  • Smart Meters – smart meters for measuring energy output and/or consumption are to be used wherever possible.
  • Interconnection – all projects must be directly interconnected to BC Hydro’s distribution system.
  • Standard Form Agreements – the standard form interconnection agreement and EPA are simplified.
  • Screening Studies – there is a mandatory screening study which estimates the interconnection requirements for the project (subject to a $5,000 fee).
  • EPA Term – the EPA term is 5 to 40 years from COD of the project.

First Phase of Water Sustainability Act Comes into Force

Posted in Water
British Columbia
Selina Lee-AndersenMonika Sawicka

The British Columbia Government has finally brought into effect portions of the long awaited Water Sustainability Act (WSA). The WSA, which was passed by the British Columbia Legislature in April 2014, came into effect on February 29, 2016. The WSA replaces many parts of the old Water Act and creates a new regulatory regime for water management within British Columbia.

The Province is taking a phased approach to the enactment of the WSA. While the majority of the WSA came into effect at the end of February, Section 18, which provides for quick licensing procedures, has yet to be brought into force. The Province predicts the next phase of the regulations and policies will be brought into effect in late 2016. This phase will include regulations relating to measuring and reporting, livestock watering, water objectives, planning and governance.

One of the biggest changes that the WSA makes is to the regulation of groundwater. Under the WSA, all groundwater users (except domestic wells) will require a water licence to divert water from an aquifer (unless the diversion is otherwise authorized under the regulations).

Groundwater licence applications can be submitted through FrontCounter BC. The new Ground Water Protection Regulation provides for a comprehensive framework respecting groundwater and deals with: well drillers and well pump installers; well construction; well caps and covers; well pumps and related works; well identification; well operation and maintenance; artesian flow; well deactivating and decommissioning; and well reports.

The Water Sustainability Regulation is also significant as it sets the scope and requirements for the new WSA regimes surrounding: licensing, diversion and use of water; changes in and about a stream; short term diversion of use of water for well drilling; and use of deep groundwater.

While it is unclear exactly how this new water management regime will be implemented by the Province, project proponents requiring water approvals, should seek advice on how the regulations will affect their operations.

LRP I Results

Posted in Community Projects, Ontario Independent Electricity System Operator, Power, Procurement, Project Finance, Projects
Ontario
Christopher Zawadzki

Today, the Independent Electricity Systems Operator (IESO) announced the results of the Large Renewable Procurement (LRP) I program. The LRP is a competitive bid process for procuring large renewable energy projects in Ontario generally larger than 500 kilowatts.

In response to 103 proposals received, the IESO offered 16 contracts representing 454.885 megawatts (MW) of renewable energy capacity. Of the successful proposals, 13 projects representing 336.8 MW include participation from one or more Aboriginal communities, including 5 projects with greater than 50% participation. More than 75% of the awarded proposals had received support from local municipalities with more than 60% support from abutting landowners. Continue Reading

It’s Official – AESO Requests Stakeholder Feedback on Implementation Plan for Alberta’s Renewable Electricity Program

Posted in Climate Change, Climate Policy, Electricity, Energy – Renewable, Alternative and Clean, Power, Procurement, Utilities
Alberta
Kimberly Howard

On March 3, 2016, the Government of Alberta took its first step in implementing the Climate Leadership Plan by officially announcing that the Alberta Electric System Operator (AESO) has been chosen to develop and implement a renewable electricity incentive program for the procurement of renewable generation capacity by 2030 (Renewable Electricity Program). In delivering this mandate, the Province confirmed:

  • The Renewable Electricity Program will be implemented through a competitive process to keep costs as low as possible;
  • The process is to be carefully managed and will operate in concert with the retirement of coal generating units; and
  • Its choice not to fundamentally alter Alberta’s current energy-only wholesale market structure.

Next Steps

The AESO was directed to prepare and provide a draft plan with its program design recommendations to the Government of Alberta no later than May 2016.  Stakeholder engagement has commenced, and developers, investors and other interested parties are invited to visit www.aeso.ca/rep to provide input on the structure of the Renewable Electricity Program.  The deadline for responses is March 24, 2015.

Following receipt of submissions, the AESO will provide its draft recommendations and plan to the Government of Alberta by its May deadline.  It is expected that the first competition will launch in the fourth quarter of 2016, and the first projects will be in service by 2019.

ERT Allows Another Appeal of a Wind Farm Approval

Posted in Energy – Renewable, Alternative and Clean, Renewable Energy Approval, Wind
Ontario
Bryn GrayJoanna Rosengarten

The Environmental Review Tribunal (“ERT” or “Tribunal”) has granted an appeal of a Renewable Energy Approval (“REA”) issued to wpd White Pines Wind Incorporated for its 27 turbine White Pines Wind Project in Prince Edward County (see case 15-068 Hirsch V. Ontario (MOECC) dated February 26, 2016). The ERT concluded the project would cause serious and irreversible harm to two species at risk, the Little Brown Bat and the Blanding’s Turtle. While this is the third REA appeal granted by the ERT, it is the first time that it has found a wind project would cause serious and irreversible harm to bats and this could have significant implications for future projects. Continue Reading

Focus on Environmental Law, from Canadian Power: Key Developments in 2015/Trends to Watch for in 2016

Posted in Climate Change, Climate Policy, Emissions Regulation

As part of our continuing series of blog posts highlighting specific topics addressed in our publication Canadian Power: Key Developments in 2015 /Trends to Watch for in 2016, we focus here on our analysis of developments and anticipated trends in Environmental Law across the country that will impact the power sector.

The National Power Group at McCarthy Tétrault LLP recently released Canadian Power: Key Developments in 2015 /Trends to Watch for in 2016.  This publication provides an unprecedented overview of the most significant developments in the Canadian power industry and to highlight key trends to watch for.  In addition to providing a detailed review of developments in each region, this publication looks at developments in key areas of national scope, including project finance, environmental, regulatory and aboriginal law matters.

Focus on Aboriginal Law, from Canadian Power: Key Developments in 2015/Trends to Watch for in 2016

Posted in Aboriginal, Energy – Renewable, Alternative and Clean

As part of our continuing series of blog posts highlighting specific topics addressed in our publication Canadian Power: Key Developments in 2015 /Trends to Watch for in 2016, we focus here on our analysis of developments and anticipated trends in Aboriginal Law across the country that will impact the power sector.

The National Power Group at McCarthy Tétrault LLP recently released Canadian Power: Key Developments in 2015 /Trends to Watch for in 2016.  This publication provides an unprecedented overview of the most significant developments in the Canadian power industry and to highlight key trends to watch for.  In addition to providing a detailed review of developments in each region, this publication looks at developments in key areas of national scope, including project finance, environmental, regulatory and aboriginal law matters.

Learning from Mistakes: Improving Governance in the Ontario Electricity Sector

Posted in Electricity, Power
Ontario
George Vegh

Over the last 10 years, the government has directed the expenditure of billions of dollars of public money on electricity projects with virtually no oversight or checks and balances. During this time, Ontario consumers have seen a large increase in electricity prices, with more to come.

In response to concerns about the rising cost of electricity and poor governance, the Ontario government has touted its proposed Bill 135 as the solution. However, far from solving the concerns about electricity-sector governance, the proposed Bill entrenches and expands the status quo and provides no role for oversight of government electricity directives.

The provincial government should move away from controlling electricity planning and instead leave the acquisition of supply to those who are responsible to meet fact-based demand requirements or, in the alternative, the government should only set broad policy objectives and not make choices on which technologies and which suppliers should receive government contracts.

See our full analysis here.

Focus on Project Finance, from Canadian Power: Key Developments in 2015/Trends to Watch for in 2016

Posted in Electricity, Energy – Renewable, Alternative and Clean, Independent Producers, Power, Project Finance, Projects

As part of our continuing series of blog posts highlighting specific topics addressed in our publication Canadian Power: Key Developments in 2015 /Trends to Watch for in 2016, we focus here on our analysis of developments and anticipated trends in Project Finance, including future opportunities in 2016.

The National Power Group at McCarthy Tétrault LLP recently released Canadian Power: Key Developments in 2015 /Trends to Watch for in 2016.  This publication provides an unprecedented overview of the most significant developments in the Canadian power industry and to highlight key trends to watch for.  In addition to providing a detailed review of developments in each region, this publication looks at developments in key areas of national scope, including project finance, environmental, regulatory and aboriginal law matters.

Canadian Power: Key Developments in 2015/Trends to Watch for in 2016

Posted in Aboriginal, BC Hydro, Climate Change, Electricity, Energy – Renewable, Alternative and Clean, Federal, Ontario Independent Electricity System Operator, Power, Project Finance, Québec, Québec Hydro-Québec, Regulation

The National Power Group at McCarthy Tétrault LLP is pleased to introduce Canadian Power: Key Developments in 2015 /Trends to Watch for in 2016. This publication provides an unprecedented overview of the most significant developments in the Canadian power industry and highlights key trends to watch for.  In addition to providing a detailed review of developments in each region, we look at developments in key areas of national scope, including project finance, environmental, regulatory and aboriginal law matters.

A full pdf version of Canadian Power: Key Developments in 2015 / Trends to Watch for in 2016 can be accessed through our website.  Individual components of this publication will also be released on this blog in the coming days.  First up are our regional analyses, which highlight key developments and trends to watch for in:

Hot Off the Press – Defending Class Actions in Canada: A Guide for Defendants

Posted in Class Actions

Defending_Class_Action_Book_2016In the newly published fourth edition of Defending Class Actions in Canada: A Guide for Defendants, McCarthy Tétrault litigators offer valuable insights for business leaders and professionals exposed to class actions as well as their counsel.

This easy-to-read book outlines the procedural machinery of Canadian class actions and the law that governs them, provides strategic analysis on managing the risks they entail, and explains the most important recent developments and trends on a national and international scale.

Edited by Jill Yates and written by Alexandra Cocks, Sarah Corman, Jessica Dorsey, Christopher Hubbard, Miranda Lam, Jean-Francois Lehoux, Elder C. Marques, Kelli McAllister, Michael J.P. O’Brien, Julie Parla, Renee Reichelt, Michael Rosenberg, and Bryan West, the fourth edition of Defending Class Actions in Canada can be purchased here.

This article was original posted on the Canadian Class Actions blog on February 17, 2016.

Canada, Mexico and the US sign MOU on Climate Change and Energy Collaboration and Launch Portal for North American Energy Information

Posted in Climate Change, Electricity, Energy – Renewable, Alternative and Clean
Selina Lee-Andersen

Taking a step towards the establishment of a continental energy strategy, energy ministers from Canada, Mexico and the United States signed a Memorandum of Understanding (MOU) on Climate Change and Energy Collaboration on February 12, 2016 during the North American Energy Ministers Meeting in Winnipeg. In addition, they launched a web platform where North American energy information can be easily accessed in one place (an initiative that was originally announced in December 2014).

Under the MOU signed by Canadian Natural Resources Minister Jim Carr, Mexican Secretary of Energy Pedro Joaquin Coldwell and US Secretary of Energy Ernest Moniz, the three countries will collaborate and share information on six key areas:

  • sharing experience and knowledge in the development of reliable, resilient and low-carbon electricity grids;
  • modeling, deploying and accelerating innovation of clean energy technologies, including renewables;
  • exchanging information in order to improve energy efficiency for equipment, appliances, industries and buildings, including energy management systems;
  • exchanging information and promoting joint action to advance the deployment of carbon capture, use and storage;
  • identifying trilateral activities to further climate change adaptation and resilience; and
  • sharing best practices and seeking methods to reduce emissions from the oil and gas sector, including methane and black carbon.

To facilitate information sharing, North American energy information is now gathered on one platform and is available on all three countries’ websites. Available information includes:

  • a first suite of static and interactive North American energy infrastructure maps;
  • a combined North American energy outlook;
  • data tables and methodological guides to allow for the comparison of energy trade between the three countries; and
  • a glossary of terms and definitions available in each country’s official languages.

It is anticipated that further discussions on a continental energy strategy will take place when Prime Minister Justin Trudeau meets with President Barack Obama in March 2016. A tripartite strategy would be aimed at enabling Canada, Mexico and the US to work together on clean energy initiatives and measures to reduce greenhouse gas emissions, potentially creating a bigger market for Canadian hydro, solar and wind power, as well as setting up an opportunity to develop a continent-wide infrastructure for electric cars.

Why Quebec is a natural fit for data centres

Posted in Power, Québec
Québec
Daniel BénayThomas Lavier

The recent announcement of Amazon’s decision to build a data centre in Montreal confirms an upswing in data centre projects in Quebec.

There are many basic factors supporting the decision to build a data centre in Quebec, making us expect more similar projects to be announced in the near future. Continue Reading

And the Word of the Day is…. Diversification

Posted in Wind
Alberta
Gordon NettletonKimberly Macnab

On February 1, 2016 the Petrochemicals Diversification Program (the “PDP”) was announced as “part of the government’s continued action on the economy, helping to create jobs, attract investment and diversify Alberta’s economy.” This announcement was made in the wake of the results of the royalty review released on January 30, 2016, with comparatively little fanfare.   Premised on the goal of diversifying Alberta’s economy, and based on the availability of methane and propane in the province, the PDP in its Fact Sheet proposes to capitalize on demand for related higher-value products and promote energy processing within the province. Continue Reading

Update on Hydro-Québec Off-Grid Wind Farm RFP

Posted in Community Projects, Québec Hydro-Québec, Wind
Québec
Matthieu RheaultLouis-Nicolas BoulangerMathieu LeBlanc

Late in December 2015, Hydro-Québec Distribution (“HQD”) announced the postponement by one year of the deadline for submissions in response to its request for proposals (A/P 2015-01) (“RFP”) issued on October 23, 2015 for the development, building and operation of a 6 MW wind farm in the Îles-de-la-Madeleine, in Québec. The objective of this RFP is to integrate a wind farm into the off-grid system of the Îles-de-la-Madeleine, which would contribute to reducing Hydro-Québec’s use of its Cap-aux-Meules oil-fired thermal plant. Continue Reading

Increased Clarity or More Uncertainty? Federal Government Takes First Steps to Review Environmental Assessment Process and Introduces Interim Pipeline Assessment Rules

Posted in Aboriginal, Federal, National Energy Board
Kimberly HowardSelina Lee-AndersenKimberly MacnabGordon Nettleton

On January 27, 2016, the Federal Government announced five principles that will guide its discretionary decision making powers on major natural resource projects. These principles are intended as an interim measure while the Government undertakes a broader review of the environmental assessment process. As stated in the December 2015 Speech from the Throne, the Government plans to introduce new environmental assessment processes as part of its efforts to restore public trust. Continue Reading

B.C.’s LNG Export Industry: 2016 Kick-Off

Posted in Liquefied Natural Gas
British Columbia
Madeleine HawkinsSebastian NishimotoPaul Cassidy

Anyone following the development of British Columbia’s nascent liquefied natural gas (LNG) export industry will have a lot to watch out for in 2016. According to both government and industry-watchers, two major LNG projects – Pacific NorthWest LNG and LNG Canada – may reach final investment decisions (FID) in 2016.

In June 2015, Petronas-owned Pacific NorthWest LNG announced a positive FID on its proposed export facility on Lelu Island near Prince Rupert, B.C. subject to two conditions. The first condition, approval by the B.C. Legislature of the Project Development Agreement with Pacific NorthWest LNG, was satisfied in July 2015. The second condition, Federal environmental assessment approval, is anticipated to be obtained in 2016. In mid-January 2016, Fisheries and Oceans Canada issued a letter to the Canadian Environmental Assessment Agency indicating that the potential impact of Pacific NorthWest LNG’s proposed suspension bridge and pipeline from Lelu Island to its tanker loading docks would be low.

Unlike Pacific NorthWest LNG, LNG Canada (led by Shell) has yet to announce an FID but in the first week of 2016, became the first LNG proponent to receive a permit from the B.C. Oil and Gas Commission to construct an export facility. Among other things, the permit sets out the environmental and safety requirements for the design, construction and operation of LNG Canada’s Kitimat facility. Within days of receiving its facility permit, LNG Canada also obtained a 40 year export license from the National Energy Board, replacing the 25 year license previously granted for its Kitimat project. LNG Canada’s extended export license must still be approved by the Prime Minister and his Cabinet.

B.C. Natural Gas Minister Rich Coleman has stated that four additional FIDs could be reached in 2016 by two major plants and two smaller plants, bringing the total to six. Douglas Channel, a smaller liquefaction facility located on a barge off the coast of Kitimat, is a likely candidate. However, the Company is currently disputing a 25 per cent excise levy imposed by Customs Canada on the import of its floating terminal which could prevent a 2016 FID if a resolution is not achieved soon. Other potential candidates for 2016 FIDs include the Woodfibre LNG Project near Squamish and the Tilbury LNG Project in Delta.

We cannot underestimate the impact of the global economic climate on the timing and nature of such FIDs (i.e. whether they end up being positive or negative). Recently, certain analysts have suggested that the prospects of B.C.’s LNG industry are grim in light of low oil and gas prices and falling demand. Japan’s move to restart its nuclear reactors is a likely factor contributing to this fall in global demand. However, the long term economic prospects are more optimistic, particularly given the decades-long timelines of most LNG projects. Future demand for LNG may also receive a boost as more countries adopt increasingly stringent environmental policies, particularly in the wake of the 2015 Paris Climate Change Summit, and actively shift away from coal generation. Furthermore, oil prices could turn around rather swiftly, particularly in the event of escalating conflict in the Middle East.

Shifting focus to upstream developments, LNG proponents are continuing to build new gas processing infrastructure in northeast B.C.  Construction on Veresen’s new Sunrise gas processing plant near Dawson Creek began in October of 2015 and construction on another plant of similar size near Fort St. John is expected to begin this year.

Stay tuned as we follow the progress of B.C.’s LNG export industry throughout what should prove to be an eventful year.

Looking Ahead at Energy Industry Trends Across Several Provinces

Posted in Carbon Tax, Climate Change, Climate Policy, Electricity, Energy – Renewable, Alternative and Clean, Power
AlbertaNew BrunswickNova ScotiaSaskatchewan
Lynn ParsonsChristopher Perez

As we begin this new year, we note that several provinces have recently announced and updated their energy plans, which signal important trends in the energy industry. Below are some of the highlights from such provinces. Continue Reading