A “bridge fuel” to nowhere: Should it be left in the ground? (LNG availability, pricing, politics, and misinformation) Peter van der Velden

This piece was submitted by Peter van der Velden. MetroVanWatch has carried several of his previous articles on civic, planning, and environmental affairs. He ran as a mayoral candidate in the October 2022 civic elections for the City of Delta. Among his previous articles is a three-part series on expansion plans for an LNG terminal on Tilbury Island.

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LNG AVAILABILITY, PRICING, POLITICS AND MISINFORMATION

Due to the Russia-Ukrainian war there is a shortage of fuel; especially in Europe. Prior to the war there was over-production of LNG with the addition of shale gas (produced through fracking for methane). This created competitive pricing, often below production costs. Countries and corporations are stepping up production as a consequence. As well, Russia will find/expand markets for their gas production.

It is not unreasonable to assume that in post-war conditions there will be no shortage of LNG.

Note: LNG stands for “liquefied natural gas” and that is the commonly used acronym. However, the term “natural” is misleading. The commodity known today as LNG is by no means a “natural” product of “nature” and would more appropriately named “liquefied fossil gas.” It is a fossil fuel.     

The Tilbury Island proposals and the failing business case that supports a “bridge fuel”.

FortisBC has proposed to increase production at its Tilbury Island facility in Delta from 60 tonnes annually by a factor of 174 to 10,460 tonnes annually. Fortis has also applied to build a jetty into the Fraser River to ship LNG to Asia.

The level of ignorance in Delta about the Tilbury LNG plant and the immense proposed increase in production is quite telling. Few people are aware of the facility or how these proposals will affect our future. Sadly our governments are complicit. They want you to believe it is a healthy (‘NATURAL gas’) source of energy and that LNG is a “bridge fuel” to alternative energy sources.

This will not be possible. The investment in this plant will be between 3-5 billion dollars. This means an investment commitment of 20-30 years into what is just another fossil fuel.

This industry infrastructure will be years in the making, delaying the real need for investment and development of low-carbon alternatives. As such it will not be a “bridge fuel”. Fossil fuel subsidies continue to grow and vastly outnumber subsidies to “alternative” solutions. At this rate, alternative energy sources will not create the changes we need. As a result, we are subsidizing yet another fossil fuel.

Table: Estimated subsidies to Woodfibre LNG in Squamish, B.C.

LNG is comprised mostly of methane compressed to 1/600th of the methane volume limiting storage requirements and expediting shipping. We have recently become much more aware of the amount of methane lost in the production of LNG and methane fracking. As well industry and governments have consistently underestimated and underreported methane ‘slippage’ from other sources. As a result, we are in much worse shape environmentally than was thought. Are we willing to continue to invest and subsidize this fossil fuel when we now understand the damage methane is causing?

Politics, the economy and LNG

We cannot allow the increase in production proposed for Tilbury. It will put our community and province in danger and will not get us to meet our National agreements to the Paris accord. Worse than that it will cost Canadian taxpayers a lot of money and harm our environment unnecessarily.

“The political protection of destructive industries is woven into the fabric of politics, not least because of the pollution paradox (“the more damaging the commercial enterprise, the more money it must spend on politics to ensure it’s not regulated out of existence)”.

“In 2010, at a biodiversity summit in Japan, governments set themselves 20 goals, to be met by 2020. None has been achieved. As they prepare for the biodiversity Cop15 summit in Montreal, governments are investing not in the defence of the living world but in greenwash.” (1)

Supply and demand

Before the Ukraine war there was an international glut creating fierce competition among producing nations.

Because of the war, Russian gas is now shunned. This has created a temporary shortage and other countries are getting into methane fracking and/or raising LNG production. Qatar alone is increasing LNG production by 60% to bring their total to 1/3rd the quantity of LNG currently used in the world. They have more planned and their production costs are low enough that they are willing to sell long term (ie protected for price and delivery) contracts. The United States is also ramping up production. American exports rose by 12% in the first half of 2022. Half of the world’s current LNG projects under construction are in the USA. .6) (2)

If western countries wish to avoid Russian gas, China and India will not. An 8,000 KM pipeline from Russia to China is already in place, and talks have begun to add an additional pipeline. Once complete, there may be no need for Canadian LNG unless we are willing to undercut Russian pricing.

To clarify, the Russian product is a by product of oil production and is a “conventional” “natural gas.” It is much more cheaply produced than “fracked gas” which British Columbia produces.

What we also need to be aware of is that Australian LNG (10% of Chinese consumption) has a shipping distance only 2/3 of that from the Delta port making Australian LNG much more competitive. Again, will we need to undercut Australian pricing?

The goal: To replace coal with LNG?

Catherine Mckenna is currently the Chair of the United Nations High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities. As Minister of the Environment plans were made to ship LNG to China to reduce China’s reliance on coal.

The Chinese are presently reselling gas bought cheaply from the USA to Europe at incredible mark-ups. This makes it very clear that they are not concerned about changing from coal to LNG. They are only concerned about cutting costs. What will Canada be willing to do about the fierce price competition for our products? Our industry is already heavily subsidized by Canadian taxpayers. and will be further subsidized by BC Hydro customers.

BC Hydro customers stand to pay tens of millions of dollars annually for the Hydro subsidies to process and compress methane to LNG. The current industrial power rate charged to LNG plants $60/MWh and the residential rate ~$100/MWh this leaves ratepayers on the hook for the $40/MWh subsidy.  This represents a huge subsidy to the power-intensive LNG industry, especially as the marginal cost of new electricity, as represented by the Site C dam project, is $145/MWh. 

LNG and the fracking industry: The future? Or not?

So far, our subsidies are into the billions of dollars. How much are we willing to spend to sell our LNG and ruin the BC environment? In late November, two significant earthquakes in northeast B.C with a magnitude of 4.7 were probably triggered by fracking, according to preliminary information from federal scientists. Two thousand wells would be needed to supply the Tilbury plant alone, increasing earthquake potential.

Figure: Impacts and risks involved in hydraulic fracturing (fracking) to to produce LNG.

In the northern province of Groningen in the Netherlands, fracking has produced methane since the 1980s. “More than a thousand tremors have been recorded since the mid-1980s. Thousands of homes and buildings have been damaged, including some of the region’s rich stock of medieval churches. The fate of the Groningen field may foreshadow what oil companies and petroleum-producing countries will face as the climate change debate intensifies. Already there are costly demands for repairs from homeowners.”.5) (3)

Meanwhile, much of the methane being released today is anything but “natural.” Daily we are learning more about the damage methane is doing to the atmosphere. This gas is not only coming from its production or burning. Methane is produced in many forms, some of it from off-gassing coal mines, landfills and, of course, the beef industry. Much of this has not been recognized until recently. Methane release to the atmosphere has been completely underestimated.

“A 2016 study from Carleton University using airplane overflights concluded Alberta’s emissions were up to 50 per cent higher than federal estimates. Methane has more than 80 times the warming power of carbon dioxide over the first 20 years after it reaches the atmosphere. Even though CO2 has a longer-lasting effect, methane sets the pace for warming in the near term.” (4)

The eventual clean-up: What have we learned?

As our country is dealing with cleaning up abandoned oil wells, we now also have the issue of abandoned asbestos mines. The clean-up costs (where clean-up is even possible) are incredibly expensive and often left to taxpayers. .2), .3) (5) (6)

In hindsight, the asbestos that was mined “should have left the material in the ground. The damage is permanent, personal and leaves communities bereft and desolate.” .3) (6)

It is imperative that we apply this hindsight and what we have learned from experience, such as that of the Netherlands, to the LNG industry.

Leave it in the ground

This all makes a very strong case for leaving it in the ground. The next 20 years will decide whether we will have any success in limiting the global temperature increase to 1.5 C. It is quite obvious that the damage done by the increase in production and use of LNG will not allow us to protect our environment or reach that goal.

This will mean more storms, floods, fires, rising ocean levels and the loss of life. Can we afford more of these disasters? We know what we need to do and we have discussed this internationally for many years. And yet, we seem to be incapable of making the right choices.

If we keep it in the ground, we still have access to it in the future should this be necessary. Right now, it is clear. Released methane needs to be curbed, not increased, if we are to protect our well-being and achieve our environmental goals.

In short, we need to stand up for good governance. Don’t let our governments be led into this downward spiral by the fossil fuel industry and short-term planning. Not only will Canada suffer the consequences we will also keep the world back from moving in a unified and positive direction. Is that what we want for our children?

.1) https://www.theguardian.com/commentisfree/2022/nov/30/amazon-public-money-earth-destruction-fossil-fuels-subsidies

(2) https://www.economist.com/business/2022/11/10/can-american-liquefied-natural-gas-rescue-europe

(3) https://www.nytimes.com/2019/10/24/business/energy-environment/netherlands-gas-earthquakes.html

(4) https://www.ctvnews.ca/climate-and-environment/methane-emissions-underestimated-a-growing-number-of-reports-suggest-1.6151626

(5) https://www.cbc.ca/news/canada/calgary/orphaned-wells-liability-alberta-1.6326942

(6) https://www.cbc.ca/newsinteractives/features/toxic-towns-baie-verte

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