Kitsault Energy proposes unique BC pipeline project

Presented by The Canadian Institute Energy Group, speakers at the recent BC Natural Gas Symposium in Vancouver, British Columbia covered a number of current topics such as the effects of natural gas supply and demand on pricing, environmental stewardship, and the latest developments and opportunities to name a few.

One of the speakers, Krishnan Suthanthiran, President of Kitsault Energy, proposed an interesting solution for delivering petroleum products to British Columbia’s northwest coast, namely to the road-accessible ghost town of Kitsault, for shipment to Asian markets. Kitsault, north of Prince Rupert, was built as a company town for a now closed molybdenum mine and is the closest BC deep water port to Asia. Alice Arm, where Kitsault is situated, is a wide, deep, ice-free waterway that leads to the Pacific Ocean by way of a wide, deep, ice-free waterway. In addition, Kitsault is also the shortest distance from northeast BC and northwest Alberta.

Suthanthiran’s idea is to “establish a Dedicated Energy Corridor and Dedicated Export Terminal with multiple pipelines carrying a range of energy products.” He is of the view that his proposal would be environmentally sensible, smarter and significantly less expensive that building 10,000 to 15,000 km of pipeline across Canada and the US at a cost of almost US $100 billion.

He notes that the underlying basis for his proposal is the fact that in the future the United States, a crucial customer, will not need Canadian crude oil or natural gas since they are already producing large quantities of petroleum products domestically and also buy them more cheaply from Mexico, Nigeria, Venezuela and Saudi Arabia. Somehow, Alberta will need to get its petroleum products to market.

Currently, Canada sells oil to the US at an unfairly low price and could do much better with Asian customers. At the same time, Japan, Korea, China, India and other Asian countries need large quantities of oil and natural gas.

Unlike most ghost towns, Kitsault is not derelict. There are 70 two and three-bedroom homes that are occupant-ready with another 25 homes soon to be available.  As well, there are four apartment buildings complete with 96 furnished two and three bedroom units. An additional 60 apartment units will soon be available for occupancy. All homes are serviced by the town’s water, electric and sewage systems. There are even two recreational facilities in town, plus a shopping mall, medical centre and fire hall.

Suthanthiran estimates that the capital cost for building the pipeline and terminal will range between US $20 and $25 billion. He notes that a project that uses Kitsault can save as much as US $5 billion from the total cost of the project. The pipeline can be shorter by 100 to 200 km compared to other proposals and savings on this alone can be US $1 to $3 billion plus one or more years of time. A pipeline from Northeast BC to Kitsault will mostly be along less populated Crown Land and some First Nation’s land with little variation in elevation resulting in less environmental impact.

While his pipeline proposal may make perfect sense, there is sure to be opposition. The federal government stands behind its decision to approve the Pacific NorthWest LNG Project (Petronas); however, two First Nations and an environmental group have filed separate applications for a judicial review. In addition, a number of other pipeline proposals are facing opposition, including the Kinder Morgan Trans Mountain Pipeline, the Enbridge Northern Gateway Project and the TransCanada East Project among others.

While oil and gas companies realize that governments are gradually switching to renewable energy sources, it is not possible to attain that goal at the present time. Trains, ships and transport trucks still rely on fossil fuel and, of course, there are no electric aircraft. Here in British Columbia, 95% of our electrical energy is already renewable, generated from hydroelectric dams.

As a matter of interest, a formerly public company, now private, Alloycorp Mining Inc., has a proposal to re-open the moly mine.