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Michael Mulcahy Op Ed: Liquefied natural gas remains a smart choice

February 27, 2015
Despite drop in oil price, LNG remains cheaper and cleaner than diesel

Printed in the Vancouver Sun, February 27, 2015

​With the recent drop in oil prices, some may wonder if using liquefied natural gas remains a competitive choice for the transportation sector and remote communities.

LNG is still about 50 per cent lower in price than the wholesale price of diesel. LNG has other benefits including a 15 to 25 per cent reduction in greenhouse gas emissions over diesel. It's also cleaner, with less particulate matter. It is for these reasons FortisBC believes LNG remains an attractive energy solution for B.C. and beyond.

Yukon Energy in Whitehorse recently became a FortisBC LNG customer that will be supplied by our Tilbury facility in Delta. The LNG will replace Yukon Energy's diesel generation that supplements the shortfall from its hydroelectric generation dam.

Yukon Energy is an example of how LNG has opened the door to providing a new energy source for remote communities not in proximity to existing pipeline or electric transmission infrastructure and where diesel and propane have traditionally been the only option for electricity generation. Liquefying natural gas makes it possible to truck it to remote communities without needing to build new gas pipelines.

Cost savings and environmental benefits have driven demand by other customers as well. Since 2013, Inuvik in the Northwest Territories has been offsetting its diesel fuel generation operations using FortisBC LNG, eliminating 6,000 tonnes of carbon dioxide emissions each year. FortisBC began assessing this energy option in 2014 for Revelstoke.

We are now exploring the feasibility of converting our piped propane system to natural gas, supplied by LNG, to help FortisBC customers realize the benefits of LNG, including fewer greenhouse gas emissions compared with propane and increased competitiveness of businesses through lower energy costs.

B.C. businesses are increasing their competitive position through LNG. BC Ferries announced this month an agreement with FortisBC to supply LNG for three dual-fuel engine ferries. Even with the drop in oil prices, BC Ferries expects to realize significant savings that will help reduce operating costs. BC Ferries is also in the process of converting its two Spirit class vessels to dual fuel. Seaspan Ferries Corporation ordered two new dual fuel ferries in 2014, and also signed on for an LNG supply agreement from FortisBC.

A successful domestic LNG industry requires support from government — and the government of B.C. is a strong advocate for using LNG to benefit the transportation sector. It brought about legislative changes in 2012 to initiate the market for both compressed natural gas and LNG vehicles and vessels. These changes have positioned B.C. as a leader across the country. We have an incentive program that has helped stimulate the market and has resulted in more natural-gas-fuelled return-to-base heavy duty vehicles in our province than anywhere else in Canada.

Heavy-duty transportation customers such as Vedder Transport, Arrow Transportation Systems and Denwill Enterprises acquire LNG from our Tilbury LNG facility.

With the growing customer need, we had an opportunity to expand our Tilbury facility to meet future demand. FortisBC started construction last fall on a $400-million expansion that will add a second storage tank with storage capacity of 1.1 million gigajoules and 34,000 gigajoules per day of additional liquefaction capacity, expected to be complete in fall 2016.

The increased volume of natural gas through our existing infrastructure as a result of projects such as this will lead to reduced rate pressure for our natural gas customers, an increased tax base, the opportunity for job creation for British Columbians and will assist in offsetting carbon emissions in the transportation sector, resulting in cleaner air.

With the changing energy demands of the transportation sector and remote communities, LNG provides both cost and environmental advantages for all our natural gas customers while contributing to a strong and prosperous B.C. economy.

Michael Mulcahy is the president and CEO of FortisBC, a regulated utility focused on providing safe, reliable energy, including natural gas, electricity and propane.