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Government changes support FortisBC operations

LNG Industry,

The BC government has announced changes that will increase FortisBC’s ability to rapidly and cost-effectively supply liquefied natural gas (LNG) to the BC marketplace.

The changes include updates to the greenhouse gas reduction regulation and directions to the BC Utilities Commission (BCUC), including the exemption of the planned expansion of FortisBC’s Tilbury LNG facility from a certificate of public convenience and necessity review by the BCUC.

“Today’s direction from government allows FortisBC to better support the province in the development of natural gas for the transportation sector. This announcement will also result in increased LNG supply, creating opportunities for industrial users and remote communities, bringing economic development and new jobs to BC,” said John Walker, president and CEO of FortisBC.

“Government’s announcement, also positions FortisBC to move forward immediately with plans to expand our Tilbury LNG Facility. This project contemplates an investment of up to US$ 400 million,” Walker said.

The investment in the FortisBC Energy Inc. gas utility would be subject to FortisBC Board approval and additional regulatory and environmental permits and approvals, including the BC Oil and Gas Commission. The expansion is expected to include a second tank and a new liquefier, both to be in service by mid-2016. The expansion will add approximately 1 million GJ of LNG storage, as well as 30 000 to 60 000 GJ of liquefaction capacity per day. It will also provide 300 person-years of construction jobs and about US$ 4 million a year in taxes paid to various levels of government over time. FortisBC expects to finance the expansion as part of its natural gas regulated rate base.

“Government wanted to get out of the way and allow the transportation fuel component of the LNG industry develop quickly,” said Bill Bennett, minister of energy and mines and the minister responsible for core review. “This US$ 400 million investment in FortisBC’s Tilbury LNG Facility will build BC’s marketplace for the world’s cleanest fuel, LNG, and create over 300 person-years of employment in the Lower Mainland.”

As part of government’s direction, the BCUC will set the LNG dispensing rate at US$ 4.35/GJ. This will help the transportation sector transition to adopt LNG as a fuel source and allow Northern and remote communities to switch to LNG, away from fuels like diesel.

Today the government also announced changes to its greenhouse gas reduction regulation. Key changes to benefit FortisBC customers include:

  • An increase to the allowed capital per station for building LNG or compressed natural gas (CNG) fuelling stations that will meet the needs of customers with larger fleets.
  • An increase in the incentive funding for safety training and upgrades to LNG or CNG vehicle maintenance facilities.
  • The expansion of incentives to rail and mining vehicles.

FortisBC expects that its gas utility customers will benefit from the additional volumes moving through the pipeline system to serve the expanded LNG facility. Better year-round, utilisation of FortisBC’s infrastructure, especially during the summer months when heating requirements are reduced, helps to keep natural gas delivery rates stable.

Tilbury LNG Facility

From the Tilbury LNG Facility, LNG is delivered by tanker truck to the LNG dispensing station on a customer’s property or at a commercial fuelling station along a regional corridor.

  • The current Tilbury LNG Facility can liquefy 5 000 GJ of natural gas per day.
  • Since LNG takes up 1/600th of the volume of gas, the tank, with a volume of 28 000 m3, holds the equivalent of 17 million m3 (600 000 GJ) of natural gas – enough gas to keep a community of 12 000 warm for about 45 very cold days.

LNG dispensing rate

The LNG dispensing rate has been set at US$ 4.35/GJ. This is intended to cover the cost of the transportation of the gas to the facility, liquefaction and dispensing. Customers will also pay the natural gas commodity cost per gigajoule.

Environmental benefits of natural gas for transportation

Converting fleets and vehicles to natural gas not only helps the province meet its greenhouse gas reduction goals but also helps improve air quality in the communities in which they serve.

  • Natural gas burns cleaner than gasoline or diesel, which can result in less pollution and greenhouse gases.
  • Carbon dioxide (CO2) emissions, the principal greenhouse gas that contributes to global warming, are reduced by 20 - 30%.
  • Natural gas vehicles emit virtually no particulate matter, the harmful microscopic component of air pollution that penetrates deeply into the lungs.
  • Businesses converting their fleet to natural gas will help meet the province’s requirements for greenhouse gas reductions under the BC Greenhouse Gas Reduction Targets Act.
  • Natural gas for transportation also helps achieve BC’s energy objectives defined under the Clean Energy Act.

Other benefits

  • More stable fuel costs: historically, natural gas commodity prices have been shown to be more stable, compared to the fluctuation of prices for diesel and gasoline. Natural gas fuel costs have historically been 25 - 40% less than diesel.
  • Fewer emissions: natural gas is a cleaner burning, lower carbon fuel than diesel or gasoline.
  • Quieter: operators of natural gas waste hauler trucks report they are quieter than comparable diesel trucks.

Adapted from press release by Ted Monroe

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